HTC Corp. in 2012 HTC Corp., Asia's second largest handset manufacturer based in Taiwan, was on a roll. By Q3, 2011, it had posted six consecutive quarters of record sales, driven by the popularity of HTC smartphones that ran on Android, Google Inc.'s operating system (OS). Under the slogan, "Quietly Brilliant," HTC had entered the ranks of the top five smartphone manufacturers in the world and became one of the top 100 global brands. Fast Company magazine picked HTC as one of the 50 most innovative companies in 2010, and then GSMA named HTC as the device manufacturer of the year in its global mobile awards in 2011. These were all remarkable achievements for a company that was still relatively unknown in the mid-2000s. At the same time, the company faced daunting challenges. HTC was tangled in patent infringement disputes with Apple Inc., which had hurt HTC's share price (see Exhibit 1). In addition, HTC's two main OS suppliers, Google and Microsoft, had allied themselves with competitors. Microsoft and Nokia entered a strategic partnership to put Microsoft's OS on Nokia smartphones while Google planned to buy Motorola's cellphone business for $12.5 billion. In the meantime, Samsung, which was smaller than HTC in smartphones in 2010, had surpassed everyone, becoming the world's largest smartphone company in Q3, 2011. Year-over-year growth for smartphones was around 61% in 2011, more than six times faster than the overall mobile phone market. Yet in Q1, 2012 HTC announced a 35% year-on-year drop in revenue that fueled a 70% decline in operating income. The continued success of the iPhone and intense competition in the Android camp, especially from Samsung, was taking a toll. Finally, Apple had taken the industry by storm with the iPad. Virtually every smartphone manufacturer had seen the need to enter the tablet market, but so far, none including HTC - had made any significant headway. For the highly competitive CEO of HTC, Peter Chou, growing slower than the industry and seeing little progress in tablets was unacceptable. Chou told his top management team that in 2012, HTC needed to move to the next level. An important step in HTC's rebound was the announcement in February 2012 of the HTC One, a new flagship smartphone line, which received very favorable early reviews. Chou was confident that the new, greatly improved product line would get HTC back on track. However, big questions remained: how should HTC differentiate itself going forward? What would be the best strategic move for HTC, following the Microsoft and Google deals? How should HTC compete in tablets and mitigate the intellectual property wars? Chou knew that tough decisions lay ahead.HTC Corp. in 2012 HTC Corp., Asia's second largest handset manufacturer based in Taiwan, was on a roll. By Q3, 2011, it had posted six consecutive quarters of record sales, driven by the popularity of HTC smartphones that ran on Android, Google Inc.'s operating system (OS). Under the slogan, "Quietly Brilliant," HTC had entered the ranks of the top five smartphone manufacturers in the world and became one of the top 100 global brands. Fast Company magazine picked HTC as one of the 50 most innovative companies in 2010, and then GSMA named HTC as the device manufacturer of the year in its global mobile awards in 2011. These were all remarkable achievements for a company that was still relatively unknown in the mid-2000s. At the same time, the company faced daunting challenges. HTC was tangled in patent infringement disputes with Apple Inc., which had hurt HTC's share price (see Exhibit 1). In addition, HTC's two main OS suppliers, Google and Microsoft, had allied themselves with competitors. Microsoft and Nokia entered a strategic partnership to put Microsoft's OS on Nokia smartphones while Google planned to buy Motorola's cellphone business for $12.5 billion. In the meantime, Samsung, which was smaller than HTC in smartphones in 2010, had surpassed everyone, becoming the world's largest smartphone company in Q3, 2011. Year-over-year growth for smartphones was around 61% in 2011, more than six times faster than the overall mobile phone market. Yet in Q1, 2012 HTC announced a 35% year-on-year drop in revenue that fueled a 70% decline in operating income. The continued success of the iPhone and intense competition in the Android camp, especially from Samsung, was taking a toll. Finally, Apple had taken the industry by storm with the iPad. Virtually every smartphone manufacturer had seen the need to enter the tablet market, but so far, none including HTC - had made any significant headway. For the highly competitive CEO of HTC, Peter Chou, growing slower than the industry and