SAN JOSE, Calif. — A Samsung executive said he thought the original iPhone was an impressive but niche product, in testimony on Monday. Three Google senior software engineers also took the stand defending Samsung against charges it infringed five Apple patents.
The original iPhone "was very impressive, a nice product [but] at that moment only AT&T distributed it exclusively, so I felt it would be a niche market," said Dale Sohn who was chief executive of Samsung's US cellular group from 2006 through 2012. "With a price of $299 I concluded many people could not afford that kind of very expensive niche product," he said.
Nevertheless, Sohn executed "a paradigm shift" in Samsung's approach to the US cellular market in 2011. He hired a new team that shifted from a focus on wholesale sales to carriers to retail sales to consumers with a new ad campaign.
"We decided to spend massive marketing dollars not one time but all year long... [on] one big marketing theme [that] we would create the next big thing," Sohn said. With "all those things together we made a very remarkable turnaround so our average market share in smartphones was up to 30%, the No. 1 in smartphone market [and in user] awareness and preference," he added.
Under cross-examination by Apple attorney Bill Lee, Sohn admitted he could offer no testimony about the details of the patents in the case. Lee showed a Samsung internal newsletter in which Sohn said in a column next to his picture, "Beating Apple is no longer merely an objective; it is our survival strategy."
Todd Pendleton, a Nike brand manager Sohn hired, testified Samsung lagged behind Apple, HTC, and Research in Motion when he joined the US cellular group in early 2012 as chief marketing officer. Pendleton and Sohn both testified about using display, battery, processor, NFC, and stylus hardware to gain an edge over the iPhone with the Galaxy S series.
Pendleton said the Next Big Thing ads, still being aired, have never highlighted the Apple patents at issue such as slide-to-unlock, universal search and quick links. "They are not drivers for a smartphone," he said.
However in cross-examination, Lee showed a Samsung marketing documents referring to the company's reputsation as a "fast follower." Referring to Samsung's TouchWhiz interface, one document said, "TouchWhiz is a direct rip of iOS. I mean it's pathetic really."
Lee also noted an ad campaign Pendleton launched to disrupt the iPhone 5 launch. "Historically, during an iPhone launch our sales dipped dramatically, so our strategy was to ensure we didn’t have another dip in sales," Pendleton said.
Next page: Three Googlers take the stand