« swipe left for tags/categories
swipe right to go back »
I just finished up spending the past two days at Google I/O. On one of the panels I participated in yesterday (VCs Who Code), the endless discussion about open (e.g. Google) vs. closed (e.g. Apple) came up with Dave McClure stating “Open is for losers.” We had a short but spirited debate about a topic that could easily consume an entire panel before Dick Costolo (our moderator) quickly moved us on. Of course, we got bogged down again later in “native apps vs. web apps” question (which I think is irrelevant in the long run, and said so.)
When I woke up this morning I was still thinking about the open vs. closed thing. I’ve been using a Droid for a week (Google gave one to everyone that came to I/O) and I’ve been loving it. I’ve been an iPhone user for several years and while there are a bunch of things about it I love, there are several that I hate, including the pathetic AT&T service, major limitations in some of the applications such as email, the restriction of Flash, lack of tethering, lack of statefulness, lack of multi-processing, and the unbearable shittiness of iTunes for Windows. But, I never really considered an alternative until I started playing with Android 2.1 on a Droid on Verizon.
I’d basically decided to switch to the Droid. The keynote on Day 2 was split between Android 2.2 and Google TV. I was completely blown away by Android 2.2. It doesn’t merely address each of the issues I have with my iPhone, it demolishes them. Google wasn’t bashful during the keynote about taking shots at Apple, which was fun to see. And as I sat there, I kept thinking about how far Android has come taking an entirely open approach.
While Google “had me at Android 2.2”, they sealed the deal by giving every attendee a brand new HTC EVO 4G (running on Sprint). There have been plenty of complaints about Android handsets; the Droid was good although I
have had a Droid Incredible on order. But, now that I have my HTC EVO, I’m completely hooked. The physical device is magnificent, the Android implementation is awesome, and it is still only running Android 2.1 so it get even better when the over the air update is released and automatically upgrades.
I’m now in a position where I can dump my Verizon MiFi since can use my HTC phone as a hotspot. One less $60 / month bill, one less thing to schlep around. And I never have to use iTunes for Windows again. Apple just lost me – again.
The most amazing thing to me when I reflect on this is how much of a complete non-event Microsoft in this discussion. Before the iPhone, there was a different discussion and Windows Mobile (or whatever it was called) was regularly in the middle of it. Not only is it no longer in the middle, it’s no longer in the discussion. Google focused their sights directly on Apple and – with an open approach – is now in a position where it can legitimately threaten the iPhone’s long term position.
I love this stuff. Plus I now have two cool new phones.
In the last few days there have been a large number of posts about two platform companies – Apple and Twitter. These posts covered a wide range of perspectives (a few of the better ones are linked to below) but fundamentally came down to the tension between a platform (e.g. the iPhone OS or Twitter) vs. third party developers that build applications on top of the platforms.
Several of the Twitter related posts include The Twitter Platform’s Inflection Point, Twitter and third-party Twitter developers, and Developers In Denial: The Seesmic Case Study. Several of the Apple related posts ones include and Adobe Vs. Apple War Generates Rage, Facebook Group, Why Apple Changed Section 3.3.1, Steve Jobs response on section 3.3.1. If you missed the leads to the story, Apple made a major change in their TOS and Twitter launched an official Blackberry client and acquired the Tweetie iPhone client, rattling their developer community. And Twitter Officially Responds To Developers and Tries To Calm Fears.
While there has been an amazing outburst of reaction – including much surprise and criticism – to both of these situations, they should come as no surprise to anyone that has been in the computer business for a long time. What we are experiencing is the natural evolutionary struggle that exists between a platform and its developers. In the past few years, both Twitter and Apple have created amazing platforms and build incredible network effects on top of their platforms. One way they have done this is to embrace developers, who have flocked to these platforms in droves, building a huge variety of awesome, great, good, mediocre, and crummy products on top of the platforms. Some of these products have created meaningful revenue for the developers, others have generated fame, and many have generated a giant time sink of work that hasn’t resulted in much. This is the nature of being a developer on top of a platform.
True platforms are special things that are rare. Fortunately, developers have a lot of choices and that is a powerful dynamic that keeps both the platforms and developers evolving. I think the next few months are going to be pretty exciting ones as the current phase we are in sorts itself out.
The Apple patent suit against HTC really riled up my friend Sawyer. I wasn’t planning on posting another missive from him until next week, but I thought this was particularly timely given the public statement from Apple, including a specific quote from Steve Jobs about its competitors stealing their patented inventions. Sawyer explains why this is simply inflammatory rhetoric and actually has no basis in fact or the way patent law works. He also makes the case – using this as an example – that patents stifle, rather than promote innovation. Enjoy. And, after you read this, if you want a little “doesn’t this sound familiar” action, take a look at the Wikipedia page on Apple Computer v. Microsoft Computer with regard to the GUI – with a little Xerox tossed in as a side dish. And now, my friend Sawyer.
The other day Apple announced that it is suing HTC for infringing several patents related to the iPhone, including patents on the UI, i.e., software patents. As part of the press release, Steve Jobs said the following (emphasis mine):
“We can sit by and watch competitors steal our patented inventions, or we can do something about it. We’ve decided to do something about it. We think competition is healthy, but competitors should create their own original technology, not steal ours.”