seeing little progress in tablets was unacceptable. Chou told his top management team that in 2012, HTC needed to move to the next level. An important step in HTC's rebound was the announcement in February 2012 of the HTC One, a new flagship smartphone line, which received very favorable early reviews. Chou was confident that the new, greatly improved product line would get HTC back on track. However, big questions remained: how should HTC differentiate itself going forward? What would be the best strategic move for HTC, following the Microsoft and Google deals? How should HTC compete in tablets and mitigate the intellectual property wars? Chou knew that tough decisions lay ahead.History HTC was founded in May 1997 by HT Cho and Cher Wang in a windowless office located in Taoyuan County, Taiwan. Cho, a soft-spoken engineer with a solid reputation for his keen attention to details and quality, hailed from Digital Equipment Corp. (DEC), a former industry leader in minicomputers. His partner, Cher Wang, came from the legendary Wang family in Taiwan. The late Yung-Chiang Wang, Cher's father, became one of the wealthiest businessmen in Taiwan by founding Formosa Plastics Group and turning it into a massive business empire. Cher Wang herself started running her own company, VIA Technologies, in 1984. In fact, Forbes magazine identified her among the top-20 world's most powerful women in 2011.5 From PDAs to Wireless Devices HTC's initial business plan to manufacture notebook computers had a rocky start. One problem led to another, involving high production costs, technical glitches, and a lack of brand recognition. Losses quickly ballooned, prompting Wang to convince Cho to focus instead on handheld, computer- like devices. Wang first came up with the idea in the mid-1990s. She was waiting for a train at a remote station in France. Tired and weary from lugging around her heavy computer equipment, she started to fantasize about a small device that could do everything, from computer-based functions to mobile calls. She claimed that, "As a woman, it's very important to carry things light. Everything has to be inside the device."6 Coincidently, over a luncheon with a general manager at Microsoft, Wang discovered that the software giant had developed Windows CE, a new platform that could run on smaller PC devices However, it was grappling to gain acceptance in the market. Wang immediately offered to try and make a portable gadget that would operate on Windows CE. Peter Chou, a talented engineer who had also joined HTC from DEC, created a small team to undertake the job. A year later in 1998, Chou's team proudly created the world's first Microsoft pocket-size PC. A major breakthrough then came in 2000 with the iPAQ, a PDA that HTC engineered and designed for Compaq Computer.' Business professionals loved the iPAQ, the first color-screened PDA that ran on Microsoft Windows' CE platform. The success of the device enabled HTC to post its first profit in 2000 and go public two years later on the Taiwanese stock exchange. While PDAs came to represent more than 80% of HTC's total revenues, new product development efforts started to shift towards the mobile telecom market. The company subsequently pursued partnerships with chip suppliers like Qualcomm and Texas Instruments. A valuable opportunity to learn about software came through Handspring, which recruited HTC to help design and make the popular Treo smartphone. In addition, as John Wang, HTC's chief marketing officer, noted, "Microsoft really played a critical role in getting HTC into the doors by breaking down the barriers."8 With former Microsoft CEO Bill Gates praising HTC as the world's best hardware maker, Microsoft worked closely with HTC on new product developments, especially after HTC made a firm commitment to use the Windows platform. HTC and Microsoft's joint efforts led to the XDA, the first Windows-based smartphone, in 2002. It was sold by Oz, a European carrier, and stood out for being a handset tailor-made for a network operator. Contract Manufacturing Business HTC's contract manufacturing business in the early 2000s was largely categorized into two main segments. One was the original design manufacturer (ODM) business for branded handsetcompanies. The other segment was producing phones for wireless network operators. While HTC did both, it focused its resources on taking a highly customized approach with mobile operators to set HI'C apart from other contract manufacturers. While companies like Nokia rarely customized phones for operators, \"We helped them [wireless carriers] build a unique value proposition and optimize their service by giving them phones that basically