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.

Google Acquires Motorola Mobility: The Big Picture

Well played Google, well played. The post-Schmidt giant has been busy competing against Facebook, competing against Facebook again, and now buying their very own mobile handset manufacturing outlet.

“It’s About the Patents!”

Prior to the Motorola Mobility purchase, Google’s weak hand of 701 patents pales in comparison to Microsoft, who was granted 3,121 patents just in 2010. Acutely aware of its vulnerability to patent lawsuits, Google is staffing up on patent lawyers, clerks and legal experts. Just one month ago, Google’s job openings included a number of patent-related positions, including a patent agent, patent counsel, patent docketing clerk, patent litigation counsel, patent paralegal, and a strategic patent licensing and acquisitions manager. So it seems likely the move was focused squarely on shoring up defenses against patent trolls. Afterall, Google stacked up enough legal firepower needed to put up a strong legal defense. Google also recently criticized Microsoft and Apple of trying eviscerate Android with a patent guillotine rather than competing in the market.

Buying Motorola means buying Motorola’s patents, as Google specifically pointed out in its blog post today. You can almost feel the disdain for our absurdly screwed up IP patent system in the writer’s prose:

“Our acquisition of Motorola will increase competition by strengthening Google’s patent portfolio, which will enable us to better protect Android from anti-competitive threats from Microsoft, Apple and other companies.”

The Android Satellites

While Google has been left untouched, Apple filed a number of rather lame-ass motions targeting Android device makers Samsung and HTC. Even Techcrunch railed against Apple’s actions (shocking!). Oh, and Microsoft also decided to pile up on HTC too. Care to guess whether HTC’s top brass is supportive of Google’s latest acquisition? Let’s see what they have to say about this:

I'm Smiling on the Inside.

“We welcome the news of today‘s acquisition, which demonstrates that Google is deeply committed to defending Android, its partners, and the entire ecosystem.”
– HTC CEO Peter Chou

Oh I bet you do Peter.

HTC isn’t the only party to take sides: virtually every other handset maker chimed in with either enthusiastic praise, or at least cautious optimism. Regardless, the biggest winners (other than Google) are the smaller satellites in the Android galaxy, who would probably be forced to walk into Microsoft’s waiting arms. The Motorola acquisition is not just lawsuit insurance – it’s market marginalization insurance.

The True Mark of Genius is Turning Disadvantage Into Advantage.

Picture this: you walk into a Verizon store in the future, determined not to buy an iPhone. You have a few choices, here, but it boils down to the Google-Motorola dynamic duo or Windows Mobile on Nokia phone. Ah, yes Nokia; The company which Microsoft invested in earlier this year. They did so to ensure a locked-in downstream mobile handset licensee for Windows Mobile. Nokia, who has a trickle of a market share in the two largest mobile markets in the world.

"Wait they bought Motorola, which means we're stuck with.. aww shit."

I suppose it’s a sweet deal for struggling Nokia, who was quick to go to press today:

“This further reinforces our belief that opportunities for the growth of Nokia’s smartphone business will be greatest with Windows Phone. Additionally, with our respective intellectual property portfolios, Nokia and Microsoft are working together to build and nurture an innovative ecosystem that benefits consumers, operators, developers and other device manufacturers.”

In other words, there are meetings happening in Redmond right now focused on how to make the best of a competitive disadvantage.

The Freedom to Run Android

You know what else Google now owns? 29% of the Android market in the U.S.

That’s a large enough share to drive Samsung and HTC to deliver user experiences consistent with Google’s vision, or else Motorola will. The mobile handset makers are probably wondering if Motorola will enjoy special benefits or access to Google itself. While Motorola is playing down the possibility, it’s likely Motorola will be the reference standard. That means a previously toothless Google couldn’t do much to combat rampant skinning which leads to Android phones with confusing interfaces which look like ass. Google’s primary advantage over the iPhones has been hardware selection. Apple’s competitive advantage over Android has always been the kind of slick user experience only possible with end-to-end control of the product. The Motorola acquisition allows Google, at least on paper, to have it both ways. I wouldn’t be surprised if Google starts making noise about how handset makers should compete on hardware horsepower and quality build, etc. If I were Larry Page, that’s what I would do. That and pick up a shiny new Tesla.

Learning The Lessons of GoogleTV

Earlier in the year, GoogleTV became a casualty of an entertainment industry which withheld critical support for the internet television devices. Google’s management apparently learned from that painful experience that locking down technical talent isn’t enough to come out ahead. It also appears Google is no longer willing to lead its from behind, but rather drive their partners kicking and screaming towards a a better user experience. All it cost was 12 billion. The price appears to be worth it.

Google+ Games is Here

In June 2011, a reference to “Google+ Games” appeared the fledgling social network’s code, suggesting Google would strike at Facebook’ gaming cash cow.

Fast forward to today, a Google+ Games icon began showing up in a number of users’ profiles. The Google+ team is rolling out a few early previews to a small group to test out the new service.

The Google+ games project is launching with 16 new games, including titles from Playdom (City of Wonder), Rovio (Angry Birds), and Zynga (Zynga Poker). Here’s a screenshot form the google blog listing the initial game offerings:

The significance? Facebook levies a fee of 30 cents out of each Dollar for games on its platform. Google’s proposed cut is a measly 5 cents, which strikes directly at Facebook’s cash cow. According to an analyst at Privco’s, Facebook relies on gaming for over a third of its revenues. Since fiscal 2011 revenues stand at 3.8 billion, we’re looking at a 1.25 billion Dollar salvo launched at the Palo Alto social network. The move likely draws a collective cheer from game developers and consumer advocates, who’ve railed against Facebook’s rather large revenue share. This was a market itching for competition.

If I were to guess at what’s next, I’d say Facebook will adopt a wait and see attitude, and drop its revenue share rates if Google begins to make serious inroads into casual gaming. I’d also bet we’ll see the impact of Google+ games on Facebook’s mammoth revenues in short order, one way or another. But the biggest winner seems to be Zynga, who now looks forward to an IPO where it can boast a viable alternative to a Facebook dependency to boost valuation numbers.

Oh, and if you haven’t gotten the “gaming icon” on your Google+ feed yet, here’s a video to rub salt in the wound.. er.. I mean to give you a preview of things to come.

Incidentally, since Google+ is now in gaming, can music be far behind?

Who’s the Highest Followed Google+ User?

Larry Page? No.
Sergey Brin? Guess again.
A celebrity perhaps? No, this isn’t Twitter here.

It just so happens the most followed user is the last person you’d expect: