Patent suit Nokia vs Apple

Nokia and Apple settled their law suits over patent infringement out of court.
http://www.cellular-news.com/story/49560.php
http://www.zdnet.com/blog/btl/nokia-likely-netted-600-million-plus-in-apple-patent-settlement/50590

It is said the settlement included a one-time payment between $550 million to $600 million. Apple and Nokia agree on some cross-licensing terms, with a patent license fee up to $11.5 per iPhone sold paid to Nokia. It looks like a victory to Nokia from the result. It is also in a way good for Apple to conclude this fight with Nokia. Based on the latest financial reports from both companies, as of Q2, 2011, Apple has $29.2 billion in cash or cash equivalents, while Nokia has about $16.5 billion. The amount of $600 million is approximately 2 percent of what Apple can pull out of its pocket. With the quarterly iPhone shipment reaches 18 million units, the royalty payment to Nokia is close to $210 million. With Q2 2011 EBITDA income at $7.9 billion, this is affordable to Apple. It is though a boost to Nokia's quarterly EBITDA income of $778 million.

At this point, Nokia has lost one quarter of its global cell phone market share (from 36% down to 27%) and over 50% of its smart phone market share (from around 55-60% to between 20-25%). Nokia lost not just market share, revenue, but also the waning cost advantage associated with scale. Did its patent portfolio protect the company and its shareholders from those aggressive competitors? This patent portfolio did not even help Nokia executives to keep their jobs.

There are two other threads of events worth watching for. One is the patent fight between Chines vendors Huawei and ZTE. Will this domestic dispute result in any legal precedent or will it settle out of court? http://www.cellular-news.com/story/49538.php

The other one is the patent auction by Nortel and Google's intention in Nortel's patents.
http://www.nytimes.com/2011/04/05/technology/05google.html
http://www.reuters.com/article/2011/06/14/us-nortel-idUSTRE75C5WT20110614

A complacent company sued an innovative company and get paid. Do patent laws really encourage innovations?

HP webOS for OEM to license

HP is entertaining the idea of licensing its webOS to other vendors. Or is this just an indication that HP has not sorted out its strategy for webOS?

http://www.reuters.com/article/2011/06/01/hp-ceo-idUSN0116927120110601

It can be a good news for the industry. One more contender means more choices. But this is just on the surface. Windows Mobile has shown that OS licensing is not a lucrative business in the mobile phone industry. If webOS can collect US$10 a piece, a volume at 3.5 million units a quarter, which is roughly Windows Mobile's 2011-Q1 shipment, makes US$140 million a year. It does not seem to be a reasonable payback for the US$1.2 billion paid for acquiring Palm. It may not even be enough for the operation cost for the business unit. Google Android makes money from advertisement revenue, not licensing fees. What is the leverage that HP can get by licensing webOS out? In the meantime, HP has to make it cost-effective for device vendors to invest in webOS. How many vendors have the extra budget and human resource to take on another OS, chipset, and board support package integration? HP did not talk or hint on intellectual property indemnification. With Microsoft onto everyone who is licensing Andorid, that is also an issue HP has to address when going to partners. http://www.zdnet.com/blog/hardware/microsofts-next-cash-cow-android/12998

The talk from HP's CEO seems to be a spillover of internal disagreement on future directions. It has been a year since HP acquired Palm. There can be some pressure built up over what webOS can do for HP. But it is clear to me, licensing webOS out will not help HP, only to create distractions.

