A Patent Is a Virtue

The large Finnish communications company, Nokia, filed a massive legal action against Apple today. The complaint alleges that Apple has infringed on numerous Nokia patents throughout nearly all of Apple's current product portfolio. If proven to be true, this complaint could have major ramifications for Apple - something that was evident in Apple's declining stock price following the announcement of the legal action.

In a world where "free" seems to be the hip new business model, this event shows the relative dominance of old capitalistic principles. The international protection of innovation and the investments required to create such innovation will be clearly tested. The sales of expensive hardware are still so significant so as to foster this continuous innovation - and the consequent struggles over fundamental intellectual property.

So we end a decade in which the proliferation of digital distribution of information goods has made charging for something into nearly a sin, with the ultimate battle over the most basic business model - over who has the right to charge a fair price for the mobile phone.

Apple's Safe Society

Apple has received a lot of criticism for making the iPhone application universe a closed system. Every single application must be vetted by Apple's mysterious approval process before it makes it to the iTunes app store. This system is quite different from how Internet-enabled and PC-based applications function - where free-for-all rules rules govern how applications are created and distributed.

Although I agree that a closed system is highly flawed in many ways, it is also an extremely comforting mechanism. In a world where any web pop-up, email attachment, or even Twitter/Facebook link could lead to virus hell, it's very pleasant to not worry about whether an application will disrupt my iPhone.

No matter how controlling, limiting, and ultimately closed the iPhone ecosystem remains, it sure is very user-friendly - down to the inherent peace-of-mind concerning every single application download.

Apple > Google = Absurd

While conducting my nightly scan of the news, I was drawn to the unbelievable fact that, at this point in time, Apple is considered to be more valuable than Google. This is based on the current share prices of each company and is thus likely to quickly change.

I find this quite unreasonable for two important reasons:

• Apple's revenue is based on a portfolio of products that become obsolete after two years (at most). Because of this, Apple is dependent on constantly rolling out new products - and thus on the hit-or-miss nature of consumer tastes. Google serves as the gatekeeper to the Internet. Although their market share can be chipped away, Google could never lose 10 to 20% of its revenue over a few months - something that could easily happen to Apple if the next iPhone is a flop.
• Google's revenue comes from a more diversified source of business customers. Google still earns the majority of its income from the advertising-network associated with its main search engine. The customers that pay to display these ads come from nearly all corners of the economy - thus likely mimic the overall economy. Apple targets a fickle, high-end customer-base that is rarely predictable.

Google is the cruise ship while Apple is the speed boat. Google is strong and large. Apple is fast and unstable.

The Barriers to Touching

Many prominent technologists and industry watchers are predicting the death of the keyboard and other button-based input methods. The argument is based on the initial success of the iPhone (the first mass-market touch-based product), the declining prices of supporting technologies, and the possibility that such forms of input are in some way simpler and offer greater space-saving opportunity.

I generally agree with this opinion but also think there are a few fundamental hurdles left before touch-based tools become more widespread:

• Tactile Feedback. The beauty of the keyboard and the mouse is the feedback that the keys and buttons inherently provide - enabling us to feel the right key as it is pressed. A flat surface will need to mimic such feedback for typing to be possible - something that RIM has begun to do with the Blackberry Storm.
• Ergonomic Shape. The flat surface - typically used for current touch-based inputs - isn't conducive to comfort as it doesn't conform with human anatomy. Even the typical QWERTY keyboard seems more comfortable. The shape of touch-based tools will need to be redesigned, especially for repetitive usage that takes place in the corporate environment.
• Flexibility. I've intentionally used a vague term to describe the final barrier because it encompasses a few different concepts such as the speed of response, the accuracy, and the durability of this type of input. Generally, touch-based tools still feel fragile and not battle-tested for those 2 AM presentation-development binges.

Although not insignificant, these barriers will be overcome in the next few years, ushering in the age of touch-based input.

The iPhone Spy Hurts Innovation

It seems that Apple recently filed a patent for a new gadget to be installed in future versions of the company's popular smartphone, the iPhone. This gadget will essentially serve as Black Box for the device, allowing Apple's technicians to detect any tampering if a device is brought in for repair. The official purpose of the device is to prevent those who've "abused" their iPhone from attaining new phones through the warranty.

For now, it seems that the Black Box won't be able to remotely communicate with Apple's servers but it does leave the door open for a very discomforting slippery slope. Apple has already been widely criticized for the closed nature of its iPhone - e.g. every single program has to be approved by Apple before it can be sold to iPhone users.

I believe that this development is very detrimental to mobile innovation in the Apple ecosystem. Without the ability to tinker with hardware, personal computers would have never experienced the innovative renaissance of the 1980s and 1990s. I fear that Apple is already stifling innovation by tightly controlling the development of new applications. The Black Box will further this trend with the iPhone's hardware.

Get Ready for the Tangible Backlash - Part II

So now that I've argued that real things will make some sort of significant comeback, what does that mean for businesses new and old?

