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Phil Schiller takes the stand in the Apple v. Samsung trial

Phil Schiller takes the stand in the Apple v. Samsung trial


We're live from the courtroom for the second day of testimony in Apple vs. Samsung.

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phil schiller

Apple called designer Christopher Stringer to the stand earlier this week in the company's trial against Samsung, and today Cupertino's going to be bringing more witnesses to the stand. We're also expecting to hear a response to the week's legal theatrics.

We just sat down in the courtroom and will be updating live, so let's get to it (timestamps in Pacific Time):

8:42AM: Judge Koh has already reprimanded Samsung. Apparently an individual claiming to be with Samsung came into the courtroom to take pictures yesterday. Samsung attorney Charles Verhoeven told the court that he did not know who the individual was.

8:45 AM: Both sides are discussing evidence related to the Schiller testimony. Samsung wants to bring out certain evidence.

8:49 AM: Judge Koh is very frustrated with the way both sides have been using objections. "Some of these objections are ridiculous." She's decided that all objections will now have to be made in person and will count against the respective party's trial time (each side has 25 hours total). The same will be true for reconsiderations."Some of these objections are ridiculous."

8:53 AM: Judge Koh just denied Apple's request for sanctions after Samsung's theatrics on Tuesday. She is reserving the right to address them afterwards. She made it a point to stress that Samsung's evidence being excluded is a "situation of their own making," and that Apple had had evidence excluded for the same reasons as well.

9:01 AM: The jurors are being brought in one by one, and Judge Koh is asking them if they've read anything in the case. If they've seen any media reports based on the evidence Samsung leaked earlier in the week, and can't decide the case fairly, they'll be let go. So far, so good.

9:05 AM: Juror number seven reports that they saw headlines about the "kitchen table" Christopher Stringer testified about on Tuesday, but didn't read anything else.

9:07 AM: The juror tells Judge Koh that they can decide the case impartially and will be fair to both sides. Koh announced they are putting together all of the media articles about the case and will be giving them to the jury at the end of the case so they don't need to worry about "missing out" on anything.

9:09 AM: The rest of the jurors make it through the gauntlet. Samsung — and attorney John Quinn — got lucky.

9:13 AM: With the full jury seated, Judge Koh is explaining to the jury the new system for objections and reconsiderations.

9:15 AM: Phil Schiller is back!

"We realized... that some phones weren't any good as entertainment devices"

9:17 AM: Apple counsel Harold McElhinny asks Schiller about the creation of the iPhone. Schiller: "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."

9:17 AM: Schiller states that the team had already been working on the iPad project when it took up the iPhone. He's now explaining multi-touch to the court. He sounds as polished as any Apple presentation.

9:18 AM: "The iPhone was a brand-new concept. A new generation of smartphone. The way we ended up helping people understand its capabiities was to break it up into three uses."

9:19 AM When asked about reactions, Schiller states that "The range of reaction was everything you could imagine, from excitement for this breakthrough product to doubt that Apple could succeed with it."

9:21 AM He name-checks the head of Microsoft — Steve Ballmer — saying the iPhone would fail as an example.

9:25 AM They're discussing iPhone marketing after the release. "Leading towards June 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."

9:25 AM Schiller was in Chicago for the iPhone launch with his son, whom he wanted to share the moment with.

9:28 AM We're now looking at a summary of news articles from the iPhone launch. David Pogue and Walt Mossberg are both featured, touting the iPhone as a "breakthrough" product. Schiller calls Mossberg's piece "a great review that we were so happy to get" and "an over-the-top positive reaction."

9:29 AM As each review is admitted into evidence, the jury is instructed that they're not to consider the reviewers' comments to be factual truths.

"Sales were really good. They exceeded our expectations."

9:32 AM Sales numbers for the original iPhone? "Sales were extremely good. They exceeded our expectations."

9:35 AM We're being shown a chart with cumulative unit sales for both the iPhone and iPad. When assessing sales for a new model of the iPhone, Apple used an easy shorthand: "Each new generation sold approximately equal to all previous generations combined."

9:39 AM Apple definitely sees the benefit of platform lock-in. Schiller states that "A customer that already has one [iPhone] is used to that one, that whole ecosystem... I'm more likely to stick to that product line when I have it."

The iPad was "a risk to our image."

