Apple and HTC announced that they had inked a joint licensing agreement that will see the companies put an end to their patent wars and financially compensate each other for any technologies they use over the next 10 years.
Neither Apple nor HTC announced the financial terms of the deal, but one analyst, Shaw Wu from Sterne Agee, says that Apple will likely come out ahead in the agreement by earning $280 million in licensing next year alone.
Despite the obvious benefit to both parties—Apple wins some more cash and HTC gets out of costly lawsuits—the agreement could play a role in the way the mobile market behaves in the next year. Samsung might be more willing to accept a deal with Apple. Motorola might find a way out of its many lawsuits. Android and iOS might even find a way to play nice together. Simply put, the Apple-HTC deal opens a world of possibilities for every company across the mobile space.
Here is how Apple’s HTC settlement could impact the mobile market:
1. Will more settlements arise?
There seems to be a good chance that the Apple-HTC deal could lead to more settlements in the mobile market. In fact, Sterne Agee analyst Shaw Wu said that the Apple-HTC deal could become the “blueprint” for similar agreements between Apple, Samsung and Motorola.
2. HTC can do what it wants
HTC will have more freedom of action in the mobile space. Previously, the company was criticized for delivering products that were rather boring and run-of-the-mill. Now, by licensing Apple’s patents, HTC has more flexibility in what features and technologies it can build into its mobile devices and include them in its products. Look for HTC to vastly improve its devices.
3. HTC’s business issues will continue
The Apple deal is not the panacea that some HTC investors might be hoping for. HTC is still in deep trouble. The company is a decidedly second-tier smartphone maker and largely ignored by customers around the world. According to Wu, HTC could sell 28 million to 30 million smartphones next year. During the third quarter, Apple sold 26.9 million iPhones worldwide. That’s a vast difference that HTC won’t be able to make up any time soon.
4. A first step toward more innovation?
Patent lawsuits stifle innovation. No matter what Apple says, the lawsuits force device manufacturers to build products not based on what makes the best product at the right price, but how to design a product that reduces the chances of a patent lawsuit. That hurts consumers as much as the producers. This settlement could encourage other mobile device makers to pursue settlements that will bring an end to innovation-killing lawsuits.