Apple, HTC Settlement Could Provide Blueprint for Future Deals

Apple’s iPhone franchise is at the center of the company’s many patent-infringement battles.

Apple and HTC have announced an end to their intellectual-property litigation, with both parties agreeing to a decade-long cross licensing agreement. As typical with deals of this type, financial terms went undisclosed. Nonetheless, at least one analyst is offering a viable estimate of how much Apple could earn over that period.

“From our conversations with industry sources, we estimate the net licensing fee to [Apple] to be in the $6-$8 per phone range which means about $180-280 million in annual revenue given the 30-35 million Android smart phones HTC will likely ship in 2013,” Sterne Agee analyst Shaw Wu wrote in a Nov. 12 research note. “But to put this in context, this compares to press reports indicating HTC pays [Microsoft] $5 per phone running Android.”

The agreement between HTC and Apple apparently covers current and future patents, and includes the dismissal of all current lawsuits. Official statements from the two companies’ respective CEOs were quite curt.

“We are glad to have reached a settlement with HTC,” Apple CEO Tim Cook wrote. “We will continue to stay laser focused on product innovation.”

“HTC is pleased to have resolved its dispute with Apple,” HTC CEO Peter Chou offered, “so HTC can focus on innovation instead of litigation.”

(It’s extra amusing if you picture each of those executives reading their respective statements aloud through gritted teeth.)

As Wu points out, HTC paying Apple anywhere from $180 million to $280 million is “immaterial” to Apple’s total revenue base and net income, which total in the tens of billions. That being said, the victory could give Apple some momentum in its continuing legal battles with the rest of the Android ecosystem, most notably Samsung. Apple executives could be looking to Microsoft as an example of how to best fight that war, given how the latter has managed to sign Android manufacturers big and small into licensing deals.

“With both Samsung and Motorola (which is owned by [Google]), still under litigation with [Apple],” Wu wrote, “the big question is whether they are closer to a settlement? We think the answer is yes and the terms set with HTC could at least provide a blueprint.”

Even as Apple settles its lawsuits with HTC, there are indications that its battle with Samsung, arguably its toughest Android opponent, is potentially escalating to a whole new level: a new report from MarketWatch indicates that Samsung is raising the prices of the mobile processors it supplies to Apple by 20 percent.


Image: Apple

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