Apple-vSamsung-schillerEvidence presented by Samsung

Apple SVP of Marketing Phil Schiller took the stand again today in the Samsung Patent Trial v2. Schiller was grilled on a number of emails Samsung came up with in discovery that painted Apple as paranoid about the rise of Android and Samsung’s Galaxy line in particular. CNET covered one such email where Schiller seemed concerned with the quality of Samsung’s Superbowl ad campaign:

After watching one Samsung pre-Super Bowl ad Schiller wrote an email to Vincent, commenting on the ad. “It’s pretty good and I cant help but think “these guys are feeling it” (like an athlete who can’t miss because they are in the zone) while we struggle to nail a compelling brief on iPhone,” Schiller wrote in an email, presented in court on Friday. He added: “Something drastic has to change. Fast.”

The concern was apparently so strong that Schiller wrote an email to CEO Tim Cook contemplating firing its dedicated marketing agency Media Arts Lab (MAL), a subsidiary of TBWA Chiat Day which itself is a subsidiary of Omnicom. Steve Jobs brought in Lee Clow at Chiat Day to create the Think Different campaign when Apple was teetering on bankruptcy in 1997 and the agency has been Apple’s only outside ad team ever since. In 2013, Apple’s “Designed by Apple in California,” was its first new branded ad campaign since 1997. Samsung positioned that campaign as a response to its Android threat…

Re/code notes other emails regarding Samsung and other Android players outspending Apple in marketing and carrier channels to gain traction.

“Competitors have drastically improved their hardware and in some cases their ecosystems,” a member of Apple’s sales team wrote in a document that was prepared as part of a fiscal 2014 offsite meeting. Portions of the document were shown Friday to the jury in the Apple-Samsung case. The document, which was presented as part of Samsung’s cross-examination of Apple Senior VP Phil Schiller, noted that all the growth in smartphones was coming either from large-screen devices costing more than $300 or from devices that cost less than $300, with the segment that included the iPhone showing decline. Other concerns noted in the document included the idea that Android rivals were “spending ‘obscene’ amounts of money on advertising and/or carrier channel to gain traction” and that mobile carriers had an interest in limiting iPhone sales because of, among other things, the high subsidies they had to pay on the device.

Schiller said he didn’t agree with the assessment which was made by lower level sales execs within Apple. Apple did however eventually lower the price on some of its phones and is expected to unveil a much bigger iPhone 6 in the fall.

Following Schiller, one of Apple’s iPhone Engineers, Greg Christie testified, reiterating many of the details of the genesis of the iPhone which Apple had previously detailed to the WSJ (including the room where the first meetings were held).

The trial is expected to last the entire month with each company getting 25 hours of arguments followed by jury deliberations. The Apple v. Samsung trial will continue next week.

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22 Responses to “Phil Schiller testimony reveals Android marketshare threat and concerns Media Arts Lab wasn’t matching Samsung ads”

  1. Len Williams says:

    So how is this news? Schiller is concerned that Samsung (using a lot of purloined ideas and technology) was gaining momentum and advertising its butt off to “gain traction.” Schiller was right to be concerned. I fail to see how this is any help to Samsung’s or Apple’s case. Clarifications? If you put out a piece like this, please try to make it make sense and have a point. Samsung stepped up to the plate and started manufacturing phones that were better than the average plastic schlock, which made Schiller concerned… and… what?

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    • Tom McLernon says:

      Can’t See? Why? Apple realized that it could not beat Samsung in the marketplace, so it resorted to suing. Lets see what crappy “prior art” patents we can pull up and then sue, and get the Samsung patents banned. Samsung is proving that this is about a “business strategy” to monopolize through court action. Then the books monopoly thing will come up as just another piece of evidence that the Apple “business strategy” is anti-competitive, anti-trust and monopolistic. Don’t do any R&D just intimidate the competition, intimidate the DOJ and attempt to scare the competitions customers. See Now?

