Apple has sued Samsung for patent infringement, claiming that Samsung’s Galaxy devices rip off patented Apple technology and design. We all know how this will likely end up: Samsung will dust off a half dozen of its own patents and countersue, money may or may not change hands, and the whole thing will be over before it started. Aggressive defense of IP is nothing new. What’s much more interesting is the dangerously interdependent relationship between Apple and Samsung that’s developed over the last six years.
The Apple-Samsung partnership heated up in 2005, when news of a huge NAND flash memory deal surfaced before we met the first iPod nano. Back then, nobody realized exactly what Apple was up to. In retrospect, though, it’s obvious why Apple was locking up flash reserves: to sell not just a lot of nanos and shuffles, but a lot of iPhones.
A lot has changed since 2005. iOS has gone from a rumor to more than two-thirds of quarterly revenue. Android has emerged as its biggest rival, with Samsung as a prominent OEM. One of Apple’s biggest suppliers is in bed with Google — big time — and Apple can’t be happy about that.
It’s easy to look at Microsoft Office or Maps.app and say that Apple has cooperated with rivals before, but this is different. Apple gives Samsung a lot of money. More big orders are pending, and multiple product lines are now involved. It’s one thing to work with a competitor; it’s something else entirely to finance one.
Why not just walk, then? Because severing all ties would be bad business. The Samsung partnership is established and lucrative. You don’t just throw that away without at least trying to leverage it first.
Does Apple have leverage, though? Memory and displays are certainly easier to find in 2011 than they were in 2005; the hot commodity of late seems to be touch panels. At the same time, Android activations are off the charts, and Samsung has had customers waiting in line for its chips more than once. It’s hard to say who needs who more at this point.
Maybe Apple is flexing its muscles. Maybe Samsung has told Apple it would rather sell at a premium to hungry Android makers, or build its own devices, than maintain Apple’s likely-steep volume discounts. Either way, this lawsuit feels like the latest move in an escalating game of chicken between both companies.