According to Oppenheimer Research analyst Yair Reiner, Apple (AAPL) wants to scare off other companies from truly competing with the iPhone. But the company's efforts, if unchecked, will eventually become its biggest act of folly.
For well over a year, Apple has allegedly threatened handset vendors with legal action to discourage them from selling products that compete too closely with the iPhone. Many companies cooperated, but eventually the dam burst. Starting in January of this year, Apple tried leaning more heavily on its competitors:
"The lawsuit filed against HTC thus appears to be Apple's way of putting a public, lawyered-up exclamation point on a series of blunt conversations that have been occurring behind closed doors. ... Rival software and hardware teams are going back to the drawing board to look for work-arounds. Lawyers are redoubling their efforts to gauge potential defensive and offensive responses. And strategy teams are working to chart OS strategies that are better hedged."On the surface the strategy may seem like smart. But look deeper and you see corporate attitudes that are hypocritical, ineffective, and ultimately self-destructive.
HypocriticalFor Apple to fume over idea theft is amusing, given how much of the company's achievements rest on work of others. Don't believe me? How about Steve Jobs? You could argue that when Jobs quoted Picasso and great artists stealing, he meant ideas from disciplines other than computer science. That might be true, but other technology companies have offered frequent fodder. It's not as though Jobs invented the graphical user interface or the mouse or even the portable music player. By definition, unless you create everything in house, you depend on the intellect of those who have gone before. Apple excels at improving on something that already has existed. But this hypocritical display of ego will have consequences.
IneffectivePut aside for the moment Apple's attempt to gain the moral high ground. This move is just plain dumb. Apparently Apple believes its own press about inventing multitouch user interfaces. Few things are further from the truth. As I've noted a number of times, most recently in January, Apple's multitouch patent is on shaky grounds. Multitouch interfaces have existed since the 1980s. Researcher Myron Krueger developed the pinch gesture concept in 1983 and Pierre Wellner made it work on a computer in 1991. Microsoft (MSFT) filed for its multitouch patent before Apple. Just because Apple's was issued first doesn't invalidate the Microsoft claims. Chances are those two will end up in court.
Apple already faces Nokia (NOK). What other established and canny mobile and computing patent holders does Apple also want to take on? Motorola (MOT)? Samsung? HP (HPQ)? These companies, most of which have abundant resources for legal battles, also own a depth of mobile and handset IP that dwarfs Apple's holdings. Include the prior art on multitouch interfaces, and I don't see how Apple keeps its patent for long. In this case, threatening legal action is a fool's stratagem. That's a pity for Apple, because the patent, even if fundamentally weak, could be a great bargaining chip in dealing with companies like Nokia. Apple either has to back down or risk losing what it already has.
Self-DestructiveUnnecessarily losing the multitouch patent is minor compared to a bigger problem. Apple is about to shift from a company that constantly stays ahead to one that spends time trying to keep others from catching up. Outside Apple's ill-fated suit of Microsoft for copying the Mac look-and-feel, I can't think of another time when Apple strategy relied primarily on lawyers, not designers. This is a potentially fatal change of direction for the company. Apple is effectively saying that it is dependent on patents and can't maintain the pace of innovation necessary to stay at the front of its markets. That will eventually eat away at employees and investors. For its own good, and the good of the industry, Apple should stand down, welcome tough competitors, and prove itself more than equal to the situation.
Steve Jobs picture via Flickr user curiouslee, CC 2.0.