One of the signal processing patents involved in the HTC suit is also cited in a complaint against Nokia, and this was spun off from the wider ITC suit against the Finns, which should be decided by 24 June. Nokia lawyer Pat Flinn, of Alston & Bird, accused Apple of "dredging up patents" when it was approached for royalties by mobile pioneers like Ericsson and Nokia itself, according to Bloomberg. "Advances in technology have made the patent moot," Flinn said of the signal processing IPR.
HTC and Nokia have their own countersuits against Apple and Nokia has also sued over fundamental wireless patents for which it claims the iPhone maker does not pay royalties, even though most of the handset industry does. HTC's counterclaims will be heard from 9 May.
The importance of patents
Legal ups and downs generally end up having limited impact on actual product sales, but patents are increasingly vital to building a power base in the mobile market. This is something Google understands, and has prompted it to become the stalking horse bidder for Nortel's huge IPR portfolio.
Here, it was expected to come up against Apple too, but in fact RIM may emerge as the counter-bidder. It is reported to be preparing a rival bid for Nortel's huge store of patents. The BlackBerry maker was said to be interested in the assets when Nortel was first being broken up in the bankruptcy court, and could see the patents both as a new revenue stream and a way to increase its fighting power against Android and Apple. Under the rules of the court, a second bidder would have to offer Nortel at least $929m and subsequent bids would have to be at least $5m more.
Google clearly needs to strengthen its relatively weak IPR power, compared to that of key rivals and litigants, such as Apple, Microsoft and Nokia. Therefore it is likely to raise its price in order to secure the patents and could easily outrun RIM. The Canadian firm may, though, bid as part of a group, which according to Bloomberg's unnamed sources could contain other technology vendors and even other handset makers.
Ownership of patents is vital to being a real power player in wireless, where licensing of IPR still relies primarily on bilateral tit-for-tat agreements rather than pools or the "reasonable and non-discriminatory" principles of other standards. Even firms that rarely go to court aggressively over their patents, like Microsoft, know that their IPR mountains protect them – and their handset partners – from many lawsuits.
RIM could gain backing from other firms which have an interest in limiting the power of Google over the mobile industry. The patents collection represents one of the largest ever to come to market as a single portfolio and covers many key technology areas, especially those used in LTE, such as MIMO.
Google just starting in mobile
A relatively small IPR position is only one of the signs that Google is a newcomer to the mobile game, but that makes it all the more worrying for Apple; it still has a lot of growth to achieve, while Apple may be peaking already. At its results announcement, Google talked up its huge mobile potential even as it delivered first quarter results that disappointed because of the firm's galloping costs. CFO Patrick Pichette said the company "tripped" into a $1bn mobile business without massive effort, leaving the audience to imagine what could be achieved once Google really started to try. Jeff Huber - SVP of commercial and local services under Google's recently announced new management structure – said mobile search had increased by more than 500 per cent in the past two years, while 350,000 Android devices were being activated a day. More than three billion Android Market apps have been installed to date.
For the first quarter, Google saw earnings up 17 per cent year-on-year to $2.3bn but its shares dropped by 5 per cent, because costs grew more quickly than revenues. The latter were up 27 per cent to $8.6bn, with paid-for clicks on adverts a key driver. Operating expenses were a third of revenue, the highest proportion since 2007, and some investors are concerned at the trend, since Google plans to add a further 6,200 staff to its 23,300-strong workforce this year, the highest number in its history. Many will be focused on expansion areas like mobility, with new CEO Larry Page putting emerging technologies at the heart of his strategy. The co-founder took over the top job this month from Eric Schmidt, who stays on as chairman.
Pichette justified these rising expenses, saying: "It's clear that our past investments have been crucial to our success today - which is why we continue to invest for the long term ... We just happen to have great opportunities to fuel. Why not carpe diem now? It's there to take."
He hastened to add that Google was committed to financial discipline and all investments were regularly reviewed against productivity measures. As of 31 March, the firm had cash reserves of $36.7bn and it is expected to make further acquisitions in the key areas of mobility and social networking this year.