felt like their own products,\" explained Chou.9 For instance, one mobile network could request a phone with a black square case and a big keyboard, while a different operator could ask for the same phone in white, with a contour design and a slim keyboard. Certain functions on a handset would be modified as well, based on the operator's target geographic market. Carriers embraced HI'C as they gained a greater sense of control over their product portfolio. \"HTC's willingness to listen to what we [operators] wanted was like a breath of fresh air,\" recalled Richard Brennan, a former Orange executive who later moved to HTC as a marketing consultant. \"Because HTC were bending over backwards to deliver, you wanted to make your relationship with HI'C work and help the underdog become successful.\"10 After all, operators wanted phones that would generate low churn rates (number of customers switching to another network) and additional revenue via data services, such as text messaging. Such services generated an additional $5 in average revenue per user for the top carriers in 2005, helping to offset the decline in profit from basic voice services.11 HTC's business boomed with major operator clients expanding to include British Telecom, Orange, and Vodafone (see Exhibits 2a and 2b). In the United States, I-ITC forged close relationships with TMobile, Sprint and Verizon Wireless, which became HTC's main carrier partners. Profits margins rose as high as 20% compared to the industry's average of around 5% in the mid-2000s. The early commitment to Windows had paid off with HTC shipping over 70% of the world's Windows Mobile smartphones by 2006. Yet the landscape of the mobile phone industry was rapidly shifting, prompting a change in HTC's overall business strategy. New CEO and the Road to Brand If you really want to capture the value ofinuomiiou, you must have u brand identity. Peter Chou12 In 2006, HTC found itself at a critical juncture. Other Taiwanese competitors were rapidly catching up in the ODM market. Palm and HP, two of HTC's biggest non-operator customers, actively started to search for different partners that could make their products for less. But market forces were not the only winds driving changes at the company. Peter Chou took over the CEO helm from HI' Cho. Chou was an ambitious, energetic general manager who had been groomed to become the next CEO by Cho and Wang. They even sent him to Harvard Business School for the Advanced Management Program in 2006. Chou was obsessed with electronic gadgets, claiming that \"[I] could go on an entire week without sleep toying with these gadgets.\"13 Nicknamed \"Mr. Perfect,\" Chou was zealous when it came to details. Engineers would enter his office with trepidation, knowing that their boss would pick out any minute design defect within seconds if a handset failed to meet Chou's high standards. With a relentless passion for innovation, Chou incubated a Silicon Valley-like culture within HTC. Engineers were encouraged to openly question and to collaborate with each other, breaking away from a more bureaucratic, hierarchical research structure. As one close observer noted, \"For Asian manufacturers, that was just completely foreign?\" The new CEO also took pride in running a quick, nimble organization. Andy Rubin, Google's senior vice president of mobile, recalled complaining that a new handset model needed a better physical keyboard to type. Five days later, Chou handed Rubin a modified model with a new backlight and grooves between the keys. \"I just couldn't believe it,\" said Rubin. \"The speed at which he can move I've never experienced it anywhere else.\"15 Perhaps more importantly, Chou set out a new, bold initiative for I-ITCto brand and sell handsets under the company's own name. Chou believed that \"without some sort of brand, our business, international growth will be limited.\"16 Chairwoman Cher Wang agreed that branding HTC would help to set it apart from its competitors and gain greater control over the company's future. Several directors on the board disagreed. They worried that operators could view HTC as a competitor, creating a conflict of interest between HTC's own brand sales and customized phones for the operators. Marketing was a major concern, as HTC lacked the scale and budget to launch an aggressive worldwide publicity blitz like the ones Samsung and LG had pursued to gain greater brand recognition. Other managers argued that the risks were too great, given that HTC had ourished while operating quietly behind the scenes as an unknown brand. Yet Chou and Wang were determined to push forward and convinced HTC's board to take a chance. HTC's official