Patent Wars!

I am back. After almost four months. And lots has happened in the meanwhile. Baba Ramdev, Anna Hazare, India in England, Wimbledon, and much more. On a personal front, I have changed jobs and cities, and am back to Gurgaon.

Amongst all the other noise, one of the most fascinating, and disgusting, events has been the patent wars. From Lodsys to Nortel to Novell and now Motorola Mobility. If the 80s was marked by the Cola Wars, the current decade will be marked by fierce patent wars. The Google-Motorola deal has been analyzed to death over the past couple of days by people way more knowledgeable than I am. The value of key patents, the impact of the deal on Android handset manufacturers (Samsung and HTC), the regulatory approval, the breakup fees, will it actually be a deterrent, and much more.

Some have even gone on to analyze winners and losers. That is where I have a problem. This was a simple analysis.

Winners: Motorola/Jha/Ichan.

Losers: Everybody else.

Warning: If you don’t want some boring speculation on tech, please stop reading now!

Here’s why. People now think that making money of patents is easier than slugging it out and making products. Case-in-point: HP. The once poster child of Silicon Valley wound up its touchpad business and thinks it can make more (and easier) money just licensing patents! This is such bullshit man!! And Kodak. And Nokia. And many more to come. What people don’t realize is that eventually everyone is going to stop making things. Then you will be left with trolls and no one to sue.

Over the past couple of months, Google, MS, and Apple have spent close to $20 bn in byuing patents to gaurd themselves against each other, and I don’t think that the spending binge has come to an end. Let’s analyze each company in detail.

Microsoft:

The company has nothing to show for, in any domain other than OS, Office, and Gaming. Its web presence is almost negligible, however much Bing-ho they are about it. And its mobile OS and deal with Nokia, a footnote in the mobile chapter. It also has one of the largest patent arsenal amongst the key players. It knows it can’t deter trolls using the patents – it doesn’t work. Also, its existing patent portfolio should have helped protect itself (and key sources of revenue – OS and Office) from other companies. Also, not too many company can sue MS for large amounts in these two areas.

However, the Nortel patents was almost a pocket change for a company the size of MS. What it does destroy is the notion that MS would only use its portfolio defensively. Its a clear signal of MS’ growing ambition of generating revenue from IP – which it already does from Android manufacturers. Maybe MS can spin off an entity to do this for it. Maybe it can be named, I don’t know – IV?? Since then, MS has expressed a passive monetary interest in the Mosaid-Nokia deal, another IV in making.

Its a shame to watch a company as big as MS doing this. Money that could have been better spent on development. On XBox. On Office. On Windows. Wasted. And a bad signal being sent to developers. The company doesn’t have better development projects to spend the money on. #FAIL

Apple:

The company that single-handedly changed the smartphone scenario. The company that changed our expectations from our phones. The company that has almost $80 bn in cash.

Did Apple panic at the pace of growth of the Android OS? They shouldn’t have. Apple should have learnt from MS and Intel (and Google in search recently) that monopolies are not good for business. A good competitor not only keeps the regulator away, but also keeps the company on its toe on the tech front. Example, the malaise that set in MS OS development when it had no competition. The rebirth of the Mac OS changed that.

The logic of trolls doesn’t stand here either. So the only reason for Apple to buy patents was to sue the ass off Google Android. Not a smart strategy. What it has done now is pushed Google in to a corner, and forced it to do something stupid. A pissed off, and technically and financially well-off, competitor is not what you want.

Additionally, time, money, and focus that would be spent on developing new products will now be wasted on litigation. Not prudent according to me. The problem is Apple doesn’t have much else up its sleve other than iPhones, iPads, iTunes. If Google goes for a “scorched earth” strategy, a ruling against Apple’s handheld devices business would impact its main revenue source, and it would still have nothing to hurt Google’s search business – so far as I know.

Google:

Stupid. Plain stupid. Brave, yet stupid.

You just spent $12 bn (and another billion on IBM patents) on protection you could have had (or made more expensive to Applesoft) for say $5 bn. We all agree with your commitment to Android, but this is just insane. We know mobile web is the future and that your ad revenue will be based on your ability to play in that field, but why not team up with HTC, Samsung, and other partners to do the same. That would have given them more confidence in your support for Android. Buying a handset all on your own will just scare the shit out of them. Or you could keep the patents and sell off the rest of the company to your allies – call Ichan.

Will you go offensive – defies your “do no evil” motto, or just use it as a defense – in which case its a helluva price to pay.

Asides:

In this age of legal outsourcing, do you know what a billion dollars would have gotten you? At the very least 10,000 man years of patent searching time from some of the best talent looking to invalidate a lot of the rubbish that has been patented in the name of software patents. And believe me that is at least enough to invalidate close to 50,000 patents, if not more.

And I wish Google had the balls to do something like Fark did.

Interesting infographics on patent wars: One, Two.

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