Value add

Intel is talking about thin and light PCs, again.
http://www.businessweek.com/news/2011-05-31/intel-seeks-to-challenge-apple-s-ipad-with-new-ultrabook-pcs.html
http://www.zdnet.com/blog/computers/computex-2011-intel-unveils-ultrabook-talks-medfield-tablets/6004

Since 2007, there were Ultra Mobile PC, netbooks, and OLPC (my blogs on UMPC). It was clearly the writing on the wall for the system vendors that the mass market was ready for easy-to-use computing devices. But to Intel and Microsoft, it was just a series of protection measures to delay and deter. Intel gave up StrongARM and kept its low-end CPUs one or two steps behind what the market needed them. Microsoft tried to put a limit on netbooks to under 9-inches upon its OS licensees. Maybe it was important to protect the margin of company's bread-and-butter products. But to end users, those decisions did not add any value to them. In the end, competitors step in and eat their lunch. Companies tried to protect their profit margins by preventing new product categories from happening ended up losing more.

All those decisions must have gone through a lot of deliberation, market data analysis and signatures from layers of directors and VPs in both companies. In the end, the defense looked like being built more along departmental business lines than to the battle front line. If Intel and Microsoft had worked with the trend and all their partners, the market might have been filled with different kind of interesting products than just overwhelming Apple iPad and upcoming Google Android tablets, neither uses Intel processors nor Microsoft OS.

Speaking of surprised development and different revenue sources. A Citi analyst said Microsoft makes five times more income from Android than from Windows Phones, thanks to patent licensing fees.

http://gizmodo.com/5806227/did-you-know-microsoft-makes-five-times-more-money-from-android-than-from-windows-phone

Of course, this is not a development Microsoft would like to see. After all, no company is operating and competing in a vacuum. Market cannibalization is not a complicated concept, but can be so hard to get it right for a big company.

Google mobile payment and PayPal

Google just announced it is entering the mobile payment market and PayPal responded with a lawsuit alleging Google misappropriated its trade secrets through hiring its former employee.

http://www.cellular-news.com/story/49343.php
http://www.cellular-news.com/story/49351.php

I just blogged my idea that eBay should spend the proceeds from selling Skype's stake on mobile payment solution for its PayPal division. I believe money and brand name are very important for this emerging product. PayPal's suing Google seems to indicate that PayPal thinks the same way. There are a lot of mobile payment start-ups. I just did a quick search, and within 5 minutes, I got company names like Square, Corduro, Boku, Billing Revolution, Mobillcash, and Zong. But PayPal did not go after any one of them. Instead, PayPal cared about what Google is doing so much that it went to court to prove a point.

There is a quote in Bloomberg's report on this lawsuit:
“Silicon Valley was built on the ability of individuals to use their knowledge and expertise to seek better employment opportunities, an idea recognized by both California law and public policy,” Aaron Zamost, a Google spokesman. In a way, the series of events is a norm in the Valley between companies, employers and employees. I hope this lawsuit is a PR stunt by PayPal. Tomorrow, it can be Yahoo, Facebook, or Microsoft buying a mobile payment company to compete with everyone else. PayPal has so far enjoyed a perception of providing credit card/banking services without being regulated as a bank in the US. The benefit to its users, individuals and merchants, is that the money stays in PayPal's domain to lower cost. Otherwise, it is like a money transmitter business which has other costs associated with its products when the money has to go in and out. A segmented market will not provide such cost benefits and PayPal probably understands that.

春聯與對聯

我的第四個 iPhone 軟體, 春聯與對聯 (Chinese Couplets), 今天進了App Store.
http://itunes.apple.com/us/app/chinese-couplets/id438346456?mt=8

就像前三個產品一樣, 書的內容都需要經過一番校對和整理。我常用網際網路上的內容來和我的資料比較。但是這次的經驗, 倒是非常獨特。或許春聯和對聯不是太冷門的題目, 許多網站都有相關的內容。但是這些內容的抄襲率太高, 而且錯誤百出。我有時只是為了搜尋一個特定的詞句, 可以找到十多個有相同內容的網頁。而當中的錯誤也都十分相似, 甚至雷同。古人印書, 因為交通及通訊的不便, 校對是件難事。所以一篇文章或是詩詞常有兩三種版本。今天的電子刊物也能有類似的現象, 也讓人開了眼界。