Deciding the Future of Mobile?
I am indebted to my friends at the Enterprise Irregulars, for the links in this piece. The IE’s, if you didn’t know, are a rag tag group of certified smarties who know all kinds of stuff about the greater tech industry and I am flattered that they let me hang out with them.
The aftermath of the verdict from the patent infringement lawsuit between Apple and Samsung initially generated more heat than light. But the last few days have made up for the light that failed to emanate from the weekend’s id fest and Armageddon prediction Internet confab.
Reuters is running an interesting story about Apple CEO Tim Cook and Larry Page of Google keeping the hotline open — you really need to be a child of the 1960’s to fully appreciate this metaphor. Suffice it to say that it is the origin of the little red phone. But also, there was this really interesting post at ZDNet by Jason Perlow about Samsung and Google’s collective need for a new dress.
I particularly recommend Perlow’s article because, while the idea of product dress might seem weird to some people — especially those who take issue with the look and feel aspects of the Apple suit — it might interest you to know that product dress is a legal term.
Without giving away Perlow’s point, let’s just make the observation that the classic Coke Bottle, which has nothing to do with how the stuff tastes, is part of Coke’s dress and its IP, as much as its secret recipe. Only Coke has Coke Bottles, for a good reason. So go read that article.
My point here, other than giving a shout out to the IE’s and trying to enlighten others, is that Apple might have, at least momentarily, hit on the only look and feel for mobile devices that will ever be widely accepted. Tapping, swiping, pinching — things that come natural not only to the members of our Genus but also our Family and, who knows, maybe even our Order — might be so hardwired into our beings that coming up with an alternative might be a waste of time. Holy $%^& Batman that might mean that Apple could end up owning the mobile UI and someday soon be in a position to make a few pennies on every Samsung or HTC device running Andriod for ever.
Believe it or not, such an outcome would not be unique in the annals of business or manufacturing. It might have something to do with cross licensing (I know, but don’t confuse it with dressing mentioned above). That’s when more than one company asserts ownership rights to an invention that each came up with the old fashioned way (you know, R&D?). But rather than fighting about it for years, the two (or more) companies come to terms, some money and possibly other patents are traded and then it’s back to business.
The best example of this is the car industry. Car radios, V-8 engines, automatic transmissions, how heating and air conditioning systems work, how the controls are set up and lots more, all have patents and if all cars look more or less alike in some basic features and functions, it might be because their makers went to the same patent swap meet. Yes, patents expire so don’t go looking to fund the fifth generation grand kids college even if you have lot of patents.
So this brings us back to Larry and Tim and the hotline. May we be informal for a moment and simply refer to each other using first names like they do in the music biz (Elvis, John, Paul, George, and especially Ringo; but also Bono, Sting, Eric and many others)? So, Larry bought Motorola (early car radio patents, BTW) at least in part for its stable of patents to ward off just the kind of suit that Tim’s company is making famous in the mobile industry (Tim should file a patent! hahaha!). And Larry, Tim and their minions are keeping the lines of communication open as they say.
What are the odds that the verdict put the discussions into high gear and that there’s an informal-formal patent swap meet happening out in the Valley between these principals? Nothing would surprise me but I think that if both sides remain reasonable and use their inside voices and big words, that there will be an announcement in the not too distant future that they’ve struck a deal.
If so, the deal would create the stack of the decade. Just as Wintel described a stack of Windows OS and Intel chips that made the personal computer; or as LAMP stands for Linux, Apache, MySQL and PHP for cloud application servers, some standard that combines Mobile/Google/Android/Motorola/Apple might emerge from all this chaos for mobile devices.
Let’s see, MOGAM? MOGA? GAAMMO? AGAMO? AAM? AA? Who knows, naming might be the stickiest part of the negotiations that aren’t happening on the hot line at the moment.
Apple and Microsoft in dead heat
Katie bar the door! A fresh headline from the venerable New York Times captures an important moment — “New King of Technology: Apple Overtakes Microsoft”
Don’t get too excited, we’re dealing in Monopoly money here as the article makes clear:
“In intraday trading in the afternoon session, Apple shares rose 1.8 percent, which gave the company a value of $227.1 billion. Shares of Microsoft declined about 1 percent, giving the company a market capitalization of $226.3 billion.”
Still, the only company worth more in the known universe is Exxon Mobile valued by the market at $282 billion.
So, that’s a lot of money and a significant coup for a company (Apple) that once nearly bought the farm until Microsoft gave it life support in the form of a loan. Still the crossing is significant.
In recent years, Apple could do almost no wrong with product introductions like the iPod and recently the iPad and more importantly, the retailization of technology. I own Apple TV which is not a hit that I can tell though it is a very nice product. The glitch that I can see is that Apple TV doesn’t have a lower case “i” in front of it so blame product marketing.
