The headline in the New York Times brought what I had thought would be unambiguous good news or at the very least non-news to most people. A San Jose jury had found in favor of Apple in a patent infringement case against Samsung and awarded Apple one billion dollars in compensation. The suit involved infringement on patents for the iPhone and iPad.
But of course there was diverse opinion over the verdict. Much of the commentary in the Times was of this variety:
“This is an overreach of the patent law. If the first carmaker (Daimler) would have patented this new type of vehicle, there might never have been an American (sic) car industry. Apple ends up looking bad in the end, since it’s obvious that they are trying to stifle a competitor that is starting to get better at doing something Apple did first.
But I disagree. In that vein, did you know that the Wright Brothers patented the airplane? It’s U.S. patent No. 821,393 in case you are curious. You can look it up. That patent didn’t seem to slow down the evolution of the aviation industry.
I don’t usually comment on stuff like this but I feel compelled to because what passes for logic in this case is terrible. Much of the commentary is a misguided attempt the re-examine the patent process. The commentators disagree about whether this or that feature should be patented or patentable but that train left Dodge a long time before trial. They also engage in retrograde thinking, by essentially saying that the patent is obvious today so why was it needed in the first place? But the ideas that go into patents are rarely obvious at the time of invention and patents are awarded to protect an innovation by giving its authors time to profit from their invention. Without patents would we still bother to invest billions in R&D not to mention the time and effort to invent things?
The patents were awarded fair and square regardless of what anyone thinks now. The only question before the court was whether or not Samsung illegally copied a feature or function for which Apple had won a patent. The answer was a resounding yes. Yes, Samsung deliberately and knowingly broke the law by using someone else’s property without paying for it.
The issue was never about how deserving Apple or anyone else is or was of receiving a patent. It wasn’t even about Apple using its great wealth to prosecute an even wealthier corporation.
When did we as a people become so illogical?
What’s the world coming to? Microsoft lost money in the software business last quarter, the first loss in a decades long string of positive earnings from the world’s biggest software company. Sheesh! Yes, there were extenuating circumstances that you can read about here, but the loss signals the breadth and depth of the impact that the tablet is having on the hardware market. The iPad tablet to be precise and its economy size, iOS sharing little brother, the iPhone. For a quick slide show on iPad’s penetration and adoption check out this presentation from Business Insider.
Last time I asked if hardware was becoming sexy again and why. The answers seem to be “Yes” and “Because tablets have reached a new price point that opens up more emerging global markets to computing.” Tablets and their near kin, smartphones, are defining a global computing platformfor the next decade and beyond promising first world information access to many people formerly left in the dust.
The writing was already on the wall when analyst firms IDC and Gartner recently documented a stall in the PC/laptop forward momentum. Lower PC sales means fewer operating system sales and all that goes with it. To be sure, tens of millions of units are still being sold this year along with operating systems and productivity software often bundled in. But growth has stalled as new customers in emerging markets are voting to type on Gorilla Glass over keyboards.
Every paradigm goes through a predictable lifecycle and the computer operating system dependent on hardware sales is another example, not an exception. Microsoft, Intel and others invested heavily in thin, ultra-light laptop machines as the next thing that would protect the franchise and compete with tablets, but they were still too expensive and ultimately not cool enough. If Microsoft expects to get its OS mojo back it will need to cajole its hardware partners into really being competitive with tablets.
Right now, everything is going the way of the tablet and Apple can almost do no wrong. Even when a European judge made a finding in favor of Samsung in a patent dispute with Apple recently, he declared the Samsung gear “not as cool” as Apple’s and therefore not infringing on Apple patents. That’s just amazing.
Windows 8 comes out later this year and Microsoft has introduced a tablet of its own, the Surface. The game is far form over but the latest brush with reality suggests Microsoft might have been prescient in going “all in” as Steve Ballmer said of the company’s approach to cloud computing some time ago. Microsoft is at some intermediate point in its journey from vendor of licensed software to ringmaster of a giant subscription economy. Like many companies in similar transitions, the going isn’t always smooth but if anyone can pull this off it ought to be the guys in Redmond.
When I’ve spent time with the Redmond gang over the last couple of years I’ve been impressed with how much they get it, not just at a high level but throughout the organization. All in, Azure, and retail stores suggest a company thinking its way through the changes. And analytics and social networks suggest they really get it. Maybe all in should be replaced by we get it or better, we get you, but not quite yet.
But on a cautionary note getting to the cloud or to tablets won’t be enough; this is a business model change that every company has to deal with and Microsoft has done more than many already. Now, Microsoft’s partners have to pick up the gauntlet and evangelize more than ever.
This week (on July 25) Zuora will release a Fireside Chat video discussion that I am participating in. It will be all about the cloud and subscriptions and I expect an important theme will be the attention that subscription companies need to pay not to selling but to service and ensuring customer happiness. And, oh, heck, while I am talking about myself I might as well mention that my new book is coming out around the same time — “The Subscription Economy — How Subscriptions Improve Business.”
While the changes in the industry might be painful for some, they also represent innovation and creative destruction which is the hallmark of a vibrant economy. The issue for us is not how to slow down change but how to embrace and leverage it. Once the election clears out I think Q4 could be an important turning point as winners and losers get back to the work of inventing the future and making money.