http://www.economist.com/node/17309237
It looks like smart phone prices are on the rise. Companies in smartphone related industries that formerly lived harmoniously have suddenly decided to turn on each other and engage in all-out legal warfare. As a result, we may see prices increase dramatically as the costs rise due to patent loyalties. (On the flip side, companies may offset some of this cost by winning their own patent suits.) According to the Economist, this legal battle “is not merely about individual products, but entire platforms and operating systems.” Should any platform emerge victorious, it may dominate the smartphone market for years to come, just as Windows had dominated the PC landscape for decades and even today.
So, in this situation, the consumer will most likely lose. And what of the companies? The likely result is that none will emerge the winner. According to Game Theory, players in an oligopoly have the option of cooperating or not cooperating. Cooperation (in this case, not suing each other) by all players will naturally result in the best outcome for the industry as a whole (win-win). Currently, it seems that most players have chosen to compete instead of cooperate (lose-lose), resulting in increased production costs due to patent royalties, higher prices of their products, and lower sales for the industry as a whole (lower quantity demanded due to higher prices). Maybe it’s time for these companies to sit down at the negotiating table and rethink their strategies.