[jordanroher]

Except Apple doesn't seem to care about achieving huge market share for the iPhone. They care about money, and by delaying the iPhone 5 they've managed to make even more money than usual. It must be habit that we go for the market share argument so often. A corporation's responsibility to its shareholders isn't to spread its logo across the land like a religion, but to return value (real dollars, not imaginary market share dollars) for their investment.  That was slightly more ironic than I intended.

Besides, there are plenty of other "hidden" reasons for Apple to sue these Android handset manufacturers. Steve Jobs feels betrayed by Eric Schmidt, Samsung makes eerily close copies of the iPhone, Apple doesn't attack HP and RIM because this isn't about actual patent infringement but taking out the smaller manufacturers who can't defend themselves against Apple Legal.

[nextparadigms]

Apple cares a lot about market share. Why do you think they keep bragging with statistics every chance they get? Being a leader in market share is very important for developers and it's important for customers, too. Also more market share means more sales - so more money and profit. Why wouldn't they want that? You don't think they cared about their market share with iPods, or their market share in the tablet market?

They may not care about market share at any cost, but they do care about it quite a lot. They may have said they don't care about market share in the old Mac days, but it's not like they could do much about it, so what else could they have said?

[jokermatt999]

I'm an Android fan, but marketshare between Android and iPhone doesn't tell the whole story, at least for developers. I haven't seen numbers on it in a while, but iOS is much better for devs in terms of making money. iOS users buy more apps, and if you're developing to make money, that's pretty good deciding factor.

Of course, may not want to develop for Apple for other reasons (store policies, not wanting to get randomly rejected, etc), but I'd assume money is the driving factor for many.

Now, that isn't to say that Android won't be making good profits. It's just that Apple has a cash cow with their App Store's 30% cut (and now mandatory payments in app). Actual market share matters less, because that's not necessarily where they're continuing to make money.

[bad_user]

     iOS users buy more apps

I own both an iPhone and an Android.

I haven't bought any Android apps because Android apps are crap and I won't pay money for shitty weekend hacks.

     if you're developing to make money, that's pretty 
     good deciding factor

That's a pretty weak argument -- do the math, most apps on iTunes aren't even making up for sunken costs.

Quite the contrary I would say, since the Android Marketplace is filled with crappy apps, you can create value quite easily.

[rufugee]

Wow...troll much?

[gonzo]

I also own both Android and iOS phones.

and I've also never purchased an app on Android.

So either we're both under the bridge, or you've mis-labeled the troll. (Look in the mirror.)

[kelnos]

I've owned 2 different iPod Touches over the past 2-3 years, and I've owned an Android phone for a year and a half. I've bought apps for both platforms.

The plural of anecdote is not data. There are apps worth paying for on Android. But for whatever reason -- maybe it's quality, maybe it's customer sentiment -- iOS users tend to spend more money in the App Store than Android users spend in the Market.

[div]

iOS may be more valuable to developers today, but if marketshare keeps developing according to the current trend, there will be an inflection point.

It's widely reported that iOS users are more likely to spend money on apps than Android users. Let's assume that the percentage of users spending money on apps for iOS vs Android is something like 80% vs 40%. For a developer this means, ceteris paribus, there need to be twice as many people on Android to make the same amount of money he would make in the Appstore.

If you look at marketshare trends, Android is slowly getting to the point where you stand to make as much money developing for Android as you would developing for iOS. In fact, if trends hold, there will be more money in Android than in iOS in the long run, making it the logical step for developers to jump ship (or at least develop for both platforms).

This is why market share matters.

[demallien]

Apple cares about market share in two very different ways. Firstly, they care about it for the simple reason of making money on each handset sold. In that respect, those charts actually show Apple crushing every other smartphone manufacturer out there.

Secondly, they care about marketshare of the iOS platform because this is one of the determining factors in how much support a platform will get from developers. Here it could be an issue if the get swamped in volume by the Android platform. But marketshare isn't the only factor that helps developers make the choice to support a platform. Developers care about how much money they can make by developing on a given platform, and this is not determined uniquely by the marketshare. Other factors include discoverability of the developer's application by users, the demographics of the marketplace (are they users that tend to hand over money for a product, or do they prefer free stuff), and ease of development (how good is the SDK, how fragmented is the platform, how restrictive are the T&Cs of the marketplace).

