Monday, July 25, 2011
Nathan Myhrvold, the former chief strategist and chief technology officer at Microsoft, is the founder of Intellectual Ventures, a company that funds, creates and commercializes inventions.
More about Nathan P MyhrvoldPatents rarely make headlines, but they did this month when Nortel Networks Corp., the defunct Canadian telecommunications giant, auctioned off its patent portfolio and drew an astonishing winning bid of $4.5 billion from a group of companies that includes both Apple Inc. (AAPL) and Microsoft Corp. (MSFT)
The sale marks a watershed in the maturity of intellectual property markets and a dramatic shift in strategy for technology companies. Suddenly these companies are acknowledging that patents are a strategic asset worth billions.
Here’s an inside look at what happened -- and what’s at stake -- and remember, as you read this, that my company buys and licenses high-tech patents.
Most big tech companies inhabit winner-take-most markets, in which any company that gets out in front can develop an enormous lead. This is how Microsoft came to dominate in software, Intel Corp. in processors, Google Inc. (GOOG) in web search, Oracle Corp. in databases, Amazon.com Inc. in web retail, and so on.
As a result, the tech world has seen a series of mad scrambles by companies wanting to be king of the hill. In the late 1980s, the battle was for dominance of spreadsheet and word-processing software. In the late 1990s, it was about e- commerce on the emerging Internet. The latest whatever-it-takes struggle has been over social networks, with enough drama to script a Hollywood movie.
In each case, the recipe for success was to bring to market, at a furious pace, products that incorporate new features. Along the way, inconvenient intellectual property rights were ignored.
Yes, copyright was almost religiously enforced. Copyrights are trivial to obtain (just type the “c” in a circle symbol), and software companies see them as essential to restraining piracy, which hurts revenue. Patents are a different story, however. It takes time for engineers to apply for patents and even more time if they diligently respect other people’s patents. So technology companies typically did neither.
In fact, many tech companies forbid their engineers from checking whether their products incorporate others’ patents. The practice amounts to an intellectual property version of “don’t ask, don’t tell.”
As tech giants commercialized ideas that had been pioneered by small companies and merged once-separate technologies into new products, they infringed other people’s patents. Personal computers took over publishing, photo processing, cash handling and a million other functions once performed by other companies’ patented products. Smart phones likewise displaced more specialized devices, such as GPS units and bar-code readers. When the TV commercial says, “There’s an app for that,” the “that” part is sometimes covered by patents the app creator doesn’t own.
Once tech giants got to the top, they realized that their cavalier treatment of patents had left them vulnerable. If you already control 90 percent of the market, your own patent portfolio does little for you. But outside patent owners sometimes show up and ask to be paid. Last month, the U.S. Supreme Court decided that Microsoft, the company I used to work for, must pay almost $300 million to a Toronto-based company called I4i LP, which claimed its patented technology was used in Microsoft Word. All tech companies face this sort of claim, and they’re not happy about it.
The biggest companies, which have always touted their brilliant innovations to justify the billions of dollars in stock options they pay their executives, have been in the odd position of attacking the patent system and publicly deprecating the innovations of others. Patents attempt to create a level playing field, but the last thing an 800-pound gorilla of a company wants is a fair fight. After succeeding in part by stealing other people’s inventions, they decry any inventors who have the temerity to ask for a share of the returns.
In Congress, lobbyists for every major semiconductor, software and Internet-services company worked for seven years to undermine the much-needed patent reform bill and to delay its passage. (The House and Senate each recently passed a version of the bill; they are now working to reconcile the two measures.)
Yet even as that was going on, a growing number of tech companies started to discover that patents might be useful after all. In 2009, Micron Technology, a major computer chipmaker, transferred about 4,500 of its patents to a renowned patent litigator in the hope that he could make some money on them. And in the past two years, Microsoft has sued companies that were using the Linux computer operating system and Android, Google’s mobile-phone platform, to collect on what it viewed as its share of the patent liability that is hidden in a lot of “free” software.
It isn’t just about the money; these are also strategic moves. Apple, flush with the iPhone’s success but understandably worried that it might wind up becoming the R&D outfit that prototyped ideas that made others rich, has recently sued HTC Corp., Samsung and others. Just last week, the company won a preliminary ruling from the International Trade Commission, which if upheld will prevent HTC from importing smart phones into the U.S., essentially wiping out its business here.