brand strategy kicked off in 2007 with I-ITC branded phones available for sale in Europe and Asia. Through the $15 million acquisition of Dopod, a well-established brand name in Taiwan with a strong presence in Asia, HTC also started selling branded products in China. Average product life cycles were kept to around three quarters, shorter than other competitors, as HTC offered a wide range of handset models in order to gauge consumers' preferences and market reactions. Product Innovation While HTC ramped up its marketing expenditures, Chou and Wang believed that the key to creating a powerful brand was to produce Cuttingedge smartphones. New product designers were recruited and an internal research center called \"Magic Labs\" was set up to drive innovation, especially in terms of software and product design. In fact, Magic Labs had come up with an exciting new technologya touch-screen interface. A smartphone featuring this innovation, the HTC Touch, was targeted to launch by mid-2007. Then the unthinkable happened. In January 2007, Apple unveiled the iPhoneequipped with its own touch-screen technology. CMO Wang saw the ann0uncement in his office and his jaw dropped. Next thing he knew, Chou came running excitedly into the lab. This, the CEO insisted, was a great opportunity. He saw Apple creating legitimacy for visual diSplay and all the features associated with touch-screen technology, opening the door for HTC. HTC rushed to ship the first HTC Touch three weeks before the iPhone was released in June. Operators saw the Touch as an Opportunity to offer the iPhone alternative, as only AT&rT had the exclusive rights to the iPhone in the U.S. I-lTC's next model, the Touch Diamond, delivered a more solid mobile Internet experience with a quicker prOCessing speed and attractive 3D interfaCe. The product quickly emerged as HTC's \"hero\" product of 2008. Positive market responses to the Touch series phone gave HTC condence to completely exit the traditional contract manufacturing business and keep pursuing its own brand strategy. Reaching Out to Google Amid praise for the Touch Diamond, product reviews inevitably addressed the shortcomings of the Windows Mobile platform. As a Wall Street Ioumal review noted, \"[D]espite its [the Diamond's] handsome TouchFLO 3D software and animated icons. ..this device failed to disguise the frustrating interface of Windows Mobile?\" HTC pondered possible options for its OS strategy, which led the c0mpany to swiftly team up with GOOgle to make the world's first handset to run on Android. The concept behind Android was highly appealinga free, open-source platform with the potential to run on any wireless network As it stood, licensing payments to Microsoft represented the second- biggest expense category for HTC. From Google's point of view, Rubin said l-ITC was compelling because \"There are usually not a lot of people at the top who drive innovation from the top all the way down to the company," said Rubin. \"But I saw that in Peter.\" The first Android handset, known as the G1, was launched in October 2008. It sold more than a million units within the first quarter of sales in two countries as Android came to revolutionize the mobile device industry. The Mobile Device Industry Mobile devices had experienced explosive growth over the previous decade, thanks to technological innovation, increased competition, wider service coverage, and lower prices. While mobile phones represented the most popular mobile device product, the category had extended into different areas as well, including media players, e-readers, and tablets. Within the mobile phone category, basic phonesbare-bones, low-cost handsetswere considered the first major category that was commercialized by consumers. These were still p0pular in developing countries for making communications accessible and affordable. In more advanced nations, the industry progressed to feature phones in the late 1990s. Feature phones came in more attractive product designs and integrated user-friendly features such as a slide out keyboard for easy texting. These mid-priced phones were also loaded with popular multimedia functions, such as a digital camera and music player. Product life cycles were shortsix to nine monthsas consumers came to perceive mobile phones as a fashion accessory, even a lifestyle statement. A market observer described it as a \" soup du jour: Today one brand is hot, and tomorrow it's leftover.