9:40 AM We've moved on to the iPad, which Schiller says Apple moved back to after the iPhone introduction. We're seeing a number of press pieces, with the WSJ calling it a 'big gamble." Schiller says "It was a big gamble to introduce the iPad for a number of reasons. First, this was a new category of devices." He goes on to say that tablets were considered "a dead category" at the time, and Apple considered taking it on "a risk to our image."

9:45 AM Another pair of glowing reviews from Walt Mossberg and USA Today. However, Schiller also admits there were negative responses. "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."

9:48 AM Moving back to the iPhone. "I think there are many reasons for the iPhone's success. For me, what I believe is really prevelant 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." Apple's strength — hardware and software combined — is his third, but the trump card in Schiller's mind is that "We've really taken the entire experience, hardware, software, integrated experiences, and taken the responbility to make them all work together for the customer."

9:49 AM He feels a similar set of reasons led to the iPad's success. We're now looking at a comparison of the four iPhone models, with Schiller pointing out what makes them distinctive. Along with the icons and design, the dots on the bottom are listed as "something we're known for."

9:51 AM Now we're looking at the two iPad models. Schiller stresses consistency and the "beautiful, colorful icons" — basically naming each of the elements involved with the design patents in play.

"Periodically my market research team will do surveys of customers."

9:54 AM They're now introducing excerpts from several internal iPhone buyer surveys from 4Q 2010, Q1 2011, Q2 2011, and Q3 2011. Schiller says that "Periodically my market research team will do surveys of customers who have already purchased our products to ask them questions we're curious about."

9:54 AM "They're usually done by gathering answers from web surveys, sometime phone surveys," and then collected into Apple's own database.

9:56 AM Schiller is reading the summarized results from several of the surveys, which ask how important the look and design was for customers purchasing the iPhone 3GS and iPhone 4. Schiller states that 85 percent said it was either important or very important in their purchase.

10:01 AM They're now discussing Apple's use of advertising. "Advertising is one of the most important tools we have.... We create an ad, and reach millions of customers, and speak directly to them from our company."

"We call it 'product as hero.'"

10:02 AM Schiller sums up Apple's product-first advertising strategy nicely: "We call it 'product as hero'."

10:04 AM Schiller comments that the best way to turn people onto the iPhone was to have them use it, which provided an interesting marketing challenge — how could they convey that? We're now being shown one of the early iPhone ads that walked viewers through the different features one by one.

10:07 AM For the trial Apple has put together a DVD for every iPhone ad aired with a list to match. Apple names each spot individually. The jury will have the DVD when they enter deliberations.

10:10 AM The iPad presented another challenge: showing customers why they would need one. We're watching another iPad ad back from 2010. "So in that brief 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."

10:10 AM Apple tries to introduce a DVD of iPad ads into evidence but Samsung objects. They're fine with the chart listing them, but not with the DVD itself. The matter will be discussed over the court's next break.

10:13 AM We're getting into the nitty gritty of how Apple decides where to run its ads. "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."

10:16 AM Apple's also put together a chart and DVD of news program and product placement clips. The chart gets in, Samsung objects to the DVD.

$149.5 million spent in iPad advertising by September of 2010

10:18 AM A new chart provides some insight into how much Apple spends on advertising. For the iPhone: fiscal year 2008, $97.5 million. FY 2009, $149.6 million. FY 2010, $173.3 million. FY 2011, $228.6 million. For the iPad? FY 2010, $149.5 million. FY 2011 , $307.7 million. Apple's fiscal year ends in September, so these numbers are before holidays sales for that calendar year are included.

10:20 AM And it's time for a break. We'll be back in 15 minutes!

10:39 AM We're back! Harold McElhinny is asking Schiller about Samsung's line of products, and if they compete with Apple's own. They're introducing a chart listing which retail channels Apple and Samsung sell their products through. AT&T, Verizon, Sprint, Amazon, Target, Wal-Mart, Best Buy, and Radio Shack all carry both product lines.

10:39 AM Schiller is asked about his reaction when he first saw the Galaxy S. "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" because it could be confusing to customers.

10:41 AM Schiller is asked how he feels about competition. "Competition's great... Every day there are companies creating producs to compete with us." Is copying fair? Schiller doesn't think so. "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."

"I thought they were just going to copy our whole product line."

10:43 AM Schiller reacted with "even more shock" when he saw the original Galaxy Tab. "I thought they were just going to copy our whole product line."

10:45 AM He pulls no punches on his feelings about any alleged copying. "It confused the customers on who's the creator of these products. It diminishes the value we've created for Apple as the creator of these products, of these beautiful things... It dilutes the way customers see Apple."

10:47 AM Schiller also thinks it's had an impact. "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," because additional customers then feed off the ecosystem of the devices they own.

10:48 AM Apple's done; now it's time for the cross-examination. Charles Verhoeven is handling the duties for Samsung. They're discussing touch keyboards. Schiller is still as put-together as you'd expect.

"I don't know how many things... you could legitimately claim we did first."

10:54 AM An email from Steve Sinclair at Apple is being shown in which Sinclair discusses the marketing challenges Apple faces: "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." The LG Prada is listed in the email as a phone that had a full touchscreen prior to the iPhone.

10:58 AM Pursuing the comparison between the Prada and the iPhone, Verhoeven asks Schiller about the importance of the touchscreen, even quoting Jony Ive. He pronounces it "Ivy;" Schiller corrects him.

11:02 AM Verhoeven is talking about using the iPhone when making a call, and is saying that the small black strips that frame the screen on either side are one way in which the iPhone helps prevent users from accidentally touching the screen when doing so. It's an odd line of questioning — it seemed like Schiller though he was talking about the proximity sensor turning the screen off at first.

11:09 AM They're now discussing how carriers display the iPhone in their stores; Verhoeven asks Schiller if Samsung and Apple devices are "segregated." He's getting at the question of whether consumers can confuse one product for another. Regarding the confusion, Schiller says "I was talking specifically about the marketing effort."

11:08 AM Verhoeven gives Schiller a Samsung Continuum, one of the phones accused of trade dress infringement in the case. A slide is shown on the screen, putting it side by side with the iPhone 3GS. The screen of the Continuum is blank, which causes Apple to object: "Now they've turned on the part they want, and turned off the parts they don't want." Koh asks why Samsung has the screen whited out, given that it's involved in the trade dress infringement allegations.

Verhoeven replies that they could "make it black instead." Yeah.

Samsung got its own phones confused in front of the jury

11:13 AM Verhoeven is putting another phone side-by-side with the 3GS: the Infuse 4G. Verhoeven asks him if it has buttons on the bottom, but it turns out he'd actually handed a different phone to Schiller. Schiller cracks that "they're confusing."

11:19 AM Samsung's attorney is trying to pin Schiller down on if he thinks customers will confuse the Infuse 4G for an iPhone. Schiller is sticking to the party line, but adds that "Samsung has ripped off a number of our design elements and yes I do believe some customers could be confused."

11:23 AM Verhoeven revisits the Apple buyer surveys, asking Schiller if they show that design was less important than ease of use. Schiller says that they do, but that it varies between region. It appears Samsung is trying to minimize the importance Apple has been placing on design thus far.

11:27 AM Samsung is showing another survey from the fourth quarter of 2010, where only 1 percent of respondents stated that color or design factored into their design decision. Schiller bristles at the comparison with the previous chart, telling Verhoeven that the data doesn't make sense unless you know the methodology of the study, even raising his voice to say "You're not explaining it!"

11:33 AM Remember that sales channel chart Apple showed earlier? Samsung is now attacking it, pointing out that several of the carrier partners listed weren't present for the first three years of the iPhone's life. Verhoeven presses Schiller, suggesting his earlier testimony about the chart may have been "misleading." Schiller's not happy with the accusation, but says he didn't testify about availability timelines and that there was no intention to mislead.

Schiller declined to comment on the iPhone 5 design

11:40 AM Samsung's attorney straight-up asks Schiller if Apple will be changing the iPhone design with the iPhone 5. After Apple's objection is overruled, Schiller answers that "I prefer not to tell confidential information about future products."

11:41 AM And Samsung's done. It's time for the court to take a break.

11:46 AM Harold McElhinny is back for Apple's redirect of Phil Schiller.

11:47 AM Schiller is being given a chance to explain the chart that had just one percent of customers listing design as important to their decision. He says that in this instance people were asked what element, other than price, would be the most important.

11:49 AM Schiller is asked about whether the iPhone design and Apple brand are intertwined."Yes, I think there's a strong correlation.... People associate the Apple brand with great design."

11:51 AM Samsung asks him one more question about the intent with the iPhone. "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."

11:52 AM That's all for Schiller. Up next — Scott Forstall!