Set to report earnings its Q2 earnings on July 27, Samsung in a typical fashion has released estimates for quarterly earnings. This quarter, the South Korean-based electronics company estimated a $5.9 billion operating profit, which is a record for the company. Samsung said strong sales of its Galaxy line are leading to so much profit. Samsung already said it expects to sell 10 million Galaxy S III units during the month of July—which is certainly impressive. We will have to wait until the end of the month for the full story. But, at any rate, Samsung does not look like it will lose its title as the technology company with the highest profit. (via Reuters)
Reuters interviewed the U.S. judge today who dismissed Apple’s patent court case against Motorola, and the details behind the jurist’s reasoning for tossing the lawsuit are as interesting as they are controversial.
Richard Posner sits on the 7th U.S. Circuit Court of Appeals in Chicago and disputes whether software and related tech industries should even have patents for their products.
“It’s not clear that we really need patents in most industries,” said Posner, referring to the slew of features in smartphones that are legally protected. “You just have this proliferation of patents. It’s a problem.”
Posner, 73, argued the pharmaceutical industry better deserved protection for its intellectual property because of the, as Reuters coined it, “enormous investment it takes to create a successful drug.” He tossed Apple’s lawsuit against Google’s Motorola Mobility last month and denied an injunction against the sale of Motorola devices using Apple’s patented technology.
The judge attributed Apple’s scramble to attack competitors allegedly using its technology to a “constant struggle for survival.”
“As in any jungle, the animals will use all the means at their disposal, all their teeth and claws that are permitted by the ecosystem,” Posner contended.
Since Google unveiled its Nexus Q streaming device at Google I/O, more and more details have come out about what is essentially a set-top box (albeit orb-shaped) Apple TV competitor with a built-in stereo amplifier. Google was first to make it clear that the device was manufactured entirely in the United States, and a report from The New York Times later confirmed the Q “was being assembled in a large factory 15 minutes from Google headquarters.”
Today, a report from Reuters quoted Google’s Senior Director of Android Global Partnerships John Lagerling explaining that the decision was based on the ability to innovate faster and not necessarily cost:
“We wanted to innovate fast. This is the first end-to-end hardware product that Google has ever put out,” said John Lagerling, Google’s senior director of Android global partnerships.
The cost of building the orb-shaped Nexus Q, a cross between a streaming video box like Apple TV and a stereo amplifier, “was not the No. 1 priority,” Lagerling said. “We wanted to see if we could do fast (design iterations) rather than having our engineers fly across the world.”
JK Shin, head of Samsung’s mobile division, told reporters today (via Reuters) that the company expects to sell over 10 million units of the recently launched Galaxy S III during July. Despite concerns of component shortages for the flagship device, the company is expecting higher earnings for its current quarter compared to the $3.6 billion profit generated from January to March:
Samsung kicked off global sales of its Galaxy S III on May 29, but shipments have been affected by the tight supply of parts such as the handset casing for the pebble-blue model… In the United States, where sales were launched last Thursday, major carriers including Sprint Nextel Corp, T-Mobile and AT&T have not been able to offer the Galaxy with 32 gigabytes of memory, partly due to tight supply… “Due to overwhelming demand for the Galaxy S III worldwide, Samsung has informed us they will not be able to deliver enough inventory of Galaxy S III for Sprint to begin selling the device on June 21.”
Shin assured reporters that the company is not worried about the shortages affecting second quarter results. Shin noted “supply simply can’t meet soaring demand,” but he claimed, “things will get better from next week”:
Speaking at the Reuters Media and Technology Summit yesterday, YouTube chief Salar Kamangar talked about the video service’s desire to include subscription-based offerings that would possibly rival traditional cable channels. Reutersexplained:
Cable channels with smaller audiences will in the future migrate to the Web and become available on an “a la carte” basis, Kamangar said at the Reuters Media and Technology Summit on Thursday… Some of those channels, which Kamangar said receive little or no affiliate fees from cable distributors, could be one of the viable offerings for Google-owned YouTube as it weighs selling subscriptions to some of the hundreds of millions of people who watch videos on the website every month.
Last time we checked in on the ongoing U.S. patent-related court cases between Apple and Samsung, Apple’s lawyers were requesting to add the Galaxy S III to its previous motion for a preliminary injunction against the Galaxy Nexus line of products from February.
