The Counterintuitive Winner in the Landmark Samsung vs Apple Trial

The landmark Apple vs. Samsung intellectual property trial ended in an award for Apple totaling $1,049,343,540  in damages, while countersuing party Samsung was granted a total of $0 in damages. That’s not a typo, that’s a zero.  Apple roped in over 30 devices infringing more than a dozen patents. All this while infuriating federal judge Lucy Koh who’s been the most entertaining part of this circus:

For reference, let’s have a look at the highest-profile offending device:

No wait, that’s not it. Can we pull up the right image?

Wait that’s not it either.

That’s the one.

So Apple’s lawsuit against Samsung ended in a $1 billion award. Queue the tech press soiling their ishorts while writing up gregarious headlines like APPLE WINS BIG!

Actually, no.  This is a pretty huge win for Samsung, for the following reasons:

1. When a market leader in the premium space goes on offense, the target is immediately elevated to direct competition in the minds of the media.  It’s a classic marketing slip up where the market leader signals to the market that competitor X is a serious threat.  Don’t believe me?  Ok, when was the last time BMW sued Mazda?  Never, you say? Exactly my point.

2. Samsung rakes in 1 billion USD in just over 2.2 days.  Do the math.  This isn’t much of a penalty in absolute terms.

3. Besides, Samsung will (potentially) pay 1 billion USD to secure the #2 spot in the mobile market. That’s a bargain when you think about it in absolute terms. I bet RIM would be in far better shape today if it had infringed.  Same goes for Nokia.

4. Judge Koh orders an injunction on Samsung selling phones in the US? I highly doubt it. Putting aside the logistical nightmare, that would leave  American buyers the choice between the iPhones, Windows phones, and this piece of crap.

5. Just imagine the blowback on Apple if an (unlikely) injunction does come into force. Apple will scramble to put together a generous licensing agreement. Samsung makes chips in the iphone, so they’ll play ball.  It’s probably even money for Samsung in the long term. (Update: it seems blowback is already hitting Apple.)

6. This entire exercise likely puts Apple in the red since Google/Motorola is now suing Apple in turn.

7. Apple was forced to divulge it’s playbook into the public record because the outcome hinged on the jury’s impressions of the trial in addition to the law.  That’s a fail for normally uber-secretive Apple.

8. Oh, and let’s not forget appeals, where “overwhelming wins” more often get scaled back than not.

So don’t believe the hype.  Samsung took a risk, and it seems to have paid off.   The real loser today is Google, who’s ecosystem is under attack, which should raise doubt in the minds of smartphone buyers.  That uncertainty, timed just before the iPhone 5 release, is worth far more than any settlement.

The Founders Dictionary

Terms every entrepreneur should be fluent in, courtesy of Udemy

Best Halloween Costume Ever

Can you round up two spare iPads or iPhones for the evening?  If so, you too can make this amazing “hole through the chest” zombie costume. Check out the video below:

From Gizmodo: “It’s really pretty simple. You strap one iPad 2 to your front, one to your back, and you start a FaceTime chat between them.”  Add a shirt with holes, some fake blood and you’re set.  Roaming around Trick or Treating? No problem: simply carry a portable Wi-Fi hotspot in your pocket.

Brilliant!

Visualizing Dilution

A must read for startup founders, via Techcrunch.f

 

 

What if Solar Received The Same Subsidies as Fossil Fuels?

From 1BOG..

Steve Jobs 1955 – 2011

Here’s to the crazy ones. The misfits. The rebels. The troublemakers. The round pegs in the square holes.

The ones who see things differently. They’re not fond of rules. And they have no respect for the status quo. You can quote them, disagree with them, glorify or vilify them. About the only thing you can’t do is ignore them. Because they change things. They invent. They imagine. They heal. They explore. They create. They inspire. They push the human race forward.

Maybe they have to be crazy. How else can you stare at an empty canvas and see a work of art? Or sit in silence and hear a song that’s never been written? Or gaze at a red planet and see a laboratory on wheels?

While some see them as the crazy ones, we see genius. Because the people who are crazy enough to think they can change the world, are the ones who do.

——–

I’ve Steve-Jobbed my career for the last couple of years.  It’s worked wonders for me.

Here’s what I mean: I try to carve out 2-3 hours a week to step away from the day-to-day and think creatively.  I do so to not to think about where the industry is headed, but where I want to it to go.  I learned to do this from the man who embodied this practice better than anyone.  That’s what I’ll remember Steve Jobs for.  That’s what he taught me.

You lived life to the fullest, Steve.



Amazon’s Kindle Fire Will Dominate the Low End Tablet Market. Here’s Why.

Amazon hasn’t shipped product, but it has already won the race for the low end tablet market. Fan boy premature exuberance, you say? Hold on, hear me out. There’s a simple reason why Amazon will dominate the low end tablet market..

Kindle Fire wins because Amazon has told us what to do with it.
Take a look over at the top level menu on the Kindle Fire over to the left. Come to think of it, I’ll save you the futile squinting. The menu reads “Newsstand, Books, Music, Video, Docs, Apps, Web.” Options are ordered from most specific and least confusing to most abstract. Fancy a read of the NY Times? Cool. Maybe you’ll pick up a children’s book after that for the little one. Then perhaps you’ll buy Angry Birds. Heck, Apple’s television ads have already trained you how to buy apps.

Just for kicks, compare the the Fire’s ad to the Blackberry Playbook ad. “Small enough to take anywhere, but powerful enough to take you everywhere?” Really? That sounds like my laptop. I’m doing fine without a Playbook, thanks.

Blackberry isn’t the only tablet maker to struggle with a succinct and engaging message. I’m throughly perplexed by this ad:

Apparently the message here is you should never be caught without Angry Birds in case of a lightning storm.

Fire Up the Subsidies

Amazon has one additional advantage over low cost (or even total crap) Android tablet producers. Amazon can sell the tablets at a loss and subsidize the device with digital goods. In response to Fire’s USD$199 pricing, Best Buy has already slashed the price of the BlackBerry PlayBook by $200. Which means Blackberry will never match Amazon’s profitability in the segment. I bet the HTC will grudgingly follow soon. While Apple and Samsung will slug it out in the premium tablet market, the low end competitors are now facing an ugly Catch-22.

But Wait..

Not so fast, says Horace Dediu, an analyst at Asymco. He argues Fire’s USD $199 price tag yields Amazon a razor thin margin, Amazon has little incentive to introduce frequent device upgrades. Furthermore, digital goods prices sold through the Fire will also yield thin margins. Those small subsidies mean Amazon has every incentive to prolong the lifespan of each Fire model to amortize losses. Competitors like Apple and Samsung will introduce frequent device upgrades. Amazon will appear to be standing still in a competitive market while customers will rush to HTC or into Apple’s embrace with premium upgrade money.

Come to Jesus.

I don’t buy it. Dediu’s analysis is logically sound, but there’s a hitch. Nobody needs a quad core CPUs with multiple GPU cores to browse the web, read an e-book or listen to mp3 file. Since no one will buy a fire to play Crysis or other GPU intensive games, nobody will care about slower upgrade cycles. In the wacky world of consumer devices, sometimes good enough really is… good enough.

One More Thing

One complaint if you’ll indulge me, Jeff Bezos. I’m not alone when I say the “Kindle Fire” is a pretty lame name.