In this second aspect of marketshare, Apple may end up losing out to Android overall. But firstly, that day is not yet come - when talking about platform marketshare, there are also the iPod touch and the iPad to toss into the mix, which changes the final numbers. Even when (and I do think it is a question of when) Android takes over as the leading platform, the factors outlined in the last paragraph mean that it is not an automatic given that developers will flee iOS for Android. Indeed, unless Android can claim more than 80% of the market, I would expect developers will show equal preference for supporting both platforms. We are a long way from 80% marketshare for Android, so I doubt Apple is particularly worried just at the moment.

[fpgeek]

Here's the thing, even if you grant the premise: Samsung copied the iPhone and iPad from top to bottom and Apple will win their lawsuit, I still think it looks fearful.

First, by suing, Apple has vouched for the quality of Samsung's products. It is the Windows look-and-feel lawsuit all over again. Right or wrong, Apple has just stood up and admitted that Android (or at least Samsung's take on Android) is "good enough". That's just a mistake and you only make it out of fear.

Now think about what a lawsuit says about what is going on inside Apple. Suppose Apple truly believes they have a kick-ass portfolio of next-generation products that will blow Samsung and the rest out of the water this fall. Would they really waste their time and attention on the complex, multi-theater, drawn-out, unpredictable war that suing Samsung is going to be? They aren't HTC, there is no hope of squashing them quickly (not to mention the huge supplier relationship). Or would they just say "eat our dust" and move onto the next thing (transitioning to new suppliers if necessary)?

Even beyond the lawsuit, there just seem to be so many recent examples of Apple signaling that they don't believe that they can win in the marketplace (e.g. the in-app purchase fiasco). To me, that smells like fear and a lot of it.

[admiralpumpkin]

The Apple lawsuit doesn't vouch for Samsung's quality, quite the opposite. Their argument goes something like: Samsung is purposely copying iOS's appearance and iOS's products' appearances, creating confusion in the marketplace as to which product is the original HIGH quality product, and which is the LOW quality knock off. __

Your second argument is falsely premised on the idea of limited resources. Apple can easily have a good upcoming product portfolio AND pursue lawsuits. They are not resource-limited. They don't have to choose between lawsuits and good up-coming products.

___

Being a huge multi-faceted corporation, it is difficult, in my opinion, to discern their motivation down to a simple, single human emotion.

That said, if I had to guess, or put myself into Apple's mind, I would focus on Jobs' thinking. In my opinion he isn't scared, he is offended. He views his products as acts of creation--as art--and here is someone aping his art, and poorly at that. This offends him deeply.

[fpgeek]

First, if Apple is suing Samsung over their alleged knockoffs, then they are good knockoffs, not bad ones. Apple loves bad knockoffs. Bad knockoffs enhance the reputation of their products by emphasizing how special and hard to copy they really are. Why would they even dream of shutting down the kind wonderful advertising that money can't buy?

Second, of course Apple is resource-constrained. Every company is resource-constrained, but the resources they are constrained by are not always the same.

In Apple's case, the resource that I suspect is most constrained is the time and attention of their top, strategic managers. That's why I find the Samsung lawsuit so telling. Unlike most of Apple's other lawsuits (e.g. HTC, Motorola), the Samsung lawsuit / situation drains a lot of that top-level time and attention. What are the drains?

We can start with the huge supplier relationship. What do you keep sourcing from Samsung? What do you transition? What are your contingency plans if Samsung pulls together a piece of technology you want (e.g. an iPad-size "Retina Display") before the supplier you are transitioning to does? And think of all of the negotiations, planning and so on that go on around this. These are all particularly important because one of Apple's key advantages over its competitors is how it manages and captures key parts of its supply chain.

Next, Samsung is a large, diverse technology company with a robust, complex patent portfolio of its own. You can staff out the analysis of the countersuits, but deciding what to do based on that analysis is a different kettle of fish. If there are problematic patents, how hard are they to work around technically and operationally? What sorts of unexpected legal developments affect not just the legal strategy but Apple's technical and/or business strategies as well (and what do you do about them)? What about depositions and testimony (see Larry Page and Oracle)? And by the way, Apple and Samsung don't just have a simple US legal battle going on, they are lawsuits going in something like 10 countries on 3 continents. The sheer number of moving parts in this mess is a problem by itself.

The more I look at the Samsung lawsuit, the more I see Apple spending a large chunk of their most constrained resource on it. I've drawn my own conclusions about what that means.

[MatthewPhillips]

> Except Apple doesn't seem to care about achieving huge market share for the iPhone. They care about money, and by delaying the iPhone 5 they've managed to make even more money than usual. It must be habit that we go for the market share argument so often. A corporation's responsibility to its shareholders isn't to spread its logo across the land like a religion, but to return value (real dollars, not imaginary market share dollars) for their investment.

