The real losers in the Apple-Samsung US decision

The real losers in the US Apple-Samsung decision
(and it’s not Samsung)

I am sure the jury in the Apple-Samsung US case followed the instructions carefully and did their job, but it reinforced to me that the patent system is broken. (Subsequent to writing this – people are questioning the 22 hours spent reviewing 109 pages and forms they were required to fill in AND remember a judge in the UK threw this out and made apple put an apology on their web site for 6 months)

The case exposes in detail how Apple conceives many of their innovative patents (none of which to me seemed truly groundbreaking – bounce to refresh, and pinch to zoom – hmmmm…). According to Apple’s testimony, they have a few guys in special super-secure section at Apple’s Cupertino HQ called the Purple Dorm, sitting around a kitchen table and banging out ideas.

Don’t get me wrong – I think innovation is terrific, but that some of these innovations shouldn’t be a case for a patent. Spend US$100m on developing and running trials on a new drug. That deserves a genuine patent.

There are guys in Pakistan, India, China, and Vietnam, all doing the same thing as the guys at Palo Alto kitchen table. They’re sitting in coffee shops, talking about innovation, but the difference is that Apple can then spend the hundreds of thousands of dollars on patenting those ideas.

Why I give Samsung credit!
Samsung does do something incredibly admirable, which Apple does not. Samsung produces a range of phones and devices which meet a wide range of budgets. Steve Jobs would say they he didn’t want to comprise the “experience” (or his profits). But Steve missed the point – that leaves a whole lot of people who will “go without.” Price is important in the third world and emerging markets, and Apple focuses only on the high-end segments.

Apple misses a huge potential consumer base by not being innovative in the low end. A typical Level 1 Philippine technical support guy will be lucky to be making ₱15,000 (US$355) per month. So a 16Gb iPhone 4, which costs $649 in the US, is far out of his/her budget.

In these emerging markets, Apple has “re-launched” the iPhone 3GS, but at US$350 it is still 3 to 4 times more expensive then an entry-level Samsung phone running Android.

And if the local telcom subsidizes the cost of the phone? The price of the phone still has to be covered one way or another – so the plans are still well outside the amount the locals can pay.

So along came the Android guys with smart phones starting at US$70. Sure, they have neither the same big screen nor the immersive experience, but they bring technology to a market that cannot afford the high-end iPhone – I think that is important.

Perhaps the guys in building Purple Dorm should be figuring out how to produce a phone which can appeal to the masses and not just one sector of the market (which they then want to lock up at the expense of everyone else).

Another Story
As a matter of interest, a 64Gb iPhone 4S costs a whopping 37% more in the Philippines than it does in the US. As you can see below, the differences are huge – but that’s another story.

Model  –  US  –  Philippines  –  Difference

16Gb  –  US$649  –  ₱37,690 ($894)  –  US$245

32Gb  –  US$749  –  ₱43,490 ($1,031)  –  US$282

64Gb  –  US$849  –  ₱49,290 ($1,169)  –  US$320

Note: The author’s first job was working for an Apple reseller. He currently owns and collects *LOTS* of Apple computers, uses an iPhone 4S and Galaxy Note, and is fast becoming a fan of Ubuntu.

Sources:
http://shop.globe.com.ph/catalogsearch/result/index/?cat=21&p=2&q=4S
http://store.apple.com/us/browse/home/shop_iphone/family/iphone/iphone4s