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HTC-Apple settlement to pay off starting in 2013: report

TAIPEI--Taiwan's HTC Corp., the world's No. 5 smartphone maker, believes it will start to benefit from its patent settlement with rival Apple Inc. next year as the company focuses more effort on product innovation, according to a recent news report.

Ray Yam, president of HTC China, said in an interview with the Economic Observer of China that HTC has adjusted its product, sales and marketing strategies for 2013 since settling with Apple in November.

“The settlement with Apple will start to pay off next year, and the fourth quarter of this year is still going at a set pace,” Yam told the newspaper.

He said many of HTC's projects have started to proceed at a faster clip, and the company has changed the way it negotiates with telecom operators.

HTC wasted too many resources on the Apple lawsuits, which were seen as “a sword hanging over our heads,” Yam said.

Since the settlement, HTC has encouraged its employees during various meetings to “take broader steps,” he said.

“The biggest benefit to us is that we can put more energy into innovation, which is more important than anything else for a technology company,” Yam said.

HTC and Apple announced on Nov. 11 that they had agreed to settle their global patent disputes through the dismissal of all current lawsuits and a 10-year license agreement, ending a legal battle that had festered since March 2010.

The license extends to current and future patents held by both parties, the two smartphone makers said in a joint statement.

U.S. brokerage Goldman Sachs said the settlement removes one of the greatest threats to the stock and eliminates the possibility that HTC will be shut out of the U.S. market.

“We believe that by being able to access Apple's patent portfolio, HTC will be able to release part of its engineering resources that have been tied up with work-around solutions,” said Robert Yen, a Taipei-based analyst at Goldman Sachs.

That could potentially allow HTC to offer smartphone products better than those of its Android peers in terms of features and user experience, which would help the company pick up market share, Yen said.

HTC continues, however, to face the same structural problems it had before the settlement, such as lost market share in the U.S. and intensifying competition in China's smartphone market, British bank Barclays PLC cautioned.

Unless HTC and Apple build further business relationships or cooperate on mobile devices, Barclays believed the settlement remains a non-event in terms of HTC's fundamentals.

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