Citation needed. I'm just a dumb programmer but I'm pretty sure that Apple at 30% market share makes more money than Apple at 19% market share. Please edutate me if not correct.

[AllenKids]

Market is not fixed in place, when one factor changes, other numbers vary accordingly.

For example 30% of a total 100M units sold is roughly the same of 19% of a total 150M units sold. IF APU stay the same, it makes no difference financial wise to Apple. But to achieve 30% of 150M units sold, Apple may have to branch out another line of more affordable phones, it may have to give more control to the carriers, it may have to iterate on a faster pace than it is comfortable with, all of these would hit Apple's margin and equal things out.

With Nokia LG SE and Motorola in the red, Apple is now siphoning about 50% of industry profit at a market share of, what, 5% of all phones sold?

Which is not to say market share is not important, but it is not the utimate goal.

For now Apple's more urgent problem remains to be manufacturing capability, its fancy process or unique components always causes shortage upon new iOS devices launch and well into the second quarter, it almost forms a pattern (iPhone 3G/iPhone 4/iPad 2 etc). If the murmurs from Foxconn et al is to be believed the same backlog will happen to iPhone 5/iPad 3 again.

[trotsky]

Yet reports seem to indicate Apple is planning on rolling out a "budget" price point phone [1], so they probably are worried about market share after all.

Apple is on a long term digital media dominance play. They want to be the one stop locked in shop for many people's music, software, video and books. Sure they'll continue to be interested in making good money on their hardware but their evolving iOS platform strategies clearly point to what they're looking forward to. And in that version of the world where content sales is king, market share means a whole lot.

http://techcrunch.com/2011/02/10/iphone-nano/

[AllenKids]

These kinda rumors are literally a dim a dozen. I'll believe it when I see it.

Of course it is a perfectly valid strategy and Apple successfully implemented just that with its iPod line. Still the timing and implementation are everything. Handset market is clearly more competitive and turbulent, Apple is treading extremely cautiously.

[epistasis]

A "budget" price point phone would be better understood in terms of market segmentation rather than market share; i.e. getting money from people who have a lower maximum price, now that they've gotten money from those who are willing to pay more.

If they wanted market share, they would have just led with the "budget" phone.

[r00fus]

> If they wanted market share, they would have just led with the "budget" phone.

But Apple has a luxury brand, and a "budget" device would detract from that (even the lowly iPod shuffle fills a niche for well-off folks: it's small and sleek).

Budget in this context means pre-paid (as per the last earnings ). And I bet that iPhone will not be compatible with a post-paid plan (or vice-versa)... it will be interesting to see how Apple navigates this as they've been very deft at positioning new products in terms of their existing product lines.

[gonzo]

Tim Cook has made several pointed references lately to the pre-paid market.

[mistermustard]

Apple has consistently claimed the highest share of the mobile phone market's profit without selling the most phones.

Source: http://www.businessinsider.com/apple-smarphone-profits-2011-...

And the quarter before that: http://tech.fortune.cnn.com/2011/01/31/apple-is-still-suckin...

And the quarter before that: http://tech.fortune.cnn.com/2010/09/21/pie-chart-apples-outr...

[MatthewPhillips]

If they want to maintain the same (or better) share of profits they must take market share. Smartphones are only 28% of the total phone market today. That is what the article is talking about; future growth potential.

[Hyena]

That's not true. Expanding market share can mean selling at lower price points, which in turn means lower margins and potentially lower ROI. Moreover, the simple ways around this, like keeping older product lines longer, have risks in the technology sector not present in other areas. There's a lot of incentive to be not more than two models behind on mobile phones, not so much with cars.

[p0ppe]

The profit margin is more important than market share.

Profit = products sold * profit margin. If you have to decrease your profit margin, to increase market share, the total profit might suffer.

[MatthewPhillips]

Why would they have to decrease profit margin?

[mgkimsal]

I don't think the OP was saying that they'd definitely have to do so, but it's typically something companies do to increase market share generally speaking. Reduce price point means reducing profit margin, but often increasing market share because the lower price means more people can buy.

Apple typically hasn't done this (or certainly not to the extent other mfgs do) but certainly still like talking about their increasing market share.

[AndrewDucker]

Because you can now buy an Android phone for less than £100. If Apple want to compete with that they'll have to compromise on both quality and profit margin.