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      • rlowhit says:

        Or you go to a firm to manufacturer your invention. They make your units and you enjoy brisk sales. Then you find out the manufacturer also made their version that is nearly identical to your invention shorty after delivering your units. And the manufacturer spends huge amounts of money to show their product is better than yours. By your line of thinking you should not go after the company that you used to manufacture your product because that would be unfair and monopolistic.

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      • Tallest Skil says:

        Shut up and go away, you useless, pathetic imbecile.

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    • Samsung is making the argument that yes, they copied Apple’s patents, but the patents aren’t that important. Samsung could have easily found work arounds. And even so, the patents in question aren’t so vital that Samsung was gaining market share off them. In other words, Apple may deserve $100 million, but it doesn’t deserve $2B. Apple is going to try to say that the copying of their IP allowed Samsung to steal significant market share. But Apple’s own leaders never said anything about IP in their internal email exchanges. What they did say is that Samsung’s hardware and their advertising is why they were gaining market share, not the stolen IP. To summarize, Samsung is using Apple’s emails to make their case that they IP wasn’t essential to their business and hence not worth $40 per phone.

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  2. PMZanetti says:

    “Schiller said he didn’t agree with the assessment which was made by lower level sales execs within Apple”

    Maybe you should have placed a little more emphasis on this part in your dramatically worded article/headline.

    And why would he agree? The iPhone 5s is the best selling smartphone in the U.S every month since its release. Its real data like that, rather than more FUD about large screens that actually matters.

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  3. This does NOT help Samsung at the trial. This only establishes that Samsung’s theft and copying of Apple was working and/or a serious concern. Had Samsung had to pay $30 or $40 per phone to Apple for the theft, this would have increased the cost of the Samsung phone by $60+, making Samsung more expensive and not a competitive threat.

    The only reason for Samsung to bring this out is to hurt Apple PR and NOT to win the trial. Indeed, the $2B sought at this trial by Apple is pocket change compared to Samsung’s $14B marketing campaign. The only risk to Samsung is a loss that Apple could use to ban new phones going forward or getting damages as to ALL past phone sales, but this could only come years down the line after appeal because Judge Koh has twice ruled against Apple on an outright ban.

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  4. rahhbriley says:

    What does any of this have to do with either companies’ patents?

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  5. “Schiller said he didn’t agree with the assessment which was made by lower level sales execs within Apple. Apple did however eventually lower the price on some of its phones and is expected to unveil a much bigger iPhone 6 in the fall.”

    Once again, Apple is *following* — not leading. Where is the innovation I once loved?

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  6. Just goes to show you how weak Samsung thinks their case is. Very obvious misdirection by their attorney. What does Phil Schiller’s feelings on how well Samsung is competing with them have to do with whether or not they violated patent law? Very little. Apple’s claim is that Samsung is stealing their intellectual properties. Whether their execs feel the theft of that property is helping Samsung is not the point. Or maybe it is. Samsung could be undermining their own case by saying by essentially saying they’ve made a lot of money and competed with Apple using pilfered technology.

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  7. I don’t know why Apple is worried about Samsung. Pickup an LG G2, which is a vastly superior phone to both the 5s and even the Galaxy S5 (huge bright almost bezel free display), rear controls, very nice Android skin/UX, blazingly fast, stabilised camera etc. Apple have not innovated or progressed with the iPhone UX or form factor since the original iPhone, focusing instead on it’s jewel like build, which is obsoleted the second the customer puts it in a case.

    I run a business, and I want a large display and customisable UX, something I can do with my Note 3, plus the stylus makes it a productivity beast.

    Apple are the problem, not Samsung. If Apple innovate again, then customers will leave Samsung/LG etc.

    Even the Moto G is better value and more intelligent than the iPhone and it’s 1/3 of the price.

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  8. I’m glad I only own an ipad an no phone (line2 is my phone on ipad while still in college). They only apple product that people need is an ipad and an android phone.

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