Documents Show iPhone Competition Worries Apple

NEW YORK ( TheStreet) -- Newly released documents from the second Apple ( AAPL) vs. Samsung trial show a somewhat less confident Apple worried about the competition and underestimating the appeal of both larger and also less-expensive smartphones.

According to a report from R e/code, internal Apple slides from a presentation one year ago describe research showing both a slower rate of growth for iPhone sales as opposed to higher growth rates for cheaper handsets as well as larger devices (larger than current iPhone with 4-inch screens). The slide is bluntly titled "Consumers want what we don't have."

Apple was off 0.53% to $528.97 in early New York trading on Monday.

The slide goes on to admit there were other reasons for Apple to worry including growing problems with mobile carriers. Apple said those service providers had a "strong interest" in capping iPhone sales for a number of reasons especially the inability of service providers to add potentially lucrative "bloatware" to iOS handsets.

The slide also stated that the competition was starting to produce "drastically improved" smartphones as well as some Android phone makers spending "obscene" amounts on advertising.

In another document, an email dated Oct 24, 2010, then-Apple CEO Steve Jobs, writing to marketing vice president Phil Schiller, said that in 2011 Apple would wage a "Holy War with Google"  (GOOG), the creator of the Android operating system.

The document is labeled "Highly Confidential - Attorneys Eyes Only."

Jobs admitted that his company had to continue to innovate because he thought the company was "in danger of hanging on to old paradigm (personal computers as a consumer's primary device) too long." He also believed "Google and Microsoft (MSFT) were further along on the technology, but haven't quite figured it out yet.

He also had big plans for the company's Apple TV box. An innovative product, Apple TV stagnated after its original release. But Jobs had some big ideas for the device including subscriptions, content from "NBCCBS, Viacom, HBO ..." as well as "apps, browser" and a "magic wand" similar to what has evolved in current products from Roku, Amazon, Google and others.

These newly released documents were provided by Samsung.

Round two of the Apple vs. Samsung saga began last week in the federal courthouse in San Jose, Calif. Apple has sued Samsung for $2 billion, accusing the Korean company of infringing on software patents developed for the iPhone.

The battle has been raging since August 2010 when Apple requested that Samsung, a major supplier of parts and "trusted partner" for the iPhone, agree to sit down and discuss Apple's claims of patent infringement.

The first trial began in July 2012. A month later, after three days of deliberation, the jury decided in Apple's favor and awarded the company more than $1 billion in damages. A few months later, Judge Koh recalculated the jury's award and invalidated nearly half ($450 million).

-- Written by Gary Krakow in New York.

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Gary Krakow is TheStreet's Senior Technology Correspondent.

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