Microsoft and Apple could have sued Google; most of the disputed features are in Android code. Instead, they elected to sue Google’s customers as a way to avoid an all-out war with the search giant -- reminiscent of how, in the Cold War, the U.S. and the Soviet Union used to battle by proxy in places such as Vietnam. Oracle, buoyed by patents it got in its acquisition of Sun Microsystems, was less circumspect; it sued Google directly.
These tussles set the stage for Nortel to put on the block more than 6,000 patents and patent applications, which cover many features of current and future mobile phones, in an auction orchestrated by Lazard Ltd. Analysts at my company and elsewhere in the industry found that the patents were good, but what made them extraordinary wasn’t their quality -- it was simply that they were on the market and hadn’t been widely licensed. Just six months ago, the expected selling price had been $200 million to $400 million -- a lot of money, but still a pittance compared with the prize of being the biggest winner in the smart-phone business.
Google then made its move, tendering a public stalking- horse offer of $900 million that sent shock waves through the industry. Even stranger, its offer allowed Lazard to shop the deal for several months.
Many people were surprised that Google stepped forward; it has consistently been one of the most outspoken critics of the patent system, presumably because it faces enormous potential patent liability. Even its basic business model of advertising- supported search was first invented and patented by a company called GoTo.com, which sued Google for infringement in 2002. Google settled the lawsuit shortly before its initial public offering in 2004.
The amount of Google’s offer was unexpected, but the high price made perfect sense. Google has very few of its own patents; with Nortel’s portfolio, it could change the balance of power in the smart-phone industry. It could threaten to countersue any company that attacked Android, or it could even take a page from Apple’s book and go on the attack. Such potent ammunition in the battle for smart-phone supremacy could be worth far more than $900 million.
A third shocker was how Google structured its public bid. Neither I nor anybody I have spoken with can explain what Google was thinking. Had it simply waited for the auction, it easily could have won. Other bidders had much lower expectations and wouldn’t have had the time to get board approval for bids large enough to stay in the game.
Instead, the stalking-horse offer set in motion unprecedented scheming and counterscheming among strange bedfellows. Companies that normally fight one another, such as game-console rivals Microsoft and Sony and smart-phone rivals Apple and Research in Motion Ltd., pondered whether they hated the prospect of a patent-powerful Google even more. Investment companies like mine, which had been interested in Nortel’s portfolio for its potential financial return, decided the bidding was too rich for our blood, and dropped out. As the auction neared, rumors flew about who was teaming up with whom and how high the bids would soar.
Then, as the auction began, Google unveiled one more surprise. Its bids were numbers like $1,902,160,540. That’s a billion times Brun’s constant, which appears in the mathematics of prime numbers. And its successive bids were other mathematical constants, including one for pi billion dollars ($3,141,592,653).
Math geekiness, it turns out, doesn’t guarantee victory. A consortium of six other companies -- Microsoft, Apple, RIM, Sony Ericsson Mobile Communications AB and EMC Corp/Massachusetts -- won with an astounding $4.5 billion bid.
The result effectively retains the status quo. Google still has no strategic weapon to compensate for the patent liability inherent in Android, so the lawsuits will continue. Some in the industry think Google acted brilliantly; the company is no worse off than it was before, and it cost its competitors $4.5 billion. Others argue that Google was somehow snookered by Lazard into a disastrous strategy that has left its competitors better armed for the fight -- and more than a little angry. You don’t pay $4.5 billion for assets and then let them sit on the shelf.
More importantly, this sale validates the notion that patents will be a fundamental tool in the tech industry. They had been moving toward that position for years, but the magnitude of Nortel’s sale shows that they have arrived. Patents virtually define the pharmaceutical and biotech markets, and in the future they could play the same role for tech.
What’s next? The history of mergers and acquisitions suggests one possibility. Once upon a time in the clubby atmosphere of corporate America, hostile takeovers were rare; gentlemen just didn’t do such things. Then, in the 1960s, the hostile takeovers came to be accepted as a legitimate business tool. Similarly, the strategic use of patents now appears to be accepted in the technology industry. If that’s true, then Nortel is just the beginning.
(Nathan Myhrvold, the former chief strategist and chief technology officer at Microsoft and the founder of Intellectual Ventures, is a Bloomberg View columnist. The opinions expressed are his own.)
For more Bloomberg View columns.
To contact the author of this column: Nathan Myhrvold at Nathan.Myhrvold@intven.com.
