Posts tagged apple

Patent Lawsuit: Apple, Samsung and the Prisoner’s Dilemma

Apple vs. Samsung in a Patent War

CNET News 1: “Apple vs. Samsung: 50 suits, 10 countries – and counting”

CNET News 2: “Samsung, Apple CEOs meet without coming to agreement?”

Meritz Investment Bank (Korean): PDF File

A hostile patent litigation between Apple and Samsung started ever since Apple accused Samsung of copying its designs for smartphones and tablet PCs. In response, Samsung dodged back with patent lawsuits concerning the mobile technology. According to CNET News, this litigation chaos augmented into 50 lawsuits against each other in 10 different countries. Apple became wary of Samsung’s ever-increasing market share of the smartphones and tablet PCs.

A smartphone or a tablet PC market can be said to be an oligopoly. There is only a handful of firms offering the product: Apple, Samsung, HTC, Sony, and so on. It is definitely different from a PC components market where there are lots of firms providing the identical product.

As Samsung’s market power is increasing in both the smartphone and the tablet PC market, Apple has opened a Pandora’s Box by filing a lawsuit against Samsung, as it was mentioned above. This has triggered the problem of Prisoner’s Dilemma, of which the ‘players’ in a ‘game’ are forced to choose the option that makes both of them worse off. In this case, the ‘players’ are Apple and Samsung, and the ‘game’ they are playing is the chicken game of patent litigations.

Table based on Game Theory: Prisoner’s Dilemma

This table illustrates the situation that Apple and Samsung is facing. According to the table, whatever the opponent chooses to do, the best option for a player is to file a lawsuit against the opponent. For example, for Samsung, it is the best option for it to file a lawsuit against Apple because the best-case scenario is that it will possibly kick Apple out of the market. The worst-case scenario is that both Samsung and Apple will possibly be kicked out of the market. However, this case is better than Samsung being kicked out of the market while Apple stays in the market with the market gain, in the point of view of Samsung. The reason behind choosing to file a lawsuit is the same for Apple.

As a result, they reach a Nash equilibrium, in which both of them file a lawsuit against each other, making them worse off. The patent lawsuit can be seen as a deadweight loss that is ‘wasted’ in a litigious process. Some people argue that the only people gaining from this situation are the lawyers. Consumers are the ultimate victims of this patent war because the ligation burdens are passed through higher prices for the products Apple and Samsung produce.

However, it should be noted that this ‘game’ of patent lawsuits is repeated numerously, 50 lawsuits as it was mentioned. Meritz Investment Bank’s analyst Lee Secheol anticipated in April that Apple and Samsung would stop and reconcile with each other as the ‘game’ is repeated. He anticipated that both firms would realize that this situation is making them worse off and that they would sit down at the negotiating table.

According to CNET News, CEOs of Apple and Samsung did have a meeting. However, they have never came up with an agreement. The fact that they had a meeting to reconcile showed that both of them realized they were in a situation of prisoner’s dilemma. However, their disagreement over withdrawing from a patent war also showed that this issue has become somewhat emotional, which makes it beyond the problem of prisoner’s dilemma.

Consumers should realize that this is not only doing harm to both the companies but also doing harm to themselves. This patent war will inevitably lead to an increase in the prices of products that Apple and Samsung produce and will significantly limit the number of choices that consumers can make if one of them are kicked out of the market as a result of a lawsuit. Also, the products they purchase may be limited in functions or features due to the patent constraints.

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All-iPad Classroom, Is it educational?

An interactive textbook running on iPad

Oregon Live: News Article

The success of iPad and other tablet PCs has brought about the prospect of a classroom with interactive tablet textbooks. As soon as Steve Jobs introduced an iPad, everyone went frenzy about how it will ‘reshape the future’ of every aspect of our lives. It is true that Apple’s innovation has brought about changes in our daily life. For example, now nearly everyone has a smartphone and it has led to a huge success in social networking services and etc. Therefore, it is valid to expect for some changes in educational environment.

The educational market for digital, interactive, tablet textbooks will certainly be a big market for many electronics companies such as Apple or Samsung. Many schools, especially international schools, are looking forward to invest a lot of money in IT concerning their students’ education. Also, if a school buys a product from one company, it is highly likely that the school will continue to buy the same product from the same company. This is what Apple has been doing for years. Apple affiliated with school teachers and sold their products with discounted prices. This strategy has proven valid for Apple. Now, many students have apple laptops and it is likely that they’ll stick to it for years. For the same reason, many electronics companies making tablet PCs are keeping their eye on this new arising market for interactive tablet-textbooks.

It will certainly be a big market for many electronics companies, however, is it for the best for the students? Is it really educational? In my opinion, I don’t think this is the case.

Of course, these tablet textbooks have some benefits. It’s light, and you don’t have to carry all those heavy textbooks. Along with that it is interactive in a sense that you could actively apply what you have learned through internet.

However, all these benefits are in vain if the students do not have self-control over their tablets. In most cases, students will likely to be playing Angry Birds or some racing games on a tablet rather than studying from it. I’ve had experience with laptop classroom environment, and most of the time, many of my friends were on Facebook. If students keep playing games or chatting on Facebook, these tablet textbooks will be a waste of money and time.

In addition, I have read from some news articles that giving tablets to children under age of five will inhibit their psychological development, as well as their linguistic skills. It is just a form of a high-tech bad parenting that will spoil your kid.

In conclusion, I do not think the tablet textbooks will be educational for most of the students unless they learn how to gain self-control over them. However, I do think that for responsible students, this will be a great resource for his or her education. It is kind of like a double-edged sword that could be either beneficial or detrimental.

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In what type of market are iPods categorized in?

Read the article: tutor2u: Q&A: In what type of…

ipod-nano-color-palette_large

There is a controversy over whether iPods belong to monopoly market or not. Those people who say that it is not in the monopoly market categorized iPods as oligopoly market.

The arguments in favor of categorizing iPods as monopoly:

  • It dominates with the market share of more than 80 percent.
  • Apple built up ‘vertical monopoly’ by introducing generations of iPods.
  • DRM had appealed music industries to sell there products through iTunes, which strengthened this ‘vertical monopoly.’

The following points are arguments in favor of categorizing iPods as oligopoly market:

  • There are intense price competition.
  • Heavy investment on research and development.
  • Non-price competition.
  • Patented technologies.
  • Consistently creating new application.

In my opinion, iPods are in monopoly market. The arguments made in the oligopoly categorization are correct, however, I think that they’re just smart moves of Apple to dismantle the image of monopoly on their market.

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