After providing the graphic hardware of Apple’s PowerVR, Imagination Technologies enjoyed a lot of profit and popularity. However, the collaboration between the two companies is going to cease. As expected, this will affect the latter in quite a serious manner.
Apple announced that they have individually developed an alternative technology for PowerVR. They are going to use this for their future devices, therefore they will no longer need the help of Imagination Technologies. In about 24 months, they will no longer use the technology of the company.
Massive losses for Imagination
This announcement immediately caused the company to lose £500 million only in one week. This happened as their shares went down by 60 percent at the time when the news was made public. The situation was given by the fact that Imagination must have benefited from a big share of the revenue of the products.
The Imagination management has always refused to disclose how much of the revenues they got, but many assumed it must have been half. They reported that, besides Apple, they had no other important collaborations. However, they were still in a partnership with two other customers, Ensigma and MIPS.
The issue might turn into a legal matter
However, Imagination are not going to give up so easily. They believe that Apple cannot develop their own graphic hardware to be completely original, so they might end up infringing the concepts owned by Imagination. If this happens, they intend to solve the issue through legal matters. They are optimistic and think they might be in advantage.
Many wonder why Apple has made this drastic decision. Some say that they might want to benefit from a smaller royalty rate. Others suggest that they might be struggling with some difficulties in developing their technology. A third group say that this might be just a scheme, and they might come back to propose takeover to Imagination.
The purpose behind Apple’s decision is unknown, but Imagination is still in a dark place right now. They might have a legal advantage, but they will still lose their main customer. This might lead the company to acquire huge debts and even more losses. Thus, we might say that they are still the ones at a disadvantage in this conflict.
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