Apple has offered a patent licensing deal to Motorola and Samsung

This is an interesting turn of events. Apple has offered patent licensing deals to Motorola and Samsung, ‘people familiar with the matter’ have told Dow Jones.

This is something that has seemed impossible so far, as Apple has pursued a strategy based not on licensing its patents, but trying to get injunctions to stop the sales of Android devices made by the many manufacturers it has sued recently. Steve Jobs himself once vowed to “spend every penny” of Apple’s money to “destroy Android, because it’s a stolen product”. That “thermonuclear war” proposed by Apple’s founder seems to have turned into something much more tame nowdays.

Apple has apparently asked for $5 to $15 per handset for some of its patents in one negotiation, or about 1% to 2.5% of net sales per device. It’s unclear if settlement talks are currently taking place between Apple, on one side, and Motorola or Samsung, on the other. Apple had talked to Samsung about licensing its patents before litigating, at least in one case. However, talks broke down when the Korean company launched the Galaxy Tab.

Samsung (especially) and Motorola are probably the two most sued companies by Apple, the former undoubtedly thanks to its success in the Android space, and the latter perhaps more for its US market share and brand recognition (and now the fact that it’s being acquired by Google). So in a way it makes sense for Apple to offer patent licensing to these two companies at first.

Strangely though, another person familiar with the matter said that despite these offers made to Motorola and Samsung, Apple isn’t looking to create a royalty business or offer patent licenses to all its competitors.

Still, this is significant. If Apple is indeed willing to license its patents to Android makers (even just two of them), it will join Microsoft in a very lucrative business, but will abandon Steve Jobs’ dream of making Android go away. If we’re honest (and mature), that was never going to happen anyway.

So why is Apple doing this? That’s anyone guess, but it may have something to do with the fact that its victories in court so far over Android have been very limited in scope. And especially with software features, changes can be made very quickly that will result in ceasing infringement. Samsung proved in Germany with the Galaxy Tab 10.1N that even minor hardware revisions are possible in a short time frame and without horrible consequences sales-wise.

Licensing, however, especially at $15 per device, adds a significant cost to making Android gadgets (since the OS itself is free) and, together with Microsoft’s royalties, could price Android phones out of the low-end segment. Ironically though, neither Microsoft nor Apple have anything to offer in that exact price range to benefit from the added cost to Android (except for cheap older devices in just some markets in Apple’s case). Maybe that will change in the future.

Author: Vlad Bobleanta

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