Apple was hoping the courts would agree to withhold sales of the S III until a ruling on the preliminary injunction was made. Samsung recommended the judge dismiss Apple’s request and file a new motion, but Apple attorney Josh Krevitt threatened Samsung at a hearing on Thursday that Apple could file a temporary restraining order as early as today to stop sales of the S III before it launches June 21. Bloomberg reported:
Josh Krevitt, a lawyer for Cupertino, California-based Apple, told Koh he was considering filing a request for a temporary restraining order in the interest of blocking sales of the Galaxy S III before its scheduled release in the U.S. this month… Krevitt said a court order temporarily barring Galaxy S III sales in the U.S. will create “a mechanism to allow the court to decide this issue before the launch.”
First Samsung will have to prove in court today that the Galaxy S III includes a “different combination of features” from the Nexus in order to prevent Apple from adding the device to the previously requested preliminary injunction. According to Bloomberg, Samsung lawyer Bill Price claimed: “Apple’s urgency stems from its inability to “compete against the new features” of the Galaxy S III, and the company is trying to “prevent a phone from getting to the public that is better than Apple’s in many, many respects.”
Reuters noted that several Google attorneys attended Thursday’s hearing. If Apple files for a temporary restraining order, the scheduled July 30 trial date would likely be delayed. Apple is also trying its best to kill HTC.
Samsung officially appointed a new CEO today to replace Choi Gee-Sung, who will now take up a position as head of corporate strategy overseeing Samsung Group’s roughly 80 companies. Choi, who was CEO for over three decades, will be replaced by Kwon Oh-hyun, who Reutersexplained is currently head of Samsung’s components business and has deep relationships with Apple. Samsung made a statement claiming there will be no major changes in the way the company operates, because Kwon will continue to run the components business that “became the sole supplier of the mobile processors” for iPhone and iPad under his leadership:
The South Korean group named Kwon Oh-hyun as its new CEO. Currently head of Samsung’s components business, which oversees chips and display, Kwon cemented Samsung’s position in memory chips, where it has almost 50 percent global market share, and expanded into non-memory, or logic chips, which now account for 40 percent of Samsung’s overall semiconductor revenue… Under Kwon, Samsung became the sole supplier of the mobile processors that power Apple’s iPhone and iPad – rival products to Samsung’s own Galaxy and Note. The 59-year-old former engineer, who studied electrical engineering at Seoul National University and Stanford, has also led a restructuring of Samsung’s LCD flat-screen business.
According to a report fromReuters, a judge in Mannheim ruled against Microsoft today in an ongoing patent dispute with Motorola Mobility by ordering the company to remove its Xbox 360 and Windows 7 products from German retailers. In response, Microsoft claimed that Motorola is unable to enforce the court’s decision due to a prior ruling granting Microsoft a preliminary injunction in a U.S. court:
“Motorola is prohibited from acting on today’s decision, and our business in Germany will continue as usual while we appeal this decision and pursue the fundamental issue of Motorola’s broken promise.”
Today’s ruling means Judge Holger Kircher has decided Microsoft broke contracts by using video-compression software covered in Motorola patents in its Xbox and Windows products. As noted by Reuters, the ITC last week ruled that Microsoft infringed on different Motorola patents covering both video compression and wireless technologies. European Union regulators have apparently started several investigations on how much Motorola charges competitors to license its patents because of the court’s decision and previous complaints from Apple, Microsoft, and others.
A new report from business weekly Barron’s(via Reuters) claimed The Dow Jones Industrial Average stock index could potentially replace stocks from Alcoa, Bank of America, or Hewlett-Packard with Apple or Google. There’s no exact timeframe for the overhaul of the index, but Barron’s said adding the companies would be complicated due to the fact the Dow calculates the absolute price of shares. Reuters explained that getting Apple would require the company to split its shares:
Apple, whose shares on Friday closed at $603, would overwhelm the index with a 26 percent weighting. That is double the influence of current Dow component IBM, whose $207 stock price gives it a 12 percent weighting in the index, Barron’s said.
Barron’s said the heavy weighting that Apple would command at its current share price could prove a barrier to becoming a Dow component. To guarantee a Dow spot, Barron’s said, Apple would have to split its shares by five-for-one or 10-to-one. But Barron’s noted that Apple has not split its stock since 2005.
