Apple considered developing a car or a camera after seeing the iPod’s success, and in early 2011 one of its top executives recommended making a 7-inch iPad, Friday’s testimony and documents revealed in the company’s patent suit against Samsung.
Those were two highlights of a long day of verbal jousting between lawyers for the two companies, each of which accuses the other of violating its patents. Apple called two of its best-known executives, marketing chief Phil Schiller and software guru Scott Forstall, to the stand on Friday. It also questioned Justin Denison, the chief strategist for Samsung’s U.S. arm, Samsung Telecommunications America.
Both companies defended themselves against accusations that they copied designs and software features from rivals’ products, and both emphasized how much they invest in distinguishing their brands and products. Apple has spent about $1.1 billion on advertising for the iPhone and iPad since the launch of its first iPhone in 2007, and Samsung said it spends about $1 billion per year marketing its brand.
7-inch iPad?
Part of Samsung’s strategy to defuse Apple’s charges of copying is to argue that it’s no crime to be inspired by a competitor’s product and that Apple does the same. To that end, Samsung lawyer Kevin Johnson questioned Forstall about a Jan. 24, 2011 email from Eddy Cue, head of Apple’s iTunes business, in which he advocated building a smaller iPad. In the email, Cue cited an article by a writer who criticized the iPad for its size and praised the 7-inch Samsung Galaxy Tab.
“I believe there will be a 7” market and we should do one. I expressed this to (CEO) Steve (Jobs) several times since Thanksgiving and he seemed very receptive the last time,” Cue wrote in the email to Forstall, Schiller and Tim Cook, then Apple’s chief operating officer.
But attempts by Johnson to draw out details regarding the upcoming iPhone 5 were dashed when he questioned Schiller. Johnson, making the point that Apple changes the design of the iPhone nearly every year, asked Schiller whether the design would change once again with the iPhone 5. Apple’s legal team objected to the question. Judge Lucy Koh let Johnson ask, but Schiller said he preferred not to comment on possible future products.
An Apple car?
The testimony by Schiller and Forstall provided other glimpses into Apple’s internal workings. Schiller, who is senior vice president of worldwide product marketing, said the success of the iPod persuaded Apple that it could be more than a computer company. A flood of proposals came up for new types of Apple products, including a car and a camera. (Apple had previously sold an early digital camera, the QuickTake, in the 1990s.)
Schiller also revealed a few bits of Apple marketing magic that may or may not surprise close watchers of the company.
In the first weeks after the iPhone’s introduction, Apple’s marketing department lay low because of the massive press coverage the new product received. “We didn’t need to do other marketing,” he said.
Apple’s ads are built around a theory called “product as hero,” which says the product itself should dominate the ad, Schiller said. He also said the company strives to create a “lust factor” that draws consumers to a product’s looks.
Forstall, senior vice president of iOS, recalled the challenges of developing the original iPhone. Apple first started working on the iPad in 2003 as an alternative to a cheaply made laptop, which it didn’t want to build, he said. In 2004, it shifted that work to the phone platform because it saw a chance to transform a huge industry.
Jobs instructed Forstall, who had worked for him since joining NeXT Computer in 1992, to form the user-interface team for the iPhone without hiring anyone from outside Apple.
The “Purple Project”
Forstall had to recruit employees without telling them what project they were signing up for or who they would be working for, but that they would have to give up their nights and weekends for a couple of years. The iPhone work was called the “Purple Project” and took place in a highly secure workspace on Apple’s Cupertino, California, campus called the “Purple Building.”
“It was very much like a dorm. People were there all the time,” Forstall said. A sign at the entrance said, “Fight Club,” because the Purple Building borrowed its cardinal rule from the movie of the same name, he said. The first rule of the movie’s Fight Club was to never talk about the Fight Club.
But both Apple executives emphasized the risks the company took by building and introducing the iPhone and iPad. The company hopes to paint Samsung as ripping off Apple’s big investments in the products. Apple postponed other products in order to build the team that would develop the iPhone, with no guarantee that the product would succeed, Forstall said.
After Samsung cross examined Forstall about whether Apple had borrowed ideas from Samsung, Apple’s legal team asked him whether he had copied that company’s phones.
“I never directed anyone to go and copy anything from Samsung,” Forstall said. “We wanted to build something great … and so there was no reason to look at something they’d done.”
Apple attorney Bill Lee questioned Samsung’s Denison about what it called internal Samsung analyses of the iPhone. One such analysis included the recommendation, “Remove a feeling that iPhone’s menu icons are copied by differentiating designs.”
“Sustainable advantage”
Denison said Samsung’s strategy is to gain “a sustainable advantage” in the market using core competencies that its rivals don’t have. If Samsung copied rivals products, “that would not represent a sustainable advantage,” Denison said.
The dueling lawyers and Judge Koh also continued to wrestle over the large volume of objections and motions for reconsideration coming from both sides in the case. Early in the day, Koh had ordered the companies to deliver all their objections in front of the jury, using up the time they have allotted for arguing their cases. In a conference following Friday’s testimony, Koh said she would allow lawyers to submit two objections per witness on paper.
The case is 11-01846, Apple v. Samsung Electronics, in the U.S. District Court for the Northern District of California.