Apple victory spurs buyers to snap up Samsung phones
Source: Martha C. White
While phrases like "permanent injunction" aren't in the lexicon of the average smartphone owner, the latest salvo in the industry's patent wars could change that.
Fresh off its resounding victory over Samsung, Apple is forging ahead with the next offensive in its battle with the South Korean manufacturer, seeking a sales ban on eight phones that will be decided at a December hearing. While armies of lawyers on both sides split hairs over patent law minutiae, the question on consumers' minds is simpler: What happens if my phone gets banned?
So far, the devices Apple wants yanked from shelves ― two versions of the Galaxy S, Droid Charge, Galaxy Prevail and four versions of the Galaxy S2 ― are all older models. But anecdotal evidence indicates that consumers are worried that Samsung's flagship Galaxy S3 phone could be in Apple's crosshairs next, a prospect analysts say can't be ruled out.
"Apple could very well expand its request to include more recent models, which would be more damaging for Samsung," said Sarah Rotman Epps, an analyst at Forrester Research. "The Galaxy S3 has been very well-reviewed. Savvier consumers might be conerned that that model could disappear too and they want to get it before it’s gone."
S3 sales did appear to get a boost last weekend after the ruling. Global Equities Research surveyed 16 sellers of the S3. Five reported total or partial sellouts (retailers contacted included Costco, which sells multiple carriers), and others said S3 sales were higher than usual.
"It seems like the knee-jerk reaction from the consumer was... they just ran to the store and they bought it up," said Trip Chowdhry, a managing director at Global Equities Research. Fear of a ban on the S3 "acted like a positive catalyst," he said.
If Apple succeeds in getting all or some of the devices on its wish list pulled from store shelves, owners might not notice much change in the day-to-day use of their phones. That is, unless they need to buy an accessory. Accessory manufacturers are fast-moving and follow the money, which means focusing production on items compatible with the biggest sellers.
Just as consumers with an older or discontinued phone model might have trouble finding a case or a bumper that fits their device, owners of banned phones might be pushed to secondary markets like eBay in a search for accessories.
There's also the question of software updates. This isn't really an issue with the older models Apple wants to ban now, but any successful ban on newer models could be problematic for consumers.
"I would say they would support the software to the extent that they’re allowed, and if at a certain point that becomes untenable.... maybe they’ll offer customers the ability to upgrade at a discount," Rotman Epps said.
If a banned phone needs to be replaced through warranty or insurance coverage, consumers could wind up with an entirely different handset.
"Insurance and warranty policies already have to contend with the case where a user’s product has been discontinued," Andrew Sheehy, chief analyst at Generator Research, Ltd., said via email. "[Being] legally required to discontinue is just a variation on an existing theme. In this case the manufacturer usually agrees to provide an ‘equivalent device,’" he said. In practice, this often amounts to an upgrade, he pointed out, since the replacement generally is a newer model.
How likely Apple will be granted injunctions is hard to tell, but the iPhone manufacturer did succeed in winning a temporary injunction against Samsung's Galaxy Tab 10.1 tablet, and both companies are wrangling over an injunction on the Galaxy Nexus phone that is being decided by an appeals court.
Although Apple has been a formidable adversary in the U.S., it hasn't fared as well in its fight with Samsung in Asia. A South Korean court handed down last week a split verdict that found both companies guilty of patent infringement, and a district court in Japan ruled in favor of Samsung in another patent suit Friday.
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