Monday, August 27, 2012

Nokia To Microsoft Seen Benefiting From Possible Samsung Ban

By Adam Ewing, Adam Satariano and Hugo Miller - Aug 27, 2012 9:43 AM GMT+0400
Nokia Oyj (NOK1V) and Microsoft Corp. (MSFT), both looking to increase U.S. sales of smartphones, stand to get a much-needed boost as Samsung Electronics Co. (005930)products face a possible ban and phonemakers come under pressure to consider alternatives to Google Inc. (GOOG)’s Android software.
A federal jury awarded Apple Inc. (AAPL) more than $1 billion on Aug. 24, saying Samsung infringed on six of seven patents for mobile devices. U.S. District Judge Lucy Koh will weigh Apple’s request for a ban on U.S. sales of some devices from Samsung, the dominant maker of Android phones, next month. Some Android- equipment makers may turn to platforms such as Microsoft’s Windows 8 to avoid a similar trip to court, said Carolina Milanesi of the research firmGartner Inc. (IT)
Microsoft Corp.'s Office operating software is displayed on a Nokia Lumia 900 smartphone screen at a mobile phone store in Helsinki, Finland. Photographer: Ville Mannikko/Bloomberg
“I am sure that vendors in the Android ecosystem are wondering how long it will be before they become Apple’s target,” Milanesi said in an interview. “This might sway some vendors to look at Windows Phone 8 as an alternative, and for the ones like HTC Corp. (2498) and even Samsung, who have already announced plans to bring to market a WP8 device, how much stronger their investment should be.”
The ruling will allow Apple to defend its intellectual property more vigorously, Bloomberg Industries analyst John Butler said in a report.
BlackBerry maker Research in Motion Ltd. will largely miss an opportunity to benefit because the first of the new BlackBerry 10 phones it’s counting on to win sales won’t arrive until next year’s first quarter, said Horace Dediu, a former analyst for Nokia who now runs mobile-phone industry research firm in Helsinki.

Microsoft Benefits

Microsoft stands to gain the most, Dediu said. The Redmond, Washington-based company has already prevailed in patent disputes with Android user Motorola Mobility, which is owned by Google. Microsoft has won orders that banned U.S. imports of some Motorola devices and limits on sales of some of the company’s products in Germany.
“Microsoft can go in to all these accounts and say, ‘Let us remind you again of the cost of Android,’” Dediu said. “What Microsoft has always had trouble with is getting these vendors to switch.”
Samsung sells dozens of Android phone models, according to its website, compared with three for Microsoft.
Microsoft could also boast it offers legal protection that Google, by giving away Android for free to vendors, hasn’t provided, Dediu said.

Nokia’s Partner

“With Windows phones, you’re protected against IP lawsuits because, if anybody sues, they are going to talk with Microsoft,” he said. “Microsoft can do that because they actually do have their IP pretty well sorted out.”
Nokia decided to become partners with Microsoft last year after jettisoning its aging Symbian platform that had failed to keep up with Apple’s iPhone and Android devices. Nokia’s global mobile-phone market share slumped to 20 percent last quarter from 23 percent a year earlier, according to Gartner. Android’s share among platforms rose 21 percentage points to 64 percent, while Cupertino, California-based Apple’s iOS had 19 percent.
“Right now, for Nokia, it is a case of ‘the more the merrier,’ as the strength of the ecosystem is what they need to get traction with consumers and carriers alike,” said Milanesi, of Stamford, Connecticut-based Gartner.
More important than the Aug. 24 U.S. court ruling is the injunction Judge Koh is considering issuing next month, said Mark Lemley, a professor at Stanford Law School in Stanford,California.

New Lineup

“The real question is whether this is enough to derail the momentum the Android ecosystem has gained in the marketplace,” Lemley said in an e-mail.
The injunction may give other handset makers a welcome boost, said Michael Schroeder, a Helsinki-based analyst at FIM Bank.
“A potential sales ban on Samsung products will create some additional room for Nokia as it is preparing to ship the new lineup of Lumia devices over the next couple of months,” Schroeder said.
Nokia shares have dropped 34 percent in Helsinki this year. Suwon, South-Korea-based Samsung rose 21 percent in its home market before the U.S. court ruling, while Apple, the biggest smartphone makers, jumped 64 percent.
Nokia continues to focus on expanding the entire Windows Phone system, said Susan Sheehan, a Nokia spokeswoman, declining to comment on the Samsung ruling.

Elop’s Bet

Last quarter Nokia sold 600,000 handsets in North America, little changed from the previous period even after introducing the flagship Lumia 900 in April at AT&T Inc. Apple sold 5.9 million iPhones, which then-CEO Steve Jobs introduced in 2007, in the U.S. in the quarter, according toStrategy Analytics. Microsoft’s mobile platform gained speed, winning 2.7 percent of global sales compared with 1.6 percent a year earlier, Gartner said.
Nokia is set to show its new Lumia smartphones running Microsoft’s Windows Phone 8 software on Sept. 5. Stephen Elop, the former Microsoft executive who was brought aboard in 2010 to revive Nokia, is now betting that a wave of advertising spending by Microsoft to push the new Windows 8 operating system will help accelerate demand for Lumia.
Tara Walberg of New York-based public relations firm Waggener Edstrom Worldwide, speaking on behalf of Microsoft, declined to comment.

RIM’s Decline

While RIM is fighting a similar battle to regain lost market share with a new platform, it is months behind Nokia. RIM’s take of global smartphone platforms fell to 5.2 percent last quarter from 12 percent a year earlier. The first two new models of BlackBerry 10 devices -- a touchscreen and a traditional Qwerty keyboard version -- won’t be out until early next year, well after the iPhone 5, expected out next month.
RIM’s sales fell 43 percent last quarter as its aging lineup of devices failed to excite buyers. Chief Executive Officer Thorsten Heins said earlier this month that the new BlackBerry 10 platform will soon be ready to license to other manufacturers, even as his company races to release its own handsets with the software early next year.
Waterloo, Ontario-based RIM has no comment on the case, said Amy Jones, a company spokeswoman.

Samsung Damage

Asymco’s Dediu said RIM doesn’t stand to benefit in the same way because it won’t have a new competitive product until next year. RIM’s stock has fallen 76 percent in the past 12 months and is 95 percent off its 2008 high.
“RIM is not competitive,” Dediu said. “RIM’s story will be more next year if they are able to recover.’
The lasting damage may ultimately be to Samsung, not Google, because the judge ruled the infringements had less to do with the Android operating system and were more related to imitating the iPhone’s design, said Edward Snyder, an analyst at Charter Equity Research (MFSEEA1) in San Francisco.
‘‘Apparently, they lifted too much of the look and feel from iPhone, but I don’t believe it has much to do with the Android OS, and even if it did, I doubt Google would have much trouble designing around it,” Snyder said. “We’re unlikely to see a big push to Windows because of this.”
To contact the reporters on this story: Adam Ewing in Stockholm at; Adam Satariano in San Francisco at
Hugo Miller in Toronto
To contact the editor responsible for this story: Kenneth Wong at

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