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Phil Shiller testimony: iPhone, iPad creation and customer surveys, Samsung copying skills and iPhone 5 design secrecy

August 3, 2012

The U.S. Apple vs Samsung trial continued today after Judge Lucy Koh ruled on certain motions and objections from both parties with the testimony of Apple’s Phil Shiller, the company’s Senior Vice President of Worldwide Marketing.

In what follows we’re going to look at what both Apple and Samsung asked Shiller, as reported by The Verge, as his responses are quite revealing for the trial.

Apple examination

Apple attorney Harold McElhinny started asking Shiller about the way the iPhone and iPad came to be. The executive offered various details on what it took to create the iPhone and the iPad, both great gambles for the company. He explained differences between models, what differentiates them, and referred to elements and patents that Apple claims are infringed by Samsung’s products. He even described how a multitouch is supposed to work.

iPhone and iPad creation

He explained that the iPhone project came after the iPad, but Apple shifted attention to the iPhone when realizing its priorities. Here are some of his answers:

  • We started to look at whether you could put entertainment content on cellphones…. We realized at the time that some phones weren’t any good as entertainment devices.
  • The iPhone was a brand-new concept. A new generation of smartphone. The way we ended up helping people understand it’s capabilities was to break it up into three uses.
  • The range of reaction [to the iPhone] was everything you could imagine, from excitement for this breakthrough product to doubt that Apple could succeed with it.
  • Leading towards June [2007] we began to carefully turn on the marketing. First we held a TV ad during the Academy Awards… and then as we got closer to the launch in June we started to bring in additional ads.
  • Sales were extremely good. They exceeded our expectations.
  • Each new generation sold approximately equal to all previous generations combined.
  • It was a big gamble in introduce the iPad for a number of reasons. First, this was a new category of devices, […] a risk to our image.
  • [Despite positive reviews] there were many in the industry… that questioned if it could succeed at all… There was great doubt on whether it would be successful to any quantity that mattered.
  • I think there are many reasons for the iPhone’s success. For me, what I believe is really prevalent is number one, people find the iPhone design beautiful. Number two, it’s an incredibly easy to use device with all of our software inventions to make it simple and integrated. [Number three] We’ve really taken the entire experience, hardware, software, integrated experiences, and taken the responbility to make them all work together for the customer.

Market surveys

While Apple is famous for saying that the company does not conduct surveys when creating new products, it appears that the Shiller’s market research team “will do surveys of customers” from time to time. And here we’re talking about the surveys that Apple wanted to be thrown out of the trial, but Samsung convinced the judge they were relevant for the case.

Again, the best way to look at the story is to follow some of the most important quotes from Shiller:

  • Periodically [surveys from 4Q 2010, Q1 2011, Q2 2011, and Q3 2011were shown] my market research team will do surveys of customers who have already purchased our products to ask them questions we’re curious about.
  • “They’re usually done by gathering answers from web surveys, sometime phone surveys,” and then collected into Apple’s own database.

According to these studies, 85% of surveyed customers purchasing the iPhone 3GS and iPhone 4 said that the look and design was important or very important.

Advertising the iPhone and iPad

Apple’s counsel also asked Shiller to describe Apple’s iPhone and iPad ads. The jurors will also be able to watch all the iPhone and iPad ads since the launch of each product until present day, something Samsung has tried to object but was overruled. According to Shiller, the concept behind Apple’s advertising campaigns is calling the “product as hero” of the ads. Here are some relevant quotes:

  • So in that brief [iPad] ad we wanted you to see the beautiful design, get a sense of how easy it was to use…. and to give you a taste of the depth of software that could be used… To create a reason why you might want a tablet device like an iPad in your life.
  • “It’s important when we pick media,” Schiller says. “We try to pick publications that fit well with Apple’s image…. We also try to pick nationwide, largest-reach publications.” On product placement, he says “We would love to see our products used by stars in movies, TV shows, and we have a person who helps provide products to people that want to do that.”

