The shock announcement by Apple that it was planning sever the
links with Imagination Technology, the British company whose
patents Apple has been relying on in connection with the graphics
in Apple devices, has caused Imagination's shares to plummet by
Imagination relies on Apple for at least half of its license and
royalty business and following Apple's statement that it will
no longer use Imagination's intellectual property in any new
products in two years' time coupled with the fact that Apple
has not only been developing a "separate independent graphics
design in order to control its products" it has allegedly been
poaching Imagination staff over the past two years, all of which
leaves Imagination in an invidious position with a Ł500
million hole in its finances.
Apple's killer blow comes in the wake of its unsuccessful
attempt to buy Imagination. The deal faltered after lengthy
negotiations broke down; questions may be asked as to why
Imagination did not recognise that a global giant such as Apple who
not only featured so much in the future and success of Imagination
but was also the largest shareholder and the biggest client by a
country mile would be unlikely to just give up and revert to the
previous arrangement when clearly change was on the horizon.
It transpires that Apple had a fairly advanced Plan B that was
ready to swing into action leaving Imagination reeling. It is
difficult to see how Imagination can turn the situation round,
having been caught by surprise with no prepared response, their
comeback amounted to clinging to the fact that Apple couldn't
do without them by effectively saying that Apple hadn't
presented any evidence that it will no longer require
Imagination's technology; doubting that Apple can get by
without infringing Imagination's patents and a little sabre
rattling about a potential legal battle. At the same time entering
talks around "potential alternative commercial
If Imagination does decide to pursue the legal route it will
face a David and Goliath fight without necessarily achieving the
surprise result. Apple's strategy has been planned for some
time and almost certainly will have considered the intellectual
property aspect. Imagination may pay a painful price for not
landing a deal when the offer was on the table, particularly given
the fact that Apple is known to for bringing external expertise in
It is unwise to believe that a business relationship, even if it
has lasted a decade and even if you think your expertise is
irreplaceable, is unbreakable.
Keep close to your clients and be aware of changes on the
horizon, you may not be able to halt or change anything but you may
be able to bend a situation to your advantage.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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