\"13 In the United States, the Big Two OperatorsVerizon Wireless and AT&Tcollectively owned 66% of the $160 billion market as of Q1, 2011.19 While many operators around the world would sell consumers a SIM card, which could be used in any c0mpatible phone, U.S. wireless networks were \"locked\"; in essence, a Verizon customer could only use a phone approved by Verizon on Verizon's network Subsidies played a big role as well, bringing down the consumer price tag by as much as half for a \"hero\" product. Operators usually recouped subsidies through service plans, such as binding a consumer to a twoyear contract with an early termination fee. In contrast, about half of the European market was \"unlocked\"; a mobile phone could be used on multiple carrier networks. Consumers tended to be more loyal to handset makers, while operators competed on calling price packages and services. Subsidies were not as prominent as in the Us. Pre- paid payment plans, also known as \"pay as you go,\" were very popular outside the US, usually offering low-cost plans with no minimum contract term that appealed to a younger demographic. Smariphones While market saturation and price wars had led to weaker profit margins across the industry, smart-phones became the most protable and fastest growing segment within the mobile device industry. Smartphones took off around 2008 as devices that seized full advantage of high-speed mobile Internet access, faster wireless data downloads, and constant connectivity offered by 38 and 4G networks. Better productivity tools, such as \"pus " e-mail that delivered mail in real-time, integrated mobile data access and information into an essential part of smartphone users' daily lives. of apps were either free or cost 99 cents, no app could appear in the Store without Apple's approval. As of September 2011, 18 billion downloads had been made from a selection of over 500,000 apps. To further expand the Apple ecosystem, iCloud was released in 2011. iCloud seamlessly synchronized content stored on users' devices as long as they were Apple devices (Mac books, iPod, iPhone, iPad). Another unique offering was Siri. It turned the iPhone into a virtual personal assistant by sending messages, searching for information, or even playing a song according to a user' 5 voice command. Google's Android Since its debut in 2008, Google's Android had created a storm. It was free and open for customization, allowing device manufacturers to modify Android according to their needs. A consortium of 84 handset makers, chips makers, and operators, known as the \"Open Handset Alliance,\" backed the platform. As the number of Android phones exploded, deve10pers saw a market potentially larger than Apple with fewer restrictions. The combination of such factors powered the platform to become the most popular smartphone OS, securing 52% of the worldwide market as of Q3, 2011. Rubin claimed that more than 700,000 Android devices were activated every day?'1 Android-powered tablets and notebooks streamed out into the market as well. The Android Market offered over 300,000 apps which were restricted to Google authorized phones, such as those who owned an Android based phone and had a Gmail account. Google lagged behind Apple in terms of the total number of downloaded apps (see Exhibit 4). Android also fell behind in terms of revenues for developers: software developers reportedly generated roughly 10 times more revenues on the iPhone than on Android phones in 2011.25 At the same time, fragmentation emerged as a key concern. Several versions of the OS simultaneously oated around the market. Market research in October 2011 indicated that at least 16 out of 18 Android phones in the US. would never get the current version of Android.26 It was ultimately up to handset manufacturers and carriers to pass along the updates to the end-users, but they lacked the incentive to do so once a smartphone was sold. Fragmentation ignited problems for developers who frequently ended up releasing apps that ran on outdated software. Developers fretted about whether their apps could operate on various devices that came in different specs and capabilities. In response, Google indicated that \"Ice Cream Sandwich,\" an Android update released in October 2011, was designed to address most of these issues. It was reportedly optimized to run on both tablets and smartphones, and offered a onesizefits-all approach for different screen sizes. Microsoft's Windows Phone The Seattle-based software giant was engaged in an uphill battle with mobile devices, contrary to the dominance Microsoft enjoyed with PCs. Windows Mobile, the predecessor to Windows Phone, existed in the market for years before iOS or Android came along. But Microsoft's platform faltered as smartphone users actively sought platforms that provided easy web access, and functiOnality as both a work and a personal entertainment device. The