• There will be a breakout collectible item that will hit across generational groups and will become a fast-burning yet Billion Dollar opportunity - think the new Beanie Babies.
• The concepts of pure and rare will become closely tied to the real - such as live gatherings, live music, live comedy.
• A premium will be accepted for good design - we already get this with brands such as Apple and and Method, but will also get it in new and unexpected places.
• Anything vintage will be valuable - we already see this with Vinyl music and we'll see it with film, art, toys, design, and other creative outlets that have been recently consumed by the digital domain.
• The real estate and automobile industries will experience a rapid comeback - beating all expectations - what's more real than the home and the ride?

All of these predictions are quite positive and will benefit from riding the economic-recovery wave. They represent opportunities large and small that will offer a significant, yet temporary revival for all that is tangible.

World War II All Over Again (Google vs. Apple)

The rapidly declining level of cooperation between Apple and Google has reached a new bottom - with Google CEO Eric Schmidt leaving the Apple Board of Directors due to significant conflict of interest disputes. This comes after a long progression of Google-product encroachment upon the Apple world of hardware and the resulting, ever-more public displays of antagonism. The two technology behemoths, once united in their battle against Microsoft, are now left battling each other.

This reminds me a lot of the early developments of World War II - where the once united Nazi Germany and Soviet Union allowed initial conflicts of interest to become outright antagonism and eventual war. I won't guess as to which ally-to-enemy players of the past match the present - but it would be safe to say that late 1930s Poland is equivalent to the modern day mobile ecosystem.

Logo placement is purely illustrative - no implications.

If Germany and Russia had maintained their alliance, Germany would have been able to focus on the Western Front and WWII would have potentially had a different historic outcome. If Google and Apple had maintained their alliance - with Apple focusing on mobile/music and the Mac ecosystem while Google focused on the Internet and PC arenas - Microsoft would have potentially lost its position of PC dominance and significant mobile competitiveness. Now we are left with Microsoft (the U.S. or U.K.-equivalent of WWII?) laughing as its two worst enemies commit a historic mistake.

The Home of the Brave Entrepreneurs

With July 4th approaching, I've been motivated to think about a few quintessential traits of the American business and innovation culture. The latest issue of one of my favorite e-zines further inspired me to think about this from an entrepreneurial perspective. Here are three fundamentally American quirks:

• Failure is a badge of honor. This of course doesn't apply to all forms of failure, but it does apply to the entrepreneurial type of demise. The United States fosters an incredibly supportive environment for new ventures, and a key component of this support comes from the general acceptance of new-business busts. Entrepreneurs are heralded for offering new products and services and are respected for imagining new business models. Failure is just the occasional side-effect of innovation. This is further excused by the fact that second chances are an ingrained component of our culture.
• Risky behavior is surprisingly supported. Even though the U.S. comes from conservatively puritanical roots, risk within the business context is generally encouraged. Although it is often publicly decried, high-levels of risk are actively pursued. Although new forms of minimizing risk are constantly invented, it is risk that brings great success stories such as Microsoft and Apple, but also great catastrophes such as the recent credit crisis.
• Technology is both a friend and an enemy. Silicon Valley is still seen as the global hotbed of innovation. But Americans are often initially skeptical of new technology - which is usually masked through the concerns of "security" or "privacy." Adoption of new products usually differs from adoption in Japan or other Asian countries. Familiarity and acceptance of new technology takes longer to permeate our culture - this is why fast-followers are often more successful in reaching a massive audience - e.g. IBM with the personal computer, Microsoft with Windows, Apple with the iPod, Facebook with social networking, etc.

Although these quirks can make entrepreneurship in the United States tricky, they also create a unique environment that has nurtured and continues to nurture many of the most innovative companies in the world.

Mobile Matters

With the Palm Pre being released this weekend and the upcoming Apple announcements concerning new iPhone versions coming this week, I thought that this would be a good opportunity for me to give some advice to handset manufacturers and the mobile network operators that release the phones on their networks.

Since I won't be so arrogant as to assume what others value in their phones, I will give my personal top-ten phone features in regards to usage. I am a professional in my mid-20s, living in New York, and this is what I care most about in my mobile handset:

1. Voice. This is why I will never purchase the Palm Pre in New York as long as it's on the Sprint Network (my negative perceptions of the Sprint Network are a whole different story). With the mobile phone quickly replacing landlines, voice quality and reliability will grow in importance.
2. Keyboard. I type a lot. Unless a phone has a full QWERTY keyboard or something as simple and easy to use, I won't even consider it - important for 3, 4, and 5.
3. Corporate Email. This is one of the main features keeping me from getting an iPhone (besides the keyboard). Although the iPhone does support enterprise email capabilities - my company's IT department doesn't. I will not carry two phones.
4. Personal Email. This primarily includes Gmail but also my personal BlackBerry email.
5. SMS (Texting). All phones support this now. Pricing-plans might affect my decisions.
6. Mobile Internet. Reading the NYTimes.com and CNN.com fills idle time and is still in front of downloading applications for either of those two news sites.
7. Mobile Applications. Games, location-based services, and other types of apps are quickly rising on my list. This will be at #6 soon.
8. Performance. Speed and memory matter more and more as the Mobile Internet and Mobile Applications are beginning to push my phone to the edge.
9. Battery Life. I've learned to live with bad battery endurance.
10. Sexiness. Appearance does matter a little.

I know that a student or a soccer mom might have different preferences. For example, price isn't close to being in the top-ten for me. I also know that the list is somewhat messy, but so is the mind of a typical consumer.