Port of Seattle

Last week the AT&T HTC One X and Sprint EVO 4G LTE were delayed at U.S. customs following an International Trade Commission exclusion order and subsequent review that Apple won against the Taiwanese company, banning them due to infringement on a specific aspect of an Apple patent wherein linked phone numbers would open an options menu. HTC in December said it already had a workaround, and sure enough it's present in the One X and EVO 4G LTE.

But this customs delay caused HTC to miss its launch date for the EVO 4G LTE at Sprint, and has caused AT&T to show an out-of-stock message on the One X. HTC stock was smacked by nearly 6 percent by the end of last week. And now that U.S. Customs has cleared the EVO 4G LTE, the market obviously feels comfortable with the idea that HTC has skirted this particular patent issue. The stock already has recovered from last week’s punishment. [HTC Corp at Google Finance]

But we really should be taking a long-term view of this situation. Similar to our friends from Waterloo who sell BlackBerry, HTC has been struggling in the U.S. market lately. Samsung quickly has become the top selling phone vendor on the planet.  And according to Gartner’s latest numbers, Samsung sells more than four times  the number of Android phones versus its closest competitor. 

So HTC really needs a comeback in the U.S. market. And that’s why a delay by International Trade Commission hurt as much as it did. Having just come home from a Canadian long weekend up in cottage country, these short term delays at U.S. customs remind me more of mosquito bites rather than bullet wounds. They’re irritating, but not deadly. They heal quickly and we forget about them.

But there’s no denying that Apple is putting some serious pressure on Android. Giving credit where credit is due, Apple single-handedly reinvented the user experience on a mobile phone. Android, BlackBerry, and others have copied Apple. 

Steve Jobs made no secrets about how he felt about this. I’m not saying that Apple never copied anyone either ... obviously it has.  But, unfortunately, that doesn’t matter. Patent law doesn’t care whether the plaintiff has infringed other IP in the past. 

The way I see it, Android vendors are exposed to future IP litigation by Apple. These first customs problems are the mosquito bites. But are the bullets still coming? And what are HTC, Samsung, and even the mighty Google doing to sidestep these bullets through future software redesign? 

HTC’s problems also go way beyond patent litigation. The company’s stock price has fallen from about 2,500 Taiwan dollars last April down to nearly 400 Taiwan dollars today. That kind of collapse is on the order of what happened to RIM.  But in the case of HTC, it's fighting purely on hardware. It doesn't own a platform like Apple or RIM. It doesn't have the supply chain strength to compete against Samsung. And to me, these are bigger issues than patent litigation.