U1 was criticized for being clunky, difficult to use, and slow to evolve. The 05 also came with a licensing fee estimated at $8 to $15 per phone. Amid slipping market share and weak support from carriers, a completely revamped platform named Windows Phone debuted in 2010. Reviewers praised the vastly improved UI and tight integration with Microsoft Office, but the platform did not take-off. Then in February 2011, Microsoft announced that Windows Phone would become the future platform for Nokia smartphones. Under the agreement, MicrOSOft reCeived royalty payments frOm Nokia; in return, Nokia reportedly would get over $1 billion to market and develop Windows Phones. The agreement was not exclusive and Microsoft continued to work with other handset manufacturers. In terms of apps, Microsoft dropped the $99 developer fee for its app store, Windows Marketplace, and planned to consolidate it with Nokia's Ovi Store. Windows Marketplace featured around 30,000 apps as of late 2011. Industry observers commented that \"No matter how good Windows Phone 7 gets, it doesn't stand a Chance unless it can get more app developers on board?\" RIM'S BlackBerry OS RIM was best known for its prized product, the BlackBerry, which was first introduced in 1999. The Canadian company had built a large, loyal business customer base with a stellar reputation for its email service, convenient keyboard, and instant messaging feature. Large corporations willingly paid extra data charges for RIM's secure enterprise communication service, which led to hefty margins for RIM (see Exhibit 6). However, RIM's once d0minant market position in the US. market eroded dramatically in 2010 and 2011. The US had been slow to deliver a satisfactory mobile Internet experience. New product delays, weak shipments, layoffs, and service outages across five continents marred RIM's brand image. To offset declining sales, RIM aggressively targeted new markets in countries like India, Argentina, and Brazil where the BlackBerry was still considered a prestigious brand. Yet RIM struggled to impress investors and consumers in 2011, especially after RIM announced that phones Operating on its new OS, called QNX, would not be available until the latter half of 2012.28 Ongoing trouble led to the resignation of the company' s duel CEOs, and triggered rumors of possible takeovers by Amazon, Microsoft and/ or Nokia. The Wall Street Journal reported that RIM was exploring many strategic options, including licensing its new OS to other handset makers, such as Samsung and I-ITC.29 In terms of apps, RJM's BlackBerry App World reportedly had the fewest downloads among the major app stores. One issue was that previous versions were primarily designed to support email, and thus failed to gain traction with app developers. To boost RIM's app offering, RIM planned to allow users to run Android apps on RIM devices. Others With the Microsoft deal, Symbian was expected to retire from the OS market. Nokia's internally-developed platform had been rapidly losing market share. Palm's WebOS was released in 2009 as Palm's last ditch effort to revive itself. Reviews were encouraging but sales failed to rescue Palm. It ended up with a new owner, Hewlett Packard (HP), for a price tag of $1.2 billion in 2010. In late 2011, HP said that it would release the source code for WebOS and turn it into an open source program, similar to Android. Meanwhile, another opensourCed, free platform, Tizen was announced in 2011. It was backed by Intel and Samsung Electronics and essentially replaced MeeGo, a short- lived platform project pursued by Intel and Nokia. Smartphone Handset Manufacturers Nokia Finland-based Nokia was the world's biggest handset manufacturer by volume with a strong international custOmer base. Nokia carved out a name for itself in the 1990s through its attractive feature phones. Low-cost phones produced based on only a few standard models also played a big role in helping Nokia achieve economies of scale that were difficult to find elsewhere. Business in the next decade told a different story as the company found itself caught in a downward spiral for missing the initial smartphone revolution. In the U.S., Nokia's unwillingness to work with carriers' customization demands led to unsubsidized, higher-priced phones. Nokia's smartphones operated on Symbian, which was considered archaic compared to its rivals. As a result, Nokia lacked support from software developers and carriers. Amid faltering sales and shrinking margins, a new CEO, Stephen Elop, was appointed in September 2010 (see Exhibit 6). Elop, a former Microsoft executive, cut thousands of jobs and made the radical decision to abandon Symbian