Apple and Cisco end iPhone dispute

Apple initially called the lawsuit “silly” and argued that it was entitled to use the name because the phones operate over different networks and would not compete with each other.

Cisco maintained that in an era of “convergence” – where increasingly intelligent networks and devices can handle a variety of different types of voice, video, data and other transmissions – the two companies’ phones could eventually take on different features and wind up competing head-to-head.

The result would be “confusion, mistake and deception among consumers”, according to the lawsuit.

Collaboration deal

Cisco-owned Linksys has been using the iPhone trademark since last spring [AP]

Negotiations between the companies broke down just hours before Jobs’ dramatic unveiling of the product on January 9 in San Francisco.

The sticking point apparently was Cisco’s demand that in order to use the iPhone name, Apple would have to open up its famously closed products to communicate with some of Cisco’s offerings.

Neither company would discuss what future products might come from the collaboration.

Analysts said the deal could help both companies strengthen their positions in the increasingly fierce battle to deliver video and other applications through the network directly to consumers’ homes.

Zeus Kerravala, a network infrastructure analyst with Yankee Group, said there are ample opportunities for the companies to dream up collaborative projects to win over consumers.

Partnership projects

One possibility, he said, could be the creation of a Linksys device that users call inyo to record podcasts that are then automatically uploaded to iTunes, which would make the creation and dissemination of such content easier.

However, he cautioned that both companies need to be willing to share in order to make the partnership work.

Kerravala said: “If the two actually can work together, then the combination of the two is obviously more powerful than the two butting heads.

“There’s no company out there that understands network service like Cisco. And you could argue no other company understands user experience like Apple.”

Shifting strategy

The dispute highlights the shifting business strategies for both companies.

Cisco, which is Silicon Valley‘s most richly valued company with a market capitalisation of $166 bn, makes most of its money by selling the routers and switches that direct data traffic over computer networks.

However, the California-based company is also making an aggressive push into the consumer market and towards products that help deliver content, such as cable set-top boxes, wireless broadband routers for the home, and equipment for playing digital music.

Apple is also expanding its business range from beyond primarily a Mac computer and software maker as it capitalises on the demand for digital music and the soaring popularity of its iTunes and iPod products.