The handset, and more particularly, the smartphone industry, is particularly interesting from the IP point of view. I can think of no consumer hi tech industry in recent times where there is such a variety of competitors, and such an interdependency with third parties, all wrapped-up in a melange of various IP rights. "That all sounds nebulous to me", you might say. So let's try to give some focus to my thoughts, centering on a piece that appeared in the 3 August edition of
Business Week entitled "Motorola Has One Bullet Left in Its Gun."
The
Business Week article describes Motorola's almost desperate strategy to reinvigorate its mobile phone business. It is difficult to believe, but it was not that many years ago that the Motorola RAZR was all the rage, particularly due to the success of its slim, distinctive design. That seems to be the problem; the product was longer on design than on functionality. As the
Mobile Gazette wrote on May 16, 2007
here,
"although the RAZR looked high-tech on the outside, the handset's specification was a straight copy of [models] ... which had been around since 2003. So it wasn't a very new phone underneath, even though it was still quite competitive. However other features proved to be a disappointment, such as the pretty-but-difficult keypad and the poor user interface. The RAZR also lacked an MP3 player, expandable memory or a decent camera which became more marked as the competition evolved ... and the RAZR did not."
Roughly speaking, when the design no longer conferred a market premium for the market, and with no discernible advantage in its product functionality, Motorola entered in an inexorable decline for that market.
Fast forward to 2009, and to the intensified efforts of Motorola to recapture its glory, in particular with respect to smartphones. Ah, but what a crowded field we find-- iPhones, Blackberrry, Palm Pre, HTC, Samsung, LG (have I listed them all?). These are not fungible products at the moment (although there seems to be greater convergence); so the iPhone has materially different features, and different types of users, from the Blackberry. And how will Motorola play this? According to
Business Week, it has reached a strategic decision to develop a new generation of products that rely on the Google-supported Android operating system.
Remember that Android is an open source system, supported by Google, and was developed as an alternative to the proprietary operating systems available on the market. When launched, the rationale was that Android would increase search and other on-line usage on handsets for which Google could profit, while at the same time preventing anyone else from gaining proprietary control of the handset operating system. For whatever reason, perhaps cost, perhaps something else (the article does not specify), Motorola is prepared to adopt, indeed to be dependent upon Android, upon the development of a critical mass of Android-based applications (to compete with AppStore, the RIM equivalent and so on) even though the Android is itself a work in progress, and even though Android serves Google's broader business strategy, which might include direct involvement in the handset business at some future time. The harsh truth is that, while Motorola apparently has decided that it needs Google, Google scarcely needs Motorola, except as another cog in the Android network.
So what does Motorola bring to the table? It is not clear. The article states that the analysts, "briefed on Motorola's phones", are of the view that the phones are
"impressive. ... sleek touchscreen phone with qwerty keyboards that slide out of the body of the device for easier typing."
Those seem like nice features. Still, for Motorola's sake, I hope that there is meaningful protectable IP in these features. The article does not mention patents or even any indication that patent protection is part of the company's strategy with these products. As Motorola has learned, design itself won't do it and, unless Motorola obtains an exclusive IP position with respect to at least some of these features, any advantage in this direction would seem to be short-lived.
There is one ray of IP hope however--branding. Perhaps, just perhaps, Motorola might be able to successfully roll its new products out in a way that will capture the fancy of at least a commercially viable critical mass of handset users who will come to prefer the Motorola-branded products. This will then allow Motorola to be able to roll out new features on an incremental basis, rely on its burnished brand image (assuming that it can be reestablished) and thereby not have to seek some likely unattainable holy grail of IP exclusivity.
Something like that was suggested by the Apple presentation about the iPod product that took place several days ago. None of the features that Apple introduced for its iPod product seems to be a blockbuster. Indeed, some features, at least with respect to the Nano iPod, were described as common fare on many MP3 devices. No matter. The idea is that Apple is Apple, and it is enough that it continues to roll out incremental improvements for its flagship products.
Duplicating that dynamic will be ever so difficult for Motorola. The RAZR models were top of the class less than five years ago, but Motorola could not leverage that goodwill more generally, and the Motorola brand is light-years behind Apple in brand strength. But with the operating system in the hands of an open source developer community, behind which lies an 800-pound business gorilla with its own business agenda, with no apparent patents to rely on, with the awareness that designs are fleeting at best, brand development may be the last best IP hope for the company in the handset industry.