To contact the editor responsible for this column: Mary Duenwald mduenwald@bloomberg.net
Monday, July 25, 2011 0
i've read bonks of articles on WebOS and HP. what people never seem to address is the politics in every company.
Will the entrenched managers and power brokers in HP in charge of the printers, windows PCs divisions etc cave in so easily and make Rubinstein ex-Apple ex-Palm chief of WebOS into a STAR and jeopardize their own positions? Give the Apple Guy' full support and let him grab the limelight, the bonuses and the promotions?
Don't think so unless you are Apple with Steve Jobs who can cut through the B.S (Jobs pushed iOS to equal standing or even ahead of Macs and iPods).
studies have shown that top managers spend 70% of their energy on promoting themselves (networking, kissing up to superiors, building alliances, turf fighting etc) and 30% on technical company business ('pure' lab rat engineers etc never get the top posts). Top managers will never just let outsiders walk onto their turf without major resistance.
GEEKY writers saying WebOS (because it's a cool tech) will transform HP easily without addressing internal politics are dumb, have little understanding of human nature.
I suspect New CEO Apoetaker an outsider who took over from Hurd who left under a cloud is himself on uncertain ground and doubtlessly afraid to push the established LORDS of Divisions too hard.
the HP touchPad disaster (fat clunky, no apps, buggy) is clear indication of lukewarm internal support.
look at Microsoft, the Lords of Windows Desktop and Office (the BIG Msft money earners) has whacked Win Mobile (peanut money division) for years, look at all the win Mo initiatives which went nowhere or died: Win Ce, Win Mobile 6, Zune, Zune Phone, Danger, Pink, Courier, Kin etc (yeah I know some of them are interlinked but I'm too confused to untangle the mess). Now the new tablet OS will be Windows DESKTOP 8!! Windows desktop guys will never cede power no matter how advantageous making new pure mobile OS is.
Nuance Powers Hands-Free Genius Button on New T-Mobile myTouch 4G Slide - MarketWatch (press release)
Sunday, July 24, 2011
 International Business Times | Droid 3 News: Droid 3 Has Locked Bootloader Same Boot for Droid Bionic? Wireless and Mobile News In April Motorola's CEO Sanjay Jha said that Motorola would unlock bootloaders "across our portfolio of devices starting in late 2011, where channel and operator partners will allow it." When Motorola reps revealed the Motorola Photon 4G with an ... Battle Ahead: It's Motorola Droid 3 vs. myTouch Slide 4G, Until Photon 4G and ... Motorola Droid Bionic Spied in Best Buy Promo Motorola's Latest Phone Comes as No Friend to Hackers |
Sunday, July 24, 2011 0
 Gizmag | Motorola Photon 4G Gizmag When the Motorola Photon 4G debuts through Sprint later this month it will be Motorola's first WiMAX smartphone and Sprint's first international 4G smartphone that is capable of working on GSM networks around the world. Powered by a dual-core NVIDIA ... |
Saturday, July 23, 2011
If true, the latest rumors on the next-generation Google-branded Nexus Android smartphone could be a device that will be well-integrated with Google’s emerging Google+ social networking service, which is currently in beta. News that Google may be following in HTC’s footsteps in launching a social networking oriented Android smartphone comes from an anonymous source who claims to have obtained his information from a Google employee and has since posted this information to Facebook on the Google+ page.
Integration a smartphone with a social network–given the rise and pervasiveness of social networking sites–is nothing new. Android can automatically pull contacts from Facebook and can integrate with Twitter, and iOS is now providing deep Twitter integration with iOS 5. Palm’s Synergy engine was perhaps the first one of the gate to announce a consolidated synchronization engine for webOS, which has since been acquired by Hewlett-Packard. Additionally, HTC is launching its Cha Cha smartphone as the HTC Status, which is an Android smartphone with a front-facing QWERTY keyboard and design styling reminiscent of the original European edition (not the Sprint version) of the HTC Hero, as the HTC Status on AT&T with a dedicated Facebook button so consumers can quickly view and update their Facebook feeds.
Likewise, it seems that Google will be following the Status route with its new social networking. The rumors would have Google leveraging the brand power of its mobile Android smartphone platform, along with the Nexus brand, in a device that would integrate a ‘G+’ button as one of Android’s navigation button. Currently, on a Nexus smartphone, we have buttons–capacitive touch buttons located just below the display–for search, back, menu, and home, and it’s unclear if Google will augment those four buttons with a Google+ button or if it will replace one of those buttons with a G+ button.