Reuters reported that a judge rejected Google and Apple’s bid last night to have an antitrust lawsuit dismissed. The lawsuit claimed the companies illegally entered “no-poach” agreements in an effort to stop competitors from stealing talent:
District Judge Lucy Koh in San Jose, California, rejected the companies’ bid to dismiss claims brought under the Sherman Act and California state law, in a decision released Wednesday night. […] The proposed class action lawsuit was brought by five software engineers, who accused the companies of conspiring to depress employee pay by eliminating competition for skilled labor.
Other defendants in the case included Intel, Adobe Systems, Intuit Walt Disney Co’s Pixar, and Lucasfilm.
Ahead of its full quarterly report scheduled for April 27, Samsung Electronics today estimated its operating profits for the three-month period that ended in March. Estimated at 5.8 trillion won or $5.15 billion USD, that is nearly double the company’s results from the same quarter a year ago and up from the roughly 5 trillion won originally forecasted by analysts. While attributing the strong quarter to the Galaxy Note, the report fromReuters noted Samsung is “set to consolidate its market position with new products” over the next few months, including a “revamped Galaxy S” that will compete with Apple’s next iPhone: Expand Expanding Close
Stemming from a lawsuit in 2010 where Oracle claimed Google was infringing on its Java-related patents with Android, a court document today reveals Oracle rejected Google’s offer to pay a percentage of Android revenue if the alleged patent infringement is proven in court. Reuters reported:
Google proposed to pay Oracle a percentage of Android revenue if Oracle could prove patent infringement of the mobile operating technology at an upcoming trial, but Oracle rebuffed the offer as too low, according to a court filing late on Tuesday.
As for Google’s offer, Reuters said the company would give approximately $2.8 million in damages to cover 2011, and a future 0.5-percent royalty of Android revenue for one patent that will expire in December. A second patent included in the case would provide Oracle with an additional 0.015-percent until it expires in April 2018. According to the court document, Oracle is holding out for a possible injunction:
European regulators are moving early on Google antitrust probe, tellingReuters that a decision on a formal complaint against Google for misuse of its market position will be reached in late March, much sooner than expected. EU Competition Commissioner Joaquin Almunia told the news gathering organization late on Tuesday:
I will receive comments from the case team towards the end of the first quarter. I do not expect anything sooner. Let us see.
Since November of last year, 10 complainants such as Microsoft, VfT, Foundem, Deal du Jour, 1plusV and the Spanish Association of Daily Newspaper Publishers have filed complaints with the Commission, accusing the search giant of misusing its dominance in search. Google’s problem with EU courts could result in a multi-billion dollar fine, as had been the case with EU antitrust probes into Microsoft and Intel in the past. Expand Expanding Close
Japanese carrier Docomo sold 100,000 Galaxy S II phones in the first three days and today they launched an LTE version of the Galaxy Tab tablet.
Apple’s patent infringement claims against Samsung now include twelve courts in nine countries on four continents. Reutersreported this morning that Apple is now formally suing Samsung in Japan and seeking to block sales of Samsung phones and tablets in the country:
Apple has filed a suit with the Tokyo District Court seeking the suspension of sales of Galaxy S and its sequel S II smartphones and the Galaxy Tab 7 in Japan, according to sources close to the matter. The first hearing was held on Wednesday, the source said.
The iPhone maker is seeking 100 million yen, or approximately $1.3 million, in damages. Apple previously had filed four complaints before the Tokyo District Court, according to patent expert Florian Müller. Coincidentally, Japan is also another high-revenue market for Apple. Other countries where Apple took Samsung to court include Germany, U.K., U.S., Australia and more.
Samsung’s Galaxy S has outsold the iPhone in Japan last year. In July of this year, Samsung announced sales of three million Galaxy S II phones in 55 days, the successor to the popular Galaxy S handset. Samsung is also the world’s #2 smartphone maker, after Apple. The Korean company surprised investors by deciding against divulging sales of phones and tablets in the face of growing competition with Apple. Android-based handsets and iPhones together hold well over three-quarters of the Japanese market for smartphones, forming a duopoly which is present in pretty much every other market where Google and Apple compete are locked in the battle for smartphone supremacy.
Apple is projected to sell 86.4 million iPhones worldwide in 2011 and its iPad is dominating the post-PC world with approximately two-thirds of all tablets sold worldwide. In an interesting twist, court in Australia recently advised the Cupertino, California-headquartered gadget giant to divulge iPad 2 sales figures in the U.S. and U.K. if the Samsung sales blockade is to hold. In a nutshell, judge wants proof that the similarities between Samsung’s Galaxy Tab 10.1 tablet and iPad 2, which had been first brought to light by Apple, have in fact hurt iPad 2 sales.
