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Apple's True Intentions Behind the Samsung Suit

It's not all about the damages. Apple is using this high-profile trial to send the message to its competitors that, regardless of the outcome, it will go to great lengths to protect its intellectual property.

August 27, 2012

When news broke that over patent and design issues, I was stunned—not because Apple was suing Samsung, but because the amount in damages it was suing for was so low.

Apple earns at least that much in profit per month, making it clear to me that this suit is not about damages. As I hear the various testimonies from Apple and Samsung, I believe Apple's real motive is becoming clearer.

Yes, Apple believes that Samsung did indeed violate its patents and copy the designs of the iPhone, but Apple is also using the trial to send the message to its competitors that regardless of the outcome, it will go to great lengths to protect its intellectual property. I have talked to some employees of Apple's competitors and this trial has already caused them to think twice before copying anything related to Apple.

Ultimately, this trial is really about seeking revenge on Google. It believes Google stabbed it in the back with Android and, as Steve Jobs told biographer Walter Isaacson, it will launch a "thermonuclear war" over Google's Android mobile OS.

To understand Jobs' anger with Google, you must grasp one very important thing from Apple's past. When Apple was developing the iPhone, Google CEO Eric Schmidt sat on Apple's board of directors. There is no question in my mind that he went to school on smartphones and their operating systems and I would not be surprised if he used that information to help Google guide its own efforts in this area. I'm astounded that Schmidt did not alert Apple that Google was working on a competing product the moment Larry Page and his team started to negotiate with Andy Rubin to buy Android. Instead, he merely asked to be recused from board meetings where the iPhone was being discussed, long after Google had announced Android. He left the board completely only after investors questioned how he could be on the board with a competing product in the works.

Now, one could argue that the purchase of Android was Larry Page's project and that Eric Schmidt was involved with neither the actual purchase nor the guidance of the product at the start. If that is true, though, then Schmidt was not doing his job as CEO at the time. It would have been his job to be in the know and sign off on the deal as part of his fiduciary responsibility.

The fact that Android started surpassing the iPhone in smartphone sales only added to Jobs' anger. All the legal fees associated with this suit are chicken scratch to Apple, given its more than $117 billion cash in the bank. Not to mention, it continues to see profits rise as consumers buy its products. This does not take the sting out of the fact that Android now represents about 54 percent of the smartphone market and is a most serious competitor of Apple.

Going after Google would have been more difficult, so Apple chose instead to sue the highest profile Android licensee. In a sense, Samsung is kind of serving as the whipping boy for Apple's Android anger. This also may not be the last suit Apple has in its legal arsenal.

Even with its battle with Android, the suit with Samsung has a lot of merit for Apple in the long run. It keeps Samsung on its toes. Regardless of who wins, Samsung will certainly not copy Apple in the future but rather, it will try to create a greater level of distinctiveness in its products.

I also believe, however, that this suit has tainted the previously good relationship between Apple and Samsung, its component supplier. I have already heard that Apple is going to other sources for future components and I believe that Apple could eventually drop Samsung as a supplier altogether.

The trial could also affect Samsung in another way. In , I stated that I do not believe Apple will make a TV, but rather it will innovate around the .

Although the Wall Street Journal recently reported that Apple is in talks with the cable companies to provide some type of set-top box, I'm not convinced.

I think Apple has realized that it has a powerful OS and an ecosystem that can be extended to the TV experience. It will most likely talk with the cable companies about content and featuring the new OS on future set-top boxes. I would not be surprised if it is negotiating with companies creating smart TVs to make its OS the smart OS for their future TVs.

Android has been a huge failure on the TV even though Google is pushing this OS to vendors at every level. If Apple can deliver an OS and an ecosystem of content that "" to the interactive TV experience and it is willing to license it, the company could make it very difficult for Android to gain ground in TVs.

So, how would this concern Samsung? Unless it makes some sort of compromise with Apple, you can pretty much bet that Apple will not license its TV OS to this Korean company. Ironically, it would force Samsung to go to Android even though Android wasn't written with TV in mind.

Regardless of how the jury rules, Apple has already used the trial to go "thermonuclear" on Android and make this legal exercise its first major shot across the bow.