Friday, February 7, 2014

Impact of Patent War on Smartphone Ecosystem and Its Implications

The smartphone patent war is a maze. All the major players are tangled up together and each one of them is trying to find a way to block others, while finding the best way out.

However, with more than 250,000 patents in play in the smartphone ecosystem, it is virtually impossible for either company to achieve a decisive victory. And it seems like there is no significant influence on brand recognition regardless of the result. Then why are companies so pumped at beating each other knowing it won't knock them down? Do they really need the billions of dollars claimed? Will it even product positive cash flows when firms are feeding all the expensive law firms to help them fight for the case?

The answer is simple: Firms want to slow down the competition while enjoying dominating the market sales. They are dragging each other from the back to prevent them from creating newer and better technologies to regain the market.

Go back to the question, does winning a patent infringement lawsuit has any material impact on the brand name? Currently, it seems that stockholders would respond to the lawsuit's outcome, but consumers are indifferent regarding to what is happening in the court room. To customers, a smartphone is a smartphone, a device that can allow people to communicate and social with each other, play games, track calenders, etc. It doesn't really bother a customer that Samsung copied Apple's rounded corners design; the thing that a customer cares about is really just how much he likes the device in terms of functionality and usability. 

But look at what patent war has done to the smartphone ecosystem. It slows down innovation generation. It's anti-competitive. Firms spend $1,000 per hour on IP lawyers instead of engineers to defend its products. All in all, it's counterproductive to what would actually benefit costumers. The patent war is malicious; in the long-run, it will create a vicious cycle that would severely damage the smartphone ecosystem.

1 comment:

  1. I agree that the patent war, especially patent trolling, causes inefficiency and inconvenience for technology firms. Ironically, though, the patent war is a symptom of modern technological innovations. The intensity of the patent war directly correlates to the speed and consistency of technological success. If everyone from giant corporations to non-practicing entities are at each others' throats for IP, that's a pretty good sign that we're doing something right.

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