I don’t know what you think but it seems like Microsoft hasn’t done much right since Gates went into philanthropy. The company isn’t exactly an idea or product generator like Apple and the products they do bring out seem inept. Many people bought Apple products in reaction to product quality issues with Windows. And while Apple went for hands-on selling in its stores, Microsoft left it all to the big partners that pride themselves on how efficient they are at specking out a system and mailing it to you. Where Apple updates your software automagically, Windows users have to find a web site and figure out what to get (full truth, my last experience with Windows was XP and I bought a bushel of macs rather than chance Vista).
But the two companies are not simply mirror images. Apple makes no software save its wonderful OS and some funky utilities and an office suite, and Microsoft makes very few hardware products. Perhaps software is inherently more difficult? Maybe. But, importantly, in a world where you’d think all the hardware niches are full, Apple manages to find and exploit new ones. In the same world where you’d think the sky is still the limit in software, Microsoft finds it necessary to push the same rock up a hill by periodically re-writing its OS and we get headlines about security breaches.
We could look at the parity in market value as a good thing, as Apple catching up, but we also have to say that Microsoft slowed down. Why?
Commoditization
Dan Jenkins, a venerable writer for Sports Illustrated and author of many novels about sport (he wrote Semi-tough, for example), coined one of my all time favorite Texas-isms. It was a beautiful way of describing something just bordering on impossible. In one of his books a character says that something is “Tougher than rent and alimony.” I have long ago lost the context but even today rent and alimony are my acid test of true difficulty.
I never thought it would be possible to exceed rent and alimony for their sheer descriptive power and I believe that time will bear me out. But to that nifty phrase, I feel compelled to add another idea because it is my observation that there is nothing more difficult than watching a product line commoditize knowing full well that your company must change while being totally unable to. If nothing else, rent and alimony wins on brevity.
If change was easy in business, then everyone would be doing it but the fact is that it is a Herculean task. Why else would so many major software companies watch as on-demand technology got better and better while doing nothing or next to nothing to embrace the new delivery model?
I suspect that making the technical argument for change is the easy part of the equation and the hardest part is dealing with shareholders. As shareholders — and we are all shareholders — we play an interesting game of self-deception. We intuitively know when change is needed but, nonetheless, we also know that often times, stock in a public company would crater if the market determined that a company’s business model was to suddenly change so that it would make less on purpose.
Far better to let the air out of the balloon in a slow deflation than in a burst. In a deflation we all play a game of false hope, maybe the balloon will magically re-inflate, maybe we can break even and get our money back — maybe, baby. In reality it is a one-way trip to exhaustion. Rather than taking the decisive steps needed to save the company, albeit as a reduced revenue machine, we persevere tinkering with the old products and old business model hoping to forestall the inevitable. More nimble competitors nibble at our undersides.
There are any number of examples today of companies or even whole industries that could greatly benefit from changing business models despite the negative potential for their share prices. The first is the newspaper industry. We are at a silly point in the evolution of news delivery where papers are owned by large corporations that seem to want to protect their business models more than their businesses.
Newspaper readership is in decline in America (though not elsewhere) and parent corporations are nonetheless loath to do anything to change the model of printing the news. They give away their content on the Web afraid of charging for it despite the evidence that doing so can be profitable (the Wall Street Journal) and that recent surveys show readers are more than willing to pay for content delivered electronically.
I hear the loudest analysts say that electronic content delivery would not replace the revenues from print, but I hear very little about cost reductions in labor, transportation and printing. There is a solution to this, which is to simply wait until the print news business further deteriorates. Then some of the largest newspaper corporations might qualify for a federal bailout or the further reduced projected revenues of dying business might balance out with the prospects of the new paradigm. Conversion would then become a “no-brainer” with no irony intended.
The second example is the software industry and I fear that the American software industry — the jewel in our high-tech crown — might go the way of newspapers. For despite the fact that we have wonderful examples of forward looking companies like Salesforce.com, NetSuite, RightNow, Google, Facebook and hundreds of others crafting the software paradigm of the twenty-first century we still have too many conventional software companies watching their stock prices.
The conventional companies are big and form the backbone of global computing. They have names like Oracle, SAP and Microsoft and while some are making good efforts to convert their business models, the tasks are great and some have barely started. Kudos to Oracle and Microsoft for increasingly offering SaaS solutions. You can debate whether their solutions go far enough or if they are simply extending the old paradigm but they are making progress.
Microsoft worries me at the operating system and office automation products levels though. Google’s announcement that it was building a stripped-down operating system that gives small computers just enough functionality to get to the Internet is brilliant though it remains to be seen whether they can deliver. Microsoft now finds itself on the other side of an equation from its position as the disrupter of mainframe markets. In the 1980’s we were told that nothing had the power to stop mainframe computing but somehow client-server networks took over.
At risk is Microsoft’s deep penetration in desktop operating systems and office products. Google has a plan to deliver it all over the Internet — free — which could be a big problem for Redmond. Of course Google has to deliver but the sheer number of vendors in the SaaS space means that even if Google fails in the attempt, there will be other challengers. It’s not impossible, but it is rather hard to beat free, so what does Microsoft do? Wait for the threat to materialize or take action?
The standard playbook says stand pat but as playbooks go it has a disastrous track record. Time, as they say at Apple, to think different.
