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Apple TKOs Cisco in iPhone bout, analysts say

One called Steve Jobs 'the Rasputin of the computer industry'

February 22, 2007 12:00 PM ET

Computerworld - Although Apple Inc. and Cisco Systems Inc. remained mum today on the details of their deal to share the "iPhone" trademark, some analysts said Cisco got the short end of the stick.

Yesterday, the two companies announced that they would both use the iPhone name on their products. They also pledged to "explore opportunities for interoperability in the areas of security and consumer and enterprise communications," according to a joint statement issued last night.

Cisco, in a lawsuit filed in federal court last month, claimed the iPhone trademark via a 2000 acquisition of Infogear. The San Jose company has sold a line of Linksys VoIP devices under the iPhone label for over a year.

As part of the settlement, all legal action on both sides has been dismissed, but the rest of the arrangement's details remain confidential.

That didn't stop analysts familiar with Apple, Cisco and the iPhone brouhaha from speculating on who won and, more important, who lost at the negotiation table.

"The rule in Silicon Valley is that if Apple leaves the table smiling, the other guy got screwed," said Rob Enderle, an independent analyst and principal of the Enderle Group. "And Apple left the table smiling on this one."

Roger Kay, of Endpoint Technologies Associates, agreed. "It certainly looks like Cisco gave away the store."

Both Enderle and Kay said their take was based on the clear value of the iPhone name, and the vague interoperability promises made in the statement. "I'm not convinced that Cisco got what it wanted out of this," said Enderle. In the past, he added, Apple has made promises to partners that it didn't keep. "That's been a history of deals with Apple. The partner always regrets it."

Kay, on the other hand, assumed that some money must have changed hands. The direction: from Apple to Cisco. "It would be very odd if there wasn't some money exchanged, because Apple gets almost everything." Kay said the iPhone name could be worth as much as a "couple of hundred million."

Cisco declined to comment on the record beyond the official joint statement; Apple did not return a call for comment.

Neither Enderle nor Kay was surprised that a deal was struck. "Apple couldn't afford to go to court," said Enderle. Apple had argued publicly that its cell-phone-based iPhone was different enough from Cisco's VoIP iPhone to justify using the trademark. If that reasoning had won out, Apple would have opened itself up to similar justifications from rivals. "Others could have used the same argument with the iPod," Enderle said.

"Apple clearly got the better deal," Kay said. "Steve's [Jobs] ability to hypnotize people is legendary. He's like the Rasputin of the computer industry."

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