[MatthewPhillips]

Right now Apple is only competing in the high end mid-sized slate smartphone segment. You're pointing out just 1 other smartphone segment that they could compete in, the lower priced segment. There are many ways Apple could compete. They could release 2 or 3 new styles of iPhones while retaining the same price.

[AndrewDucker]

Apple pride themselves on making the iPhone simple, and not fragmented. I can't see how they can do that and still release the iPhones in different styles, unless we're talking nothing more than different covers.

The massive market growth in smartphones is being caused by the smartphone becoming cheaper - if they want more of the market then they have to enter that area.

[watty]

If you really think they don't care about market share and money or being the top dog, you're wrong and they've fooled you. That's their number one concern, they're a business.

[rimantas]

Indeed they are the business. Business means making money not market share. That post misses one small graph: the profit share of Apple in mobile space.

[eftpotrm]

But the reason they're currently able to extract the profit they are from the market is that they've been able to build an aura as the only true 'premium' quality device, in some people's mind I've no doubt the only device of its kind.

That isn't sustainable. Both awareness and quality of competitor devices (primarily Android) is rising, and if unchecked will become a truly serious competitor to Apple. Who are then left with a premium but niche device that's incompatible with the software base of the largest platform and more expensive, and they're left selling look, feel and image over functionality for a premium - otherwise known as the 1990s MacOS strategy.

This leaves them two alternatives:

* Try to remove competitors from the market to protect your position and so margins. This seems to be the current 'patent war' strategy.

* Start trying to compete on volume. Low-end devices to get customers into the iOS ecosystem, price competition on the premium devices. It's working with tablets after all, where the major competitors to the iPad are still baffling me by producing half a netbook's components for twice the cost rather than merely 1.5 times the cost as Apple have. Problem, though, is that the whole market volume strategy increases costs and workloads, decreases margins and starts chipping away at the premium image.

Short answer: I don't see how Apple's current strategy is sustainable in the long-term. If that revenue graph is accurate, I'd be shorting Apple's stock.

[MatthewPhillips]

Are their profit margins growing disproportionate to their market share?

[rimantas]

What does this even mean? Which is better, having 80% of the market and 10% of profits, or having 20% of the market and 50% of the profits?

[MatthewPhillips]

That's the picture today with smartphones accounting for 28% of the total phone market. If Apple's market share doesn't keep up with smartphone adoption their profit % will go down. That's simple math. The notion that Apple doesn't care about market share is absurd.

[wynand]

Right, but we have to limit ourselves to the upper segments of the smart phone market. If we include the cheapo Androids when talking about smart phones then Apple's relative market share may very well drop in the coming years (unless they come up with a lower-end iPhone but even a low-end iPhone would probably not exactly be low-end).

But I agree that they cannot afford to lose ground to HTC, Motorola, LG and Samsung's high-end phones.

[GHFigs]

I don't think you understand the math there. Unless competitors claw their way up to Apple-like margins, market share (or share growth) will decline much faster than profit share will. Even if profit share declines, that doesn't mean that actual profits decline.

[AndrewDucker]

Yes. Because Apple chase the top end of the market, not the middle.

[watty]

Yes, you're right. I was just saying that "not caring about market share" is false, they do care and would certainly be worried if it was shrinking.

[illumin8]

With a market cap of 23.06 billion, Samsung isn't exactly a small company. I think Apple is going after companies where it believes it has a significant chance of winning. Whether you believe software patents are a bad idea or not (I certainly don't like them), Apple has aggressively patented a lot of key features in iOS and it seems that many Android handsets are infringing.

[fpgeek]

  Apple has aggressively patented a lot of key features in iOS 
  and it seems that many Android handsets are infringing.

Seriously? Did you consider spending maybe a few minutes looking at the patents Apple is asserting in these lawsuits before forming your opinion?

To take the current example that drives me nuts, the 2 (of 10) patents Apple asserted against HTC that were "upheld" (air-quotes specifically intended) as part of the initial determination at the ITC are from the 90s (94 and 96, IIRC) years before anything innovative meaningfully related to iOS was a gleam in anyone's eye.

Even better, as asserted by Apple, Hacker News is infringing on one of those "upheld" patents when it turns this text into a clickable link: http://www.google.com

Apple's lawsuits have only an accidental (at best) relationship to any IP that is part of iOS and nothing to do with any key features of iOS whose related IP Android handsets might allegedly be infringing. Instead, Apple rummaged around in their archives to find everything halfway-plausible that they could throw at their Android competitors. It may be understandable business and legal strategy, but it is also deplorable and the patent system needs to be fixed so that it is not exploitable in this way (as well as many others, of course).

