Analyst says Apple to extract high royalty rates from HTC, but he misses the point

Tue, Jul 19, 2011


Well, you can’t expect analysts to know everything – and in some cases anything at all. Mike Abramsky from RBC Capital Markets falls somewhere in the middle I suppose. Recently, Abramsky issued a note to investors writing that Apple’s ITC victory over HTC last week regarding two patent claims may set a high bar for Android-based royalt rates.

Ambramsky writes that Apple will try and seek a high royalty settlement on Android devices and that Apple may be able to elicit an even more profitable agreement that the one Microsoft struck with HTC a few months back whereby the handset maker agreed to pay Microsoft approximately $5 per Android device.

AI writes:

By establishing such a high precedent, Apple’s hypothetical licensing fees could constrain other, larger Android device makers like Motorola and Samsung. Those companies are up to 15 times larger, and they have much deeper intellectual property portfolios.

Apple, though, isn’t Microsoft. They’re not looking to extract a licensing agreement for Android based handsets, they want to stop Android from growing. It’s no secret that Android is growing by leaps and bounds, with Google CEO Larry Page stating last week that there are over 500,000 Android activations per day. Apple’s iOS platform may still reign supreme, but Android is serious competition and getting a few bucks per Android handset may help Apple’s bottom line, but Apple’s real goal is to use its patent portfolio to stymie the growth of Android.



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