Shiller also revealed how much the company spends during each fiscal year on ads – Apple’s fiscal year ends in September:

  • iPhone
    • FY 2008 – $97.5 million
    • FY 2009 – $149.6 million
    • FY 2010 – $173.3 million
  • iPad
    • FY 2010 – $149.5 million
    • FY 2011 – $307.7 million

Samsung copying the iPhone, iPad

Naturally, one of the points Apple’s counsel tried to make from the beginning is that Samsung copied with its Galaxy S products the iPhone and iPad. And Shiller was not shy to reveal his strong opinions on the matter – that Samsung had effectively copied the look and feel of both the iPhone and iPad with its Galaxy S and Galaxy Tab products, and other devices from these families of Android smartphones and tablets. Here are some quotes:

  • I was pretty shocked at the appearance of the Galaxy S phone and the extent to which it appeared to copy Apple’s products. We went from having something easy to market because it was so distinctive and and so famous to having something that was difficult to market.
  • Competition’s great… Every day there are companies creating products to compete with us.
  • [Copying is not fair] because when you copy or steal the idea of one company’s product now you’re trading off all that investment and marketing and goodwill with customers… when you rip that off you’re trying to get all that benefit for yourself.
  • [When he saw the original Galaxy Tab he] thought they were just going to copy our whole product line.
  • It confused the customers on who’s the creator of these products. It diminshes the value we’e created of Apple as the creator of these products, of these beautiful things… It dilutes the way customers see Apple.
  • One of the jobs of my teams is the forecasting process… It’s our belief that some customers are choosing to buy a Samsung product because one of the things it does is look like the iPhone and look like the iPad. It also has an affect after the first purchase.

Samsung cross-examination

When McElhinny finished Apple’s interrogation of the witness, Samsung moved in to cross-examine Shiller and to try to prove that Apple’s devices are not entirely original, as they do use existing technology.

Who came up with the touchscreen first?

One example given by Charles Verhoeven, Samsung’s attorney, was an email exchange inside Apple that discussed the fact that the LG Prada, a phone that preceded the iPhone, actually sported a full touchscreen (but it’s worth remembering that it did not run Android). An email from Steve Sinclair, referring to the iPhone and LG Prada said:

It’s tough to approach this with the criteria being ‘first.’ I don’t know how many things we can come up with that you could legitimately claim we did first.

Samsung also tried to make a different point during examination, that iPhones and Samsung phones are “segregated” in carrier stores in such a manner that no confusion can be made between Apple’s and Samsung’s products, but Shiller responded that confusion exists for the public when marketing the products.

Infuse 4G confuses Samsung lawyers too

But not everything went well for Samsung, as its counsel managed to confuse it’s client’s phones when showing them to Shiller. Apple’s executive was handed a Samsung Continuum first, and then he was given what Verhoeven believed it was an Infuse 4G, but it was actually a different device. This isn’t the first time Samsung’s lawyer crews aren’t able to properly recognize one of the products made by their client – a while ago a Samsung attorney was not able to tell the iPad and Galaxy Tab 10.1 apart from 10 feet away when directly asked by Judge Koh.

Shiller said that the phones that were shown to him were confusing. Furthermore, he added:

Samsung has ripped off a number of our design elements and yes I do believe some customers could be confused.

Samsung then tried to pull a fast one by asking Shiller to explain one of the surveys we mentioned before, in which only 1 percent of respondents revealed that the color or design of the iPhone would affect their buying decision. But the attempt was then deflected by Apple’s counsel. A later Apple redirect allowed Shiller to explain that in the survey Samsung quoted, Apple asked buyers what factor in addition to price would be most important for them when buy the product.

iPhone 5 design

Samsung tried to convince Shiller to reveal whether the iPhone 5 – which is what customers and tech blogs erroneously refer to when talking about Apple’s sixth-generation iPhone – would come with a different design. Even if the Judge allowed the question, Shiller choose not to answer it:

I prefer not to tell confidential information about future products.

Apple rebuttal

McElhinny returned to clarify the survey Samsung referred too (explained above) but also to have Shiller reveal the relationship between the iPhone design and Apple brand. Here’s what the VP answered:

  • Yes, I think there’s a strong correlation [between iPhone design and Apple brand]…. People associate the Apple brand with great design.
  • We have a term in marketing at apple that we call the Lust factor…. That’s one of the things we were going for, was a high lust factor.

We’ll be back with tidbits and revelations from Apples Senior Vice President on iOS Software Scott Forstall, who took the witness stand after Shiller.