Apple & HTC Announce Patent Licensing Deal – What It Means For Android And Samsung

HTC and Apple have made a surprised joint statement this morning revealing that both companies had come to a wide-ranging patent licensing deal.

HTC CEO Peter Chou said: “HTC is pleased to have resolved its dispute with Apple, so HTC can focus on innovation instead of litigation.”

The deal, which many had experts thought wouldn’t happen, was unveiled this morning and sees the warring smartphone giants enter into a 10-year deal, with the agreement covering current and future patents held by both companies.

His counterpart, Apple CEO Tim Cook added: “We are glad to have reached a settlement with HTC. We will continue to stay laser focused on product innovation.”

The terms of the settlement will remain private but a HTC representative told The Verge that he doesn’t expect the deal to negatively affect the company’s bottom line. But other sources reckon the deal will see HTC pay between $6-$8 per Android handset sold to Apple.

HTC U-turn

The news comes in stark contrast to HTC co-founder Cher Wang’s previous comments on the patent dispute – he boisterously declared HTC had “no intention” of settling with Apple in the wake of rival’s Samsung’s defeat and stated his company’s “great skills in innovation” would give them the confidence to face lawsuits from Apple.

The end of the patent wars?

The end of legal proceedings between Apple and HTC might herald a new dawn of co-operation between tech companies when it comes to intellectual property.

Apple and its rivals have been at loggerheads in the world’s courts, accusing each other of copying designs and ideas. Apple and Samsung, for example, have filed legal cases against each other in more than 10 countries, each accusing the other of violating its patents.

A California court earlier this year famously awarded Apple $1.05bn (£652m) in damages against Samsung, after ruling several of its software and design technologies had been infringed, with the Korean firm calling for a retrial.

Is HTC now priced out of Android?

Today’s news is not great news for HTC when it comes to Android. Bizarrely they already pay Microsoft for every Android handset sold, which is estimated at $5-$15 per handset. Factor in that they’re probably paying the same to Apple and their bottom line is likely being chipped away to almost nothing.

Lawyers call this “royalty stacking” and it can be a big problem for complex industries like smartphones. It’s also no surprise that Microsoft’s OS is plastered all over the HTC website today – could this be a sign that they’re already considering moving away from Android in the future? Essentially, stacking of royalties might effectively push HTC off Android entirely due to lack of profits – something that would play into both Apple’s and Microsoft’s hands.

What does the deal mean for Samsung?

The HTC deal is also bad news for Samsung, and, in turn, even worse for Google. Whatever the royalty HTC has agreed to pay, it sets a price range for any future deal between Apple and Samsung.

At some point, sooner or later, Samsung will end up settling with Apple and will have to pay a similar price as HTC. The big question that remains is whether Samsung — or any other handset maker — will be able to still sell Android phones at a profit after paying Apple’s and Microsoft’s royalties?

If this is the case then it won’t take much for handset makers to jump ship from Google’s Android and setup shop in the safety of Microsoft’s Windows Phone – with the lure of profits on each handset, something that might prove difficult on Android in the future.


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