The rhetoric of "stealing" and "theft" surrounding accusations of patent infringement is bothersome, both because substantive patent law doesn’t embrace the concept of theft, and because most patent cases don’t involve credible allegations of actual theft or even copying.
Plaintiffs try to use "theft" to inject a moral element into patent suits, but there is no substantive moral element in patent law. The point of a patent is to grant a monopoly in exchange for public disclosure, and patentees want people to use the ideas (in exchange for license fees), otherwise the public disclosure aspect is pointless. The Constitution doesn’t authorize patent or copyright law for moral reasons either: “To promote the progress of science and useful arts, by securing for limited times to authors and inventors the exclusive right to their respective writings and discoveries…”
The only doctrine in patent law that shades into morality is willful infringement. The shifting law on willful infringement will be the subject of another post, but in any case, willfulness isn’t a morality doctrine; willful infringers aren’t bad people, they are just people who decided to continue possibly infringing because they didn’t think they infringed, thought the suit was frivolous, or thought they would lose more money by stopping, at least in the short term. The doctrine is set up to penalize people who recklessly infringe by potentially trebling damages, and so acts as an incentive to settle suits and pay licensing fees. This isn’t a moral calculus, it’s a utilitarian one.
Willfulness, however, acts as the main vehicle for plaintiffs to inject moral rhetoric and copying allegations into a patent suit. “Copying” in a patent law sense means that an infringer either literally read the patent and copied what the claims said wholesale, or saw a product embodying the patent and copied the patented aspect of it. Copying in patent law does not mean “theft.” Theft of secret ideas is actionable under trade secret law, and I know of very few cases pairing the two. Literal copying is often actionable under copyright law as well. Isn’t it the case though that patentees want people to copy? Doesn’t copying mean that their ideas are spreading and being used for follow-on innovation, which are good things? The issue if anything is proper compensation, not the act of copying itself.
Unsurprisingly, we don’t usually even get into copying as a consideration. A paper by Mark Lemley and a good blog post titled Patent defendants aren’t copycats shows that the vast majority of patent cases don’t involve an assertion of copying (and we’ll have to see if the Apple case does). Putting in place an independent invention defense to infringement, as suggested recently by Brad Burnham at Union Square Ventures, would potentially wipe out 90% of patent cases.
Setting all of that aside, in my experience, when plaintiffs do allege copying, particularly in software cases, the allegations are uniformly flimsy and bogus litigation tactics aimed at getting “black hat” stories about defendants told to juries. And it’s a great tactic because juries are people, and regardless of the merits, they like to stick it to the bad guys, especially so where the merits are boring patent law issues that no one understands anyway.
Now we have one of the biggest and most innovative companies out there, Apple, trying to sue one of its competitors out of the market with patents, and using the false rhetoric of theft to justify the suit. This underscores that the patent problem isn’t just "trolls" versus "big companies," it’s big companies using patents to sue others in the same market into oblivion, cutting off competition and destroying innovation. Imagine, if HTC weren’t making great Android phones to compete with the iPhone, would Apple be incentivized to significantly improve its products? Would we have no iPhone if patents didn’t exist? I think it’s fairly obvious that in the absence of patents, we would have more competition and more innovation here, not less.
In any case, the takeaway for reform advocates is that we need to shift the rhetorical frame in discussions around patents from the moralizing of "stealing" and "theft" to what the issue actually is, a dry utilitarian calculus about what outcomes are better for innovation and competition. When we think about the issues in that frame, it sort of takes the wind of out of Steve Jobs’ sails, doesn’t it?
Today’s Washington Post article titled Staff Finds White House in the Technological Dark Ages was no big surprise. However, while I was taking a shower (in a hotel in the Houston suburbs of all places) it occurred to me that this presents an incredible marketing opportunity for Apple.
If I were king of Apple (or say, a board member with deep White House ties), I’d be on the phone with “the appropriate person” with the offer of “a Mac on every desk in the White House along with an iPhone for every White House staffer.” I’m sure there is some law that prevents Apple from giving this away from free so I’d offer it “at cost” just to Mac-enable the White House.
You can’t buy better PR than “Apple computerizes the Obama Administration, displacing ancient PCs running Windows XP.” Plus, the leader of the free world then would carry around an iPhone and a MacBook.
In addition, I see an executive order coming that completely changes the stupid, archaic, and limiting rules about archiving communications within the White House. This is a regular excuse that is used to explain why it’s “hard” to use things like Blackberries if you are president. Baloney – there are plenty of straightforward approaches that solve for whatever you want to do. It’s not like someone archived all of Rumsfeld’s Snowflakes (or maybe someone did – if so – egads.)
While we are at it, did anyone notice that Apple reported record revenues and profits in the quarter ending 12/27/08? Yeah, I guess you did but it’s worth repeating the numbers since all we’ve been hearing is bailouts and losses. These are quarterly numbers. Revenue: $10.17 billion. Net Income: $1.61 billion. These numbers are lower than reality because of the bullshit GAAP rules that force accounting for the iPhone to be reported ratably over the life of the iPhone contract. If you actually accounted for this in a way that made sense, Revenue would be $11.8 billion and Net Income would be $2.3 billion. As every good MBA knows, the key rule is to “follow the cash” which increased by $3.6 billion in the quarter. It’s worth saying again – $3.6 billion. Wowza. Well done Apple.