Cisco bites on deal with Apple

With Apple and Cisco Systems having settled their dispute over the use of the name iPhone, the telecommunications industry can prepare for the launch this summer of one of the most talked about cellphones only few people have touched.

In a brief written statement the companies said that they’ve resolved Cisco’s trademark lawsuit over the use of the name iPhone, a trademark it obtained seven years ago by buying a California company. Cisco now uses the iPhone name on a line of VOIP phones.

Cisco had told Apple it was willing to license use of the name if Apple agreed to allow its handset to interoperate on Cisco’s networking gear. Initially, at least, Apple seemed to refuse.

Under the agreement, both companies are free to use the iPhone trademark on their products throughout the world. Both companies acknowledge the trademark ownership rights that have been granted, and each side will dismiss any pending actions regarding the trademark.

In addition, Cisco and Apple will explore opportunities for interoperability in the areas of security, and consumer and enterprise communications.

That terse statement had personal technology analyst Rob Enderle amused. “It’s not clear Apple actually gave Cisco what they wanted,” he said. “It sounds like they promised to look into it, in exchange for getting use of the name.

“I think [Apple CEO] Steve Jobs has done another of his signature moves and given away nothing while getting what he wanted. It is kind of amazing to watch him work.”

On the other hand, he said Cisco had indicated it wasn’t going to hold Apple’s feet to the fire. Their products don’t directly compete with each other, at least not yet.

But it reminded Enderle of the deal Apple made with Hewlett-Packard when HP licensed the smashingly successful iPod, seemingly ready to make its own version of the digital music player. In the end HP abandoned the effort.

“The rule here in (Silicon) Valley is ‘When Apple leaves the table smiling, check your wallet,’” said Enderle.

The slender iPhone announced by Jobs at Macworld in January will have a 3.5-in. colour touch screen that can be used in landscape or portrait mode for input and synchronizes media, contact information, calendars, photos, notes, bookmarks, e-mail accounts from a user’s Macintosh or PC.

Initially the phone will only work on GSM networks, such as Rogers in this country. Equipped with with a 2MP camera, the device is 115mm tall by 61mm deep by 11.6mm wide (4.5 x 2.4 x 0.46 inches) and weighs 135 grams (4.8 oz). It will come in versions with 4GB and 8GB of storage.

It isn’t clear when it will come to Canada. Jobs said iPhones will first be launched in the U.S. in June on the Cingular network, followed by Europe in the fourth quarter.

While Apple has overwhelmed the market with the iPod, it also isn’t clear how successful its iPhone will be, in part because it will be among the most expensive cellphones on the street.

There will be two models, a US$499 version with 4GB of storage, and a US$599 version with 8GB.

Enderle said many cellphone makers and wireless carriers think Apple “is going to have their hat handed to them because Apple doesn’t understand the market, and the cellphoen market is clearly different than the MP3 market, primarily because of the influence the carriers have. Particularly Sony Ericsson is convinced Apple is going to hit this market and bounce much like Sony initially bounced before they partnered with Ericsson, because it is so heavily regulated.”

But Enderle acknowledged that Apple’s iPhone has shaken handset makers, who are trying to quickly respond.

For example, at the recent 3GSM trade show Samsung Electronics announced several new multimedia phones.

But Kevin Restivo, a Toronto-based analyst at the SeaBoard Group, which specializes in the Canadian telecommunications industry, said handset manufacturers are in “wait and see mode.”

“iPhone isn’t coming out for another six months,” he said. “Remember, too, it’s very limited distribution. I don’t think the iPhone is scaring anybody right now It’s captured imagination of consumers and the media, but the iPhone launch is going to be a very limited one. Apple and Cingular’s goal is have10 million handsets sold in the first year. Even if they were to achieve that goal that would give them very small market share when it comes to handsets.”

Zeus Kerravala, a Yankee Group analyst, was disappointed with the brevity of the Apple-Cisco announcement, suggesting it really means the two companies are still talking.

But he also noted both companies want to own what he called the user experience from end to end — Apple’s iPod, for example is a player and a music buying system, while Cisco’s networking portfolio runs from the home to the desktop.

If they can combine their efforts in handsets “the two would be very powerful.”

“This could help Cisco become a very credible consumer vendor, and Apple a credible enterprise vendor,” he said.


Would you recommend this article?


Thanks for taking the time to let us know what you think of this article!
We'd love to hear your opinion about this or any other story you read in our publication.

Jim Love, Chief Content Officer, IT World Canada

Featured Download

Howard Solomon
Howard Solomon
Currently a freelance writer. Former editor of and Computing Canada. An IT journalist since 1997, Howard has written for several of ITWC's sister publications, including Before arriving at ITWC he served as a staff reporter at the Calgary Herald and the Brampton (Ont.) Daily Times.

Related Tech News

Get ITBusiness Delivered

Our experienced team of journalists brings you engaging content targeted to IT professionals and line-of-business executives delivered directly to your inbox.