A world in economic crisis

Galaxy is uncool!!

Posted in Uncategorized by Aussie on July 10, 2012

This is not normally something that fits the purpose of this blog, except that there is an economics side that I would like to explore. Apple has lost its case against Samsung’s Galaxy in the UK. To the outside world, this case looks like any other challenge based upon patent and trademark law, but in reality the case itself goes to the very heart of economic competition.

When I studied economics the main textbook was written by Paul Samuelson and this text was based upon the work of J.M. Keynes. Samuelson was indeed a real student of Keynes, the rest of them, such as Krugman are not real Keynesians, because they are Marxist. It was the text that every student used at that time. Keynes in his treatise on “Employment and Money” (not the correct name I know)taught the concepts on perfect competition etc. I write this to explain where I am coming from in regard to this subject and why I am so delighted that Apple has lost this case.

The comment from the Samsung representative I think sums up the issue that I want to raise:

Samsung said the judgment affirms its position that the Galaxy Tab doesn’t  infringe Apple’s registered design rights.

“Should Apple continue to make excessive legal claims in other countries  based on such generic designs, innovation in the industry could be harmed and  consumer choice unduly limited,” South Korea-based Samsung said in an emailed  statement

Read more: http://www.theage.com.au/digital-life/tablets/samsungs-galaxy-tablet-not-as-cool-as-ipad-uk-judge-rules-against-apple-in-patent-decision-20120709-21s40.html#ixzz20A8ViurJ

This is exactly right. Apple has been filing these lawsuits around the world with the intention of shutting down its competition and limiting consumer choice. That is not very healthy for the consumer as a whole.

The reason that it is not healthy is that without competition Apple is free to charge whatever it wants for its products, keeping prices artificially high. In the energy market, we see that the oil industry is based upon an oligopoly situation. Those OPEC nations are in fact an oligopoly. What this means to consumers as a whole is that we end up paying higher prices for oil and oil based products because the means of production is limited by OPEC and the price per barrel is also controlled by OPEC. The consumer is not able to influence the market. This means that the market exists in the situation of imperfect competition.

If we want to see an example of perfect competition then the manufacture of a non-Apple based PC is a very good example. There are many players in that market. The components come from a few select factories in Asia including China, Japan, Korea and Malaysia. Some of the computers are made on the spot, but many are made up to the specifications of the customer. This means that the customer has greater control over the price of the product that they purchase. It also means that within the market for PCs there is almost perfect competition.  Other examples of this form of competition in the electronics field include items such as televisions, refrigerators and washing machines.

Perfect competition does not truly exist because of government interference in the market place which in turn keeps some prices artificially high because that interference impacts upon both supply and demand. An example is the market for agricultural products such as wheat, where in the USA the production is controlled by a government act. This kind of thing infringes upon the players being able to make their own decisions regarding the quantities that they will produce for personal and public consumption.

Whilst my explaination here is simplistic, based upon trying to remember what I was taught in economics, I hope that my point is not being lost upon my readers. What I am saying is that the attitude of Apple is one that I personally find to be disgusting because of their attempts to manipulate the market in their favour. (This does not mean that I have never used an Apple product or that I would not use one in the future). Also, I abhor the idea that they are attempting to manipulate the market so that prices will not fall to a rate where even more people would actually purchase the products on offer.  Therefore it is good news that this British court has stated that there was no infringement of patents due to the difference and feel of the two products…. and that the Samsung Galaxy is not a “cool” as the Ipad.

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