Apple and Android are in open war. Google Executive Chairman Eric Schmidt is throwing broadsides about how Apple is "suing instead of innovating" while Apple rejoices in its International Trade Commission patent win over Android phone maker HTC, which has vowed to appeal. Could this in fact lead to the banning of HTC's products or Android's collapse in the market? I don't think so, based on the outcome of similar patent fights in the past.
We've seen this happen before, after all. In 2007, a fight between Qualcomm and Broadcom led to the ITC actually banning the import of Qualcomm 3G chips. At the time, I joined the masses in going somewhat hysterical: what would this mean for Verizon, a major Qualcomm customer? Would this be doom for Qualcomm?
Of course it wasn't. The two companies came to a settlement, Qualcomm continued to be a highly successful chipmaker with a dominant position, and Verizon customers never noticed.
Qualcomm and Nokia had a number of spats involving the ITC, back when Nokia was undisputed as the world's largest mobile phone maker. In this case, there was a market effect: Nokia's distaste for Qualcomm was one of the factors leading to Nokia's abandonment of CDMA. But those two companies also came to a settlement in 2008, complete with a 15-year cross-licensing agreement.
Cross-licensing is one of the answers here. HTC recently bought a company called S3 Graphics for $300 million, and Apple has been found to be in violation of two S3 patents. HTC also says it has workarounds for the technologies Apple patented, according to an official HTC statement quoted by Slashgear.
For Apple and HTC not to settle, you have to believe that Apple is some sort of irrational actor, a North Korea of the tech world with a scorched-earth policy against its competition. I just can't see that. Apple is a business, just like any other U.S. tech firm. The two companies will settle, money will change hands (or not, based on the value of those S3 patents and the efficacy of HTC's workarounds) and life will go on.
There are also stories going around, driven by a Chinese newspaper, the 21st Century Business Herald, that Chinese firms Huawei and ZTE may be replacing Android with Windows Phone Mango. I was at both Huawei's and ZTE's headquarters a few weeks ago, talking with execs up to and including ZTE USA CEO Lixin Cheng, and they confirmed that both companies have been working on Windows Phone 7 for quite some time.
OEMs don't want to have all their eggs in one basket—at least, in one basket that they don't control. As much as Huawei and ZTE like the flexibility of Android, having Windows Phone available gives them some negotiating power with both Google and Microsoft, as well as less exposure to any problems one or the other partner might have.
The cascade of patent lawsuits on Android manufacturers, and on Google, may still make Android phones more expensive to produce. HTC reportedly pays Microsoft licensing fees for patents involved in Android, and Microsoft has been demanding royalties from other OEMs, including Samsung.
This could negate Android's cost advantage over Windows Phone, but Android still has the flexibility advantage: it's the only mobile OS that manufacturers and carriers can bend, twist, and shape to their needs. That's a big deal. I've seen some people claim that Android's troubles will boost Intel's struggling MeeGo, but MeeGo has almost no ecosystem right now, so I find that hard to believe.
This HTC/Apple battle should definitely concern anyone interested in profit share or stock prices. If Apple gains the upper hand, that will make HTC a marginally less profitable company. But it shouldn't reduce the number of Android models seen on U.S. store shelves.
CORRECTION: This article initially misidentified Eric Schmidt's title as Google CEO. Schmidt is of course the company's executive chairman.