News Analysis: Samsung Shifts to Offensive Side in Patent War with Apple

Samsung Electronics, the world's second-largest maker of mobile phones, took a critical turn recently in a patent war with its smartphone and table computer rival Apple.

A senior Samsung executive heralded a shift to the offensive in its patent battle with Apple, while head of Samsung's mobile-phone division hinted at another lawsuit with Apple for its wireless technology.

Samsung had taken a passive stance in its legal dispute with Apple as the iPhone manufacturer was a major semiconductor customer for the South Korean firm, but Samsung took a turn in its position recently on confidence that Apple would not make competing products without components supply from Samsung, market watchers said.

"Samsung had kept a passive stance in legal battle with Apple as its huge components were supplied to the U.S. firm, which accounts for around 4 percent in sales of Samsung. But, it decided to go on the offensive as Apple's products cannot be made competitively after completely excluding chips supply from Samsung, " Kim Young-chan, an analyst at Shinhan Investment Corp. in Seoul, told Xinhua Tuesday.

Kim noted there was no total solution provider except Samsung that could offer one-stop services for mobile DRAM, NAND flash memory and application processor (AP), saying Apple would not break off its business links with the world's largest memory chipmaker given Samsung's dominance in the global chip market.

ON THE OFFENSIVE

Samsung started taking an offensive stance against Apple from late September. Lee Young-hee, head of global marketing for mobile communications at Samsung, told media on Sept. 23 that Samsung would pursue its right for wireless patents in a more aggressively way, calling its past approach as passive.

Three days after the interview, Shin Jong-kyun, president and head of Samsung's mobile-phone division said at a media briefing that the firm's legal team would announce at a proper time whether it would seek a global sales ban on the Apple's new iPhone.

The new iPhone, referred to iPhone5 by local media, was scheduled to be launched at Apple's Cupertino headquarters on Tuesday (New York time). Expectations have widely spread that Samsung would seek the sales injunction in the United States and South Korea in a bid to fight back against Apple's previous offensive.

"Nothing has been decided yet about Samsung's formal stance" for a sales ban on the new iPhone, Nam Ki-yung, a spokesman for Samsung, said by phone.

Despite his denial on comments, market analysts expected Samsung to take legal action against Apple in any way. "Samsung will unlikely seek a sales ban in the U.S. and South Korea as Samsung is still supplying various components such as mobile DRAM and NAND flash to Apple. But, Samsung is highly likely to take legal action in Germany, the Netherlands and Australia, where the two tech firms clashed in courts due to Samsung's Galaxy Tab 10.1, " Greg Roh, an analyst at HMC Investment & Securities in Seoul, told Xinhua.

ANTI-APPLE ALLIANCE

Samsung formed an anti-Apple alliance with Microsoft by signing a cross-licensing deal with the software maker last Thursday. Under the patent-sharing deal, Samsung will pay royalties to Microsoft for the patents in Android-powered smartphones and tablet computers. HTC and other Android-based phone makers have struck cross-licensing deals with Microsoft.

"The patent deal between Samsung and Microsoft means the anti- Apple front became stronger than before. There have been negative views on Apple in the global IT industry as the iPhone maker sought to monopolize profits from the smart devices market," said Kim at Shinhan.

Kim noted Samsung would benefit from the alliance as the tech firm could get various knowhow in the course of developing mobile operating system (OS) with the software maker, saying that Microsoft would also gain a benefit from the coalition as Samsung is expected to expand the Microsoft's mobile software. Samsung agreed to cooperate with Microsoft in the development and marketing of the Microsoft's mobile software. Samsung unveiled last week the Omnia W smartphone powered by the Microsoft's software, saying the new smartphone will be sold in Europe from the end of October.

Meanwhile, the alliance with Microsoft would help Samsung diversify its sources for mobile OS. "Samsung has maintained its multi-OS strategy. The agreement with Microsoft was reached as part of our multi-OS strategy," said Nam a spokesman for Samsung.

Samsung's smartphones and tablet computers have been mainly run by Google's Android OS. The company developed its own OS called Bada and it planned to expand the use of Microsoft's mobile software. Samsung has been allegedly in talks with Intel to develop a new Linux-based OS named Tizen.

END GAME

The legal battle between Samsung and Apple became much fiercer recently, but the war was expected to end in the foreseeable future as Apple had no choice but to cooperate with Samsung given the South Korean firm's dominance in the global tech industry.

"It is hard to predict that Apple would break its strategic partnership with Samsung given Samsung's dominance in the global chip sector. Samsung has numerous patents for wireless telecommunications technology, while Apple does not have a long history in the mobile phone industry. Apple may end up choosing a patent cross-licensing or strategic partnership with Samsung," said Kim at Shinhan.

Kim forecast that the end game of the patent war would come earlier than expected as the AMOLED market would grow faster than predicted, saying Apple could not help cooperating with Samsung if it wants to apply the next-generation display to its iPhone and iPad.

Samsung's patent war with Apple began in April when the Cupertino-based firm sued Samsung in the U.S., claiming that the South Korean company's Galaxy devices copied the iPhone and iPad. Apple banned sales of the Galaxy 10.1 tablet in Germany, and the introduction of the device was delayed in Australia due to the legal fight between the two firms.

Samsung responded to the offensive by filing lawsuits against Apple, alleging that the U.S. firm infringed on its numerous wireless patents. Samsung has been involved in patent lawsuits with Apple in 10 countries around the world.