The rumor also posits that the device–perhaps to be called the Nexus Prime–will also be made by HTC, the purveyor of the current ‘Facebook phone’ known as the HTC Status and the HTC Cha Cha.
While anything is possible at this time, there are still three reasons why a Google+ Nexus Prime may not happen:
First, Google’s development and product teams don’t necessarily work together. Given the early stages of Google+ as a social network and platform, it is perhaps still to early to integrate the ‘beta’ product into Android.
Second, the Nexus branding is more geared towards developer. A Google+ phone may be geared towards consumers. Combining the two may be a cause of dissonance. Google had initially defined the Nexus brand as a phone that will help set the tone for Android hardware development. As such, a Google+ smartphone would not do that; it would merely only pre-load the social networking experience onto the device out of the box, and not lead the development cycle in terms of CPU clock speeds and cores, display sizes and technologies, screen resolution, memory and storage, and other factors.
And third, unless Google+ really takes off, a Nexus-branded Google+ phone may be doomed to failure as the strength of any social network is in the number of members. For a Google+ phone to take off, the service will need to add more active members.
The rumor of the Google+ phone made no mention of the Android operating system, though it’s widely believed that the next Nexus will usher in the next generation of Android OS, called Ice Cream Sandwich, which will begin to merge Android Honeycomb with Android Gingerbread and be a universal platform for smartphones and tablets.
Via: PhoneArena
Tags: Android, Featured, Google, Google Plus, Ice Cream Sandwich, leaks, Nexus, Nexus Prime, rumors, social network, social networking, speculationsCategory: Featured
Tech enthusiast in Silicon Valley enjoying the possibilities of ubiquitous connectivity, information sharing, and collaboration enabled by mobile broadband.
Saturday, July 23, 2011 0
 PhoneDog (blog) | Virgin Mobile shuffles Beyond Talk pricing, saves BlackBerry owners duckets Engadget It's not all bad news though -- the unlimited everything $60 service tier is being cut to just $55 and the company is doing away with the $10 add-on fee for BlackBerries. So, try not think about it as a price hike, think about it as saving you $15 a ... Virgin Mobile Beyond Talk Calling/Data Plans Will Be Updated On July 20th ... Sprint's pay-as-you-go Virgin Mobile brand launching new unlimited plan Virgin Mobile bids farewell to unlimited data too |
Friday, July 22, 2011
 Blackjack Champ | Motorola XPRT Android Phone Looks, Feels Like a BlackBerry eWeek The XPRT's similarity to the Droid Pro isn't the problem. The problem is the form factor; the device, which is business-brisk gray and black enclosed in a pebbled plastic casing, looks and works like a BlackBerry from Research In Motion. Motorola FIRE (Motorola XT316 / Motorola SPICE Key) Motorola launches XT316 Android smartphone Android Casinos Become More Accessible with Cheap Motorola XT316 |
Friday, July 22, 2011 0
OtterBox HTC4-MTC4G-20-E4OTR Commuter Series Hybrid Case for HTC myTouch 4G - 1 Pack - Case - Retail Packaging - Black
HTC myTouch 4G Commuter Series Case
So, you've jumped on the 4G train by getting yourself the new myTouch phone. Be sure to keep it safe from costly damage with the OtterBox Commuter Series for HTC myTouch 4G. This slim and surprisingly tough case incorporates a self-adhering screen, impact-absorbing silicone and a strong polycarbonate outer shell. Don't like using a holster? No worries, this case was designed to slide easily in and out of your pocket or bag!
Compatibility:
HTC myTouch 4G
Features:
- Access to all buttons and features
- Silicone plugs provide coverage for ports
- Includes a self-adhering protective film
Material:
- Self-adhering clear screen protector
- Durable silicone skin
- High-quality polycarbonate outer shell
Environmental Protection:
Case provides added protection against bump and shock. This case is NOT protective against water.
Price: $34.95
 New York Times (blog) | Why Your Business Should Reach Out to Smartphone Users PCWorld Android remains the most popular platform, with Apple's iOS second and RIM's Blackberry coming in third. And the age bracket most likely to own a smartphone, at 58 percent, was those between 25 and 34 years old. While 49 percent of those between the ... Android Smartphones Used by 35% of US Users: Pew Android, iPhone, BlackBerry Lead Smartphone Adoption: Pew Report For Millions, a Smartphone Is the Only Computer They Own |
