Mobile Industry News

Is HTC-Apple Patent Peace the First of Many?

Is HTC-Apple Patent Peace the First of Many?
November 12, 2012 1:19PM

Bookmark and Share
The HTC-Apple patent licensing settlement may have broader implications for the rest of the industry. Samsung and Google-owned Motorola are still in the throes of litigation with Apple. So, does the HTC deal drive Android competitors closer to a settlement? Analyst Shaw Wu believes so -- and he believes the HTC deal could serve as a blueprint.

Neustar, Inc. (NYSE: NSR) is a trusted, neutral provider of real-time information and analysis to the Internet, telecommunications, information services, financial services, retail, media and advertising sectors. Neustar applies its advanced, secure technologies in location, identification, and evaluation to help its customers promote and protect their businesses. More information is available at www.neustar.biz.

Apple has not given up its patent battle against Samsung, but it has reached a global settlement with HTC on the Android front. The Apple-HTC agreement means all lawsuits are dismissed as the companies agreed to a 10-year cross-licensing agreement.

According to the companies, the license extends to current and future patents held by both parties. The terms of the settlement are confidential, but some analysts believe HTC will be paying Apple $6 to $8 per handset it ships.

"We are glad to have reached a settlement with HTC," said Tim Cook, CEO of Apple. "We will continue to stay laser-focused on product innovation."

Meanwhile, HTC President and CEO Peter Chou said, "HTC is pleased to have resolved its dispute with Apple, so HTC can focus on innovation instead of litigation."

Paying the Apple Tax

Shaw Wu, an analyst at Sterne Agee, is among those who believe Apple is likely getting a net licensing fee because it has a much stronger patent portfolio than HTC. Although Apple was not the first to put out a smartphone or a touchscreen device, Apple is widely considered the inventor of the modern smartphone with a touchscreen. The big question on Wu's mind is whether Samsung and Motorola will also reach settlement agreements.

"From our conversations with industry sources, we estimate the net licensing fee to Apple to be in the $6 to $8 per phone range, which means about $180 to $280 million in annual revenue given the 30 to 35 million Android smart phones HTC will likely ship in 2013," Wu told us.

"This is apparently lower than the range that Apple initially proposed. But to put this in context, this compares to press reports indicating HTC pays Microsoft $5 per phone running Android."

Wu said one could make the argument that Microsoft has fewer patents and less intellectual property in this space than Apple. With that argument in mind, he thinks $6 to $8 seems reasonable if not a relatively small price for HTC and others to pay for the right to sell a modern smartphone with touchscreen.

Is Motorola Next?

"For a lot of companies, $180 to $280 million in annual licensing revenue from one vendor is material but for Apple it will likely be immaterial to its financials given its large revenue base of $193 billion and $48 billion in net income that the investment community is forecasting for fiscal year 2013," Wu said.

Indeed, the settlement may have broader implications for the rest of the industry than it does for Apple. Samsung and Google-owned Motorola are still in the throes of litigation with the iPhone-maker. So, does the HTC deal drive Android competitors closer to a settlement? Wu believes so -- and he believes the HTC deal could serve as a blueprint.

"We think it is fair that Apple will get some licensing revenue for the intellectual property it has developed -- in particular multi-touch gestures -- in making the modern smartphone and tablet with touchscreens," Wu said. "Prior to the iPhone and iPad, there were arguably no products that were close in functionality and appearance."

Tell Us What You Think
Comment:

Name:



 Mobile Industry News
1. Lenovo Still in Small Windows Tablets
2. Microsoft Axes Android Phones
3. Apple-IBM Deal Weighs on BlackBerry
4. Google Adds Features to Wallet App
5. Microsoft Will Lay Off 18,000 Workers




 Most Popular Articles
1. Review: Warming Up to Tablets with Keyboard Covers
2. Android SMS Worm Lets Bad Actors Cash In
3. Aerohive Helps Retailers Engage In-Store Customers
4. Google I/O Conference Brings a Lot for Businesses
5. Bezos: Amazon's Fire Phone Offers 'Something Different'

Have an informed opinion on this story?
Send a Letter to the Editor.
We want to know what you think.
Send us your Feedback.

 Related Topics  Latest News & Special Reports

  Lenovo Still in Small Windows Tablets
  Schools Buy Million Chromebooks in Q2
  'TV Anywhere' Solutions from Sling
  Mobile Apps Offer Last-Minute Deals
  Nokia X Phones Had Identity Crisis

 Technology Marketplace
Big Data
Unlock your enterprise data's potential. Learn how in the research report.
Are you getting everything you can out of your business data?
 
Business Intelligence
Get real-time, cloud-based information services with Neustar.
 
CIO Issues
Secure and retain skilled technology professionals. Learn how.
 
Cloud Computing
Are you getting everything you can out of your business data?
 
Data Storage
Unlock your enterprise data's potential. Learn how in the research report.
 
Enterprise Hardware
Protect your network with APC Smart-UPS battery backup
Cisco UCS Invicta Series flash memory systems
 
Enterprise I.T.
Register for an upcoming ISACA® certification exam today
Secure and retain skilled technology professionals. Learn how.
 
Enterprise Software
Unlock your enterprise data's potential. Learn how in the research report.
 
Hardware
Protect your network with APC Smart-UPS battery backup
Ferocious productivity. A fearless team of pros. Find Out More
Cisco UCS Invicta Series flash memory systems
 
Network Security
Protect your network with APC Smart-UPS battery backup
 
Small Business
Ferocious productivity. A fearless team of pros. Find Out More