The next fight will be in the cloud
All this could leave Apple in a weakened position, especially if it does not move more aggressively to embrace the cloud/browser trend, which may eventually start to eclipse the apps business where it succeeds so well. Apple has made only halfhearted moves in this direction, and has been outsmarted by firms like Amazon so far. We remain unconvinced of the chances for the new breed of cloud-focused operating systems – webOS, Chrome OS, Microsoft Jupiter and MeeGo – but they do indicate where the tide of mobile web behavior is flowing, and Apple is notably absent.
Hewlett-Packard, for instance, is pushing webOS as a full cloud platform, providing a low power, browser-based system that can run in every imaginable connected gadget and, where required, coexist with full OSs like Windows. And HP is now reported to be preparing a music and movie store for its upcoming TouchPad webOS tablet, with a heavy emphasis on streaming and cloud storage. HP is likely to focus on multiscreen content rather than mobile-specific items. This is in line with its webOS strategy, which looks to run the system in all kinds of devices. HP's store will support a mixture of downloaded and cloud content, according to a presentation leaked to the PreCentral site for Palm enthusiasts.
As HP and Amazon leap ahead with such platforms, Apple is left in the unusual position, when it comes to content and user experience, of being behind the curve. It may call the iPad a "post-PC" product, but it still depends on a PC or Mac to sync information. iOS devices need a PC link to update the OS, move content, back-up and restore, and activate the gadgets. Only Apple TV 2 provides a fully streamed, self-activating platform. That may point to changes that will also reach the iPhone and iPad, along with streamed content and web services for iTunes and App Store. But Apple is moving too slowly, and all the lawsuits in the world will not make up for a misstep when it comes to jumping on the mobile cloud bandwagon.
Copyright © 2011, Wireless Watch
Wireless Watch is published by Rethink Research, a London-based IT publishing and consulting firm. This weekly newsletter delivers in-depth analysis and market research of mobile and wireless for business. Subscription details are here.
Interesting but is it real analysis?
Yes, Apple are at or near the top of the curve. But this article is filled with wishful thinking rather than hard analysis. The below expected results this quarter for iPad sales are in no way a reflection dissappointing performance in the market. Nor do they reflect an over-estimation of the value or attractiveness of the post PC tablet Market. They reflect only supply chain logistical constraints and (at worst) planning failures and it is churlish to attempt to present the iPad as anything other than the runaway success it is. So using that to support the picture of Apple desperate and rounding the apex of the curve is wishfull thinking on the authors part rather than a reflection of a true weakness. Yes resorting to patents can be viewed as desperation, and certainly that has been the case for other companies in the past, but without independent indicators of desperation, that too reveals a picture the author would like to see rather than what he knows to be the case. It can also just be Apple leveraging money invested in filing IPR.
The other "indication Apple are struggling" the author uses is Apple's current "failure" to deliver a cloud music play. But this analysis lacks wisdom or insight, as there are compelling strategic partnership reasons why Apple would want to be second to the party. In summary, their form on strategic partnership indicates that while they push out technologies that unlock the market, they never rub their content partners faces in it. So they contractually ensured unlimited data (probably at the cost of a exclusivity deal with AT&T) because they saw the strategic value of ensuring the iPhone was used without data constraint. But they then didn't do Internet Tethering or allow Skype calls until after their competitors (even though they could have allowed both from the outset) because they saw the value of keeping their carrier partners (globally and not just in the US) on board. Similarly they have very strong reasons for being second to the Cloud Music Streaming party to avoid annoying their iTunes partners. Amazon is currently drawing very strong legal fire from the record labels, while Apple can now fairly say to their partners, we need to also move into music streaming to compete. Apple purchased a functioning music streaming service some time ago, so there is circumstantial evidence adding to the strategic form-book, supporting the position that the delay is a matter of policy.
The author indicates Apple are "desperate" on the basis their competitors are planning to launch new cloud based services now and implies Apple are failing to reply. Yet Apple (unlike their competitors) have consistently shown discipline in avoiding either revealing or "bigging-up" future product launches and the strategy works very well for them. It's highly unlikely, with their cash pile and history of delivery, that they have anything but a very rich and queued up pipeline of new launches.