Last week Apple successfully banned the new Galaxy Tab 7.7 from the IFA show in Germany. Samsung will also cease to market that device in the country until its legal dispute with Apple is resolved. Samsung, also Apple’s supplier of memory chips, processors and other components, considers litigation with Apple as “destiny”, their CEO Choi Gee-sung told reporters in Korea last week:
Dell discontinued its Streak 5 hybrid tablet, seen above, last November. The company is now leveraging its Baidu tie-in in the hope of re-entering the space in a meaningful way.
9to5Googleyesterday reported that Baidu, the leading search engine in China, unveiled a brand new operating system dubbed Baidu Yi. Forked from Android and stripped of Google search and services (in much the same way the Amazon tablet‘s software is rumored to be), Baidu Yi aims to keep Google’s Android in China at bay. Following up, Reutersreported Tuesday that Baidu is partnering with Dell on tablets and phones that will run the new software. A Dell spokesperson told the news gathering organization:
We have a partnership with Baidu and you know we have the Streak 5 tablet, so the partnership will be in that space.
The first devices are expected to hit the marketplace early November. The surprising news comes at a time when the mobile industry flipped upside down.“It is really interesting to see Baidu forking its nemesis’ software and partnering with Dell here”, former Engadget editor Joshua Topolsky commented on Twitter. Computer maker Dell, which pulled its five-inch hybrid Streak 5 tablet last August due to poor reception, has some experience working with Chinese carriers and companies as their inaugural smartphone launched in China first. Evidently, both companies have their sights set on the recession-proof global mobile landscape and it’s easy to grasp why…
Rivals and press for decades had been ridiculing Apple for insisting on controlling the whole widget. The iPhone maker took it on the chin, but nowadays many companies have come to realization that the best way to create delightful experiences is to approach product design from Apple’s perspective rather than slap together off-the-shelf components which run outsourced software.
For example, Google will pay $12.5 billion for phone maker Motorola. In exchange, the Android team gets to instruct Motorola’s hardware unit on how to build handsets sporting a greater interplay of software, services and hardware. Samsung, too, is looking to bolster its software as competition with Apple intensifies, reportsReuters, quoting head of the Samsung Group office Kim Soon-taek:
Chairman Lee told top managers to come up with various measures including M&As to enhance software competitiveness.
The revelation doesn’t come entirely out of blue, however. Samsung already makes Bada, its own operating system for feature phones that some think is the company’s plan B should their bet on Android go down the hill. They also create custom software for consumer electronics devices such as networked television sets and their smartphones run custom user interface built atop Android, dubbed TouchWiz.
It’s interesting how Microsoft is becoming an intellectual property vendor these days. This is all thanks to Google’s Linux-based Android operating system which incorporate Microsoft’s many patents, allowing the Redmond firm to seek royalties from handset vendors. Microsoft first forced HTC to pony up five bucks in royalties per each handset sold. The revelation has prompted pundits to note that the HTC deal earns Microsoft more money then licensing fees collected from Windows Phone partners.
Microsoft has signed a similar pact with General Dynamics Itronix and their licensing division took cash from component maker Wistron Corp., in addition to Android backers Veloicty Micro and Onkyo Corp. And now, we learn that Microsoft’s legal rottweilers are after Samsung, the leading Android handset maker, reports Reuters based on local media. Note that Microsoft already has licensing agreements in place with Samsung and LG.
Microsoft Corp has demanded that Samsung Electronics Co Ltd pay $15 for each smartphone handset it makes based on Google Inc’s Android operating system as the software giant has a wide range of patents used in the mobile platform, local media reported on Wednesday. Samsung would likely seek to lower the payment to about $10 in exchange for a deeper alliance with Microsoft for the U.S. company’s Windows platform, the Maeil Business Newspaper quoted unnamed industry officials as saying.
Let’s put it this way: Microsoft is set to make $30 million in Galaxy S 2 royalties alone based on sales of three million Galaxy S II smartphones. That’s a run-rate of twenty million handsets a year, meaning the Samsung deal could be potentially worth a cool $200 million in annual licensing fees on the Galaxy S II smartphone alone. And what happens if an Android vendor does not sign with Microsoft for patent protection?
