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Technology Stocks : Synaptics
SYNA 70.14+3.4%Nov 5 3:59 PM EST

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To: Sam Citron who wrote (19)2/10/2005 8:57:49 PM
From: HerbVic  Read Replies (1) of 191
 
I don't know if it's a patent sharing agreement or not. There were a couple of articles awhile back that covered the diverse collaborative effort that lead to the iPod, but I don't think it got into the details of any particular agreement. Normally, that's what would happen. Synaptics' clever engineers, taking direction from Apple's product development group, put together a nimble interface concept. It seems unlikely that managers at Snyaptics would have given away the intellectual property to get the contract. But it could have happened.

Did Synaptics develop the first iPod scroll wheel, or did they come into the iPod development with the click-wheel? If they were in from the beginning, it's more likely that they have some part of the patent. The iPod was just a project at that time. After it was a huge success, the prize of the contract might outweigh the perceived value of the intellectual property, especially if the intellectual property had exclusive strings attached.

If Apple is going to drop the click-wheel as analysts speculate, it would only happen if they were absolutely certain that the new design trumped the old design. Since the current design is such a huge success, and would be very difficult to copy or imitate by competitors, it's difficult to imagine Apple replacing it without testing the market first. I could see Apple potentially redesigning (tweaking) the click-wheel for ease of manufacture; in other words to decrease production costs. But, I can't imagine what you could do to it to make it functionally better.

Also, Apple does little manufacturing anymore. It is well known that they outsource manufacturing of (almost?) everything. That is how they are able to adopt new technologies ahead of the herd. The company is basically a technology applications developer/broker. So, no worries about Apple wanting to manufacture the click-wheel in house.

These kinds of collaborative deals are by their very nature transitory as is the short lived nature of product models. The relationship between Apple and Synaptics is bound to end at some point. When that happens, Synaptics takes away from the relationship the new found association with a mega hit product. Not only are they associated with it, they are part and parcel responsible for one of its most endearing attributes.

That's bound to be good for business!

Herb
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