updated 12:25 pm EST, Wed March 3, 2010
Aimed at undermining rivals in multi-touch, UI
The Apple patent lawsuit filed against HTC could take a long time to resolve, analysts argue. Needham's Charlie Wolf suggests that it could be a "long and bloody battle," in part because Apple has surrounded the iPhone with a "patent moat" meant to be difficult or impossible to cross. "Apple invested heavily and imaginatively in designing a unique, disruptive smartphone," adds Wolf. "In our view, the company has every right to protect the iPhone's unique features."
Kaufman analyst Shaw Wu remarks that the lawsuit could take "years," although Apple has millions to spend on the prospect if it wants to enforce its will. The eventual outcome is predicted to be an out-of-court settlement, in which HTC will be forced to remove features from its phones and/or pay licensing fees to Apple. HTC and other companies will have to work on alternatives, says Wu.
Both analysts point out that the lawsuit implicates other phone makers and designers, such as Nokia, Motorola, LG, Samsung and Google. Wu adds that Apple is likely motivated by the recent arrival of multi-touch on Google and HTC phones, which eliminates one of the reasons for buyers to prefer an iPhone. The HTC lawsuit may ultimately represent both a direct and a proxy conflict.
Risks of the lawsuit are said to include a negative affect on Apple shares, although dips could represent a buying opportunity for investors. Wolf observes that while Apple should have a "better than a 50-50 chance" to win its case, iPhone sales could start to slip in 2011 and subsequent years if accusations are defeated. Neither analyst has altered their financial forecasts.