and commit to Microsoft's new phone OS. The first Nokia smartphone to run on Microsoft appeared in Q4 2011. While Microsoft and Nokia proclaimed their satisfaction with early sales, Nokia's market share continued to fall rapidly. Samsung Electronics Mobile devices were only one division of Samsung' s sprawling business empire, which also enc0mpassed chips, c0mputers, TVs, and consumer appliances. Within the smartphone segment, despite its late entry in the market, Samsung propelled forward worldwide with slick new designs on the Android platform In 2011, Samsung hit a homerun with its agship Android phone, the Galaxy 52,- it broke Samsung's own sales record by reaching ten million units within five months?'0 The Galaxy 52 was as one of the lightest and brightest smartphones, which also incorporated 4G (LTE) technology. The Galaxy used Samsung's internally developed Super Amoled screen, widely considered the brightest in the industry. Analyst reports estimated that smartphones were generating as much as 80% of the mobile division's operating profits.31 While Android represented a keystone behind Samsung's OS strategy, the company also worked with Windows Phone, Tizen, and Bada, a platform created by Samsung itself. Bada-Operated phones were available in Asia and Europe; Samsung sold two million Bada phones compared to over 40 million Android-powered phones in 2010.32 To date, the Samsung app store lacked a significant developer community and generated low traffic. In response, Samsung said that it would open up Bada to any developer from 2012. The c0mpany was also gearing up its software capabilities and expanding cloud services, such as those related to media and content distribution. Others New competition emerged from Chinese companies like Huawei and ZTE. They were producing cheap but relatively capable Android phones (below $100) that were selling well in China and other emerging markets. Meanwhile, LG Electronics was racing to change its image as a laggard and come up with handsets that would reverse operating losses. Sony Ericsson, another ailing player, tried to catch up with c0mpetitors through a corporate shake-up. In October 2011, Sony said it would buy out joint venture partner Ericsson's shares for around $1.5 billion, gaining control over its mobile phone business. Finally, Motorola Mobility, withering away amid lack of scale and poor operating margins, was rescued by Google in 2011 and announced that it would operate independently from Android. Its popular Razr handset was redesigned into the thinnest Android smartphone on the market in late 2011 and was featured as Verizon Wireless' \"hero\" phone. The Patent Wars By 2012, intellectual property had become the newest battlefront for smartphones (see Exhibit 7). Apple, in particular, triggered an aggressive round of litigations against makers of Android devices, starting with HTC and then Samsung. Steve Jobs was quoted in his biography as saying, \". . . I will spend every penny of Apple's $40 billion in the bank ($80 billion as of 2011), to right this wrong. I'm going to destroy Android, because it's a stolen product. I'm willing to go to thermonuclear war on this.\"33 Since HTC was Google's partner, it bore the brunt of Job's rage. Most of the patents in question related to the iPhone's interface and hardware. HTC subsequently filed a counter suit against Apple. Then in December 2011, the US. International Trade Commission (IT C) ruled that HTC was violating one out of the ten Apple patents in question. An import ban on the affected products would go into effect in April 2012, unless HI'C removed the intellectual property from its phones. Despite the adverse ruling, an import ban was unlikely: I-lTC's general council Grace Lei stated that the patent \". . . is a small UI experience and HTC will completely remove it from all our phones...\"34 The ruling was subject to appeal and a presidential review. Separately, HTC bought S3 Graphics for $300 million, based on a strong belief that Apple was infringing on 83's patents.35 The lTC ruled against 53's favor in November 2011, only to announce a re-evaluation of the case the following month. Microsoft entered into negotiations with both Samsung and HTC, claiming that they infringed on its patents related to mobile phones. Both companies agreed to pay Microsoft royalties on their Android devices. The timing of Samsung's deal, which came after Google said it would buy Motorola Mobility, was highlighted in several reports, citing that, \"Samsung's willingness to pay royalties to Microsoft . . . raised a question about the effectiveness of Google's efforts to provide legal protection to Android hardware 1nal