The smartphone industry is a fast-evolving and fiercely competitive market. Smartphones are constantly advertising sophisticated innovations that consumers factor when making their purchase decisions. In an industry where consumer marketing is the key to success, these innovations drive sales as companies compete for customers’ loyalty. Not only can the competitive landscape change drastically, but companies can also earn a lot of revenue in a relatively short period of time. For example, in July 2011, Apple, one of the best-known developers and marketers of smartphones, was estimated to have more cash than the U.S. Treasury and recently RIM has been rapidly losing marketshare in the smartphone industry. Development of innovative designs and features appears to be the key to competitive success. Protecting those innovations from copying and forcing the competition to alter their products’ plans ultimately benefits consumers and maintains a company’s market advantage.
Patents as a Strategic Business Tool
With a lot of money at stake and an intensely competitive marketplace, companies are recognizing the value of patents and are securing competitive advantage through intellectual property. And companies are no longer just using their intellectual property portfolios to protect their turf through lawsuits and cross-licensing deals with competitors they are also using patents as standalone sources of revenue. Companies such as IBM, Interdigital, and Qualcomm are heavily licensing their patents. IBM earns an estimated $1 billion a year in licensing its patents. Microsoft earned an estimated $792 million in one quarter of 2012 from licensing its patents to phone manufacturers that operate on the Android system, about five times more income than it earned from Windows phones, according to reports.
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