Also the criticism of Apple as a "one trick peony" couldn't be further from the truth. Compare with their arch-rival Google and there you really do see - on the key criterion of revenue generation - a one trick peony. Everything, including their reported revenues for Android and YouTube (which are still proportionately very low) stems from their core advertising business. And no doubt much of the revenues that should really be attributed to search advertising are re-classified as YouTube and Android advertising success (e.g. when the ads in-situ in YouTube and Android are hit one step on from a Google search). I don't want this response to sound like a slanging match placing Apple over Google but it is important to reflect the mis-analysis inherent in the use of the "One trick peony" label. Google are making a strategic play, but they don't yet have real diversified revenue streams. Apple have multiple distinct product lines (iPhone, iPad, Mac, iPods and Mac Computers, Software) albeit united by a single ecosystem (which is a strength) and all contribute to earning real share of revenue (and notice I didn't need to resort to including iTunes or App Store).
I do agree with the author that Apple are at or near the top of the curve. However not for the reasons the author has given. I believe it for the simple reason it is difficult to see how they can continue to have an uninterrupted line of successful products that keep them as far ahead of the competition as they have been over the past three years. So my reasoning is based on respect and the slight cynicism we all as human beings have. I respect the success Apple have had. I wonder how it can continue, but equally I don't rule out further successes being launched this year or next (the Apple product secrecy point remember). I suspect the Author actually agrees with me too but rather than finding solid indicators Apple have reached the Apex of the curve, he/she has sought to write a post seeking tap in to our natural cynicism and play on the incredulity we most of us have, pretty much in equal measure. It makes for a good headline but doesn't make for insightful analysis. But then TheRegister majors in cynicism and there's always a place for that.
Apple's competitors wish they could be that "desperate" ;-)
The writer of this article is either ignorant of the facts (and reality in general) or he/she/it is just trolling for hits and will do anything ridiculous to accomplish that.
Starting with the article title "Apple's record sales are signs of desperation"... What!?!
Record sales increases (while all other competitors are losing sales) is a sign of desperation? If that's desperation, Apple and its investors must be hoping it can be more "desperate" in the future.
"And the iPad... is not yet proving that the category itself is a winner". You can't be serious. Is this meant as a joke? News flash: April Fool's Day was 3 weeks ago.
You base your premise on this nugget of ___ : "The iPad sold 4.69m tablets, fewer than the 6.1m predicted by analysts or the 7.3m of the holiday quarter."
Hello!?! The quarter reported on ended March 26, 2011. The iPad 2 which purchasers were holding onto their money for, only went on sale in the US on March 11th (the first shipment sold out nation-wide in 24 hours!), and it only went on sale in select other countries on March 25th (the day before the quarter ended).
Most intelligent people realized that the numbers would be low for this quarter even before the iPad 2 went on sale, but apparently you did not understand this.
The iPad 2 sold over a million units in its first day on sale (in the US only). By comparison, the original version of the iPad, crossed the one-million mark 28 days after its launch.
With the iPad 2 selling 28-times faster than the original iPad (which was the fastest selling consumer device of all time) this, to you, bizarrely is an indication that the iPad "is not yet proving that the category itself is a winner". ???
Next you write that Apple is displaying it's "vulnerability' by suing companies that steal its intellectual property. That is insane! Any company will rightly sue another company that steals rather than licenses its patented IP.
You try to support this ridiculous notion by using FUD to understate the situation, by saying Apple "allege copying of the colors and rectangular shape of the Apple products." Either you again do not have any understanding of why Apple is suing Samsung, or you are intentionally trying to mislead your readers.
You only need to look at the side-by-side comparison photos on the Web, to see that Samsung blatantly copied both the hardware design and the user interface design of the iPhone in the Samsung Galaxy phone.
Your article continues with other similar misleading information.
You might be hoping that your readers are buying all of this nonsense, but most people are more intelligent than that, and the result of your article is that you have lost any credibility as a writer.
I enjoyed this post more than the article.