[rrrazdan]

Well I think your figure is wrong. Samsung is huge. Samsung Electronics has a market cap of 253 trillion won or 240 billion dollars[1]. The group's 2010 revenue was 201 billion dollars or thrice as much as Apple. They aren't big, they are absolutely huge.

[1]http://thechinesenewsoflasvegas.com/business/market-cap-of-t... [2]http://en.wikipedia.org/wiki/Samsung

[jsnell]

Are you sure their market cap is that low? I find it a very hard number to believe.

[trezor]

Samsung makes eerily close copies of the iPhone

As a former iPhone-owner gone (Samsung) Android I resent that comment. iOS is a one-dimensional, inflexible and locked down platform which bored the hell out of me and this was the primary reason I went over to Android.

Android and Samsung's phone (the Galaxy S, which I have and which they are sueing for) is nothing like the iPhone and every single day I'm very happy for it.

[berberich]

Android the platform might be nothing like iOS, but Ir does appear that Samsung went out of its way to make their phones look like iPhones[1].

[1]: http://thisismynext.com/2011/04/19/apple-sues-samsung-analys...

[MatthewPhillips]

The article is well written but fails to point to any one particular phone that carries all of these iPhone similarities. A customer only buys one phone at a time.

[trezor]

To be fair, they look like any other smartphone which is black and has a touchscreen. Apple cannot be granted a patent on being black. Not even black with rounded corners. That's not how the world works.

And if we dig deeper, behind the PR-piece which Apple seemingly is winning (here on HN at least), lets compare the iPhone to Samsung F700, introduced in 2007, before the iPhone.

http://phandroid.com/2011/04/20/did-apple-really-steal-their...

I mean... It may not be all black and white, but lets not grant Apple a blanket-right to make rounded, glossy things and assume everyone else is stealing from them.

[berberich]

But that's the thing - Apple isn't trying to prevent anyone else from using rounded corners. Apple's claims in that suit are pretty specific, especially if you look at the similarity of the icons.

There are countless ways to represent an idea on an icon. Google, HTC, and others chose to go their own route - For TouchWiz, Samsung copied Apple's icons with slight modifications.

Also, the story about the F700 is inaccurate. SlashGear debunked it, pointing out that it was, in fact, announced after the iPhone was revealed in January 2007[1].

Nilay Patel, an intellectual property lawyer, wrote about the F700 too[2]:

> In many ways, the F700 does nothing but underline Apple’s overall contention: that there are thousands of ways to design and package a phone interface, but Samsung chose drop its differentiated interface and instead lift elements of Apple’s style for TouchWiz. I don’t think anyone would use the F700 interface and think it’s an iPhone, and I don’t think anyone using the iPhone today is thinking about the F700. But do people see TouchWiz and think “oh, that’s an iPhone?” That’s the most important thing when it comes to trade dress and trademark: what brand does the average consumer associate with certain design elements, phrases, and words?

[1]: http://www.slashgear.com/iphone-samsung-f700-prada-phone-rum...

[2]: http://thisismynext.com/2011/04/20/talk-picture-samsung-f700...

[onemoreact]

Umm, those are really not that similar.

IPhone does not have navigation elements at the bottom of the screen. It adds a text description under the elements vs. the top. It includes status information as ribbon across the top and does not plaster their logo on the screen anywhere. Also, none of the icons look similar, their screen is significantly diffrent shapes and even there buttons have different shapes. And most importantly I think the number of people that would confuse the two is tiny.

Not to mention one was released in Febuary and the other with a clearly better interface was released four months later.

[saddino]

Actually, that's exactly how the world works.

Design patents and trade dress protection can indeed protect the look of a product, even a color from use by competitors, e.g. Tiffany's defends its "robin's egg blue" color used to sell jewelry: http://www.scribd.com/doc/102788/tiffany-v-ebay-III

[AllenKids]

Apple certainly thinks very different, and the court will decide, won't it?

[poppysan]

I think they are merely trying to intimidate a competitor...

[AllenKids]

What you think is not important in the court.

I too think these kind of lawsuits are boring as hell, luckily there is a system to sort it out, it may not be perfect, but that's what we've got and a whole lot better than a flamewar.

[poppysan]

I never intended my opinion to be law, just my own view. No flamewar on my side...

[AllenKids]

Oh, I'm not accusing you of that.

It's just how things supposed to be handled, Apple and Samsung are all big boys. We as costumers really should not be bothered with their petty squabble to be honest. Nothing drastic will come out of this case.