It's the APIs, stupid!

One way to make lots of money is to create and control a popular platform. But sometimes it's possible to control a platform without creating it, often by creating an abstraction layer to unify previously disparate APIs.

Such is Google's soon-to-be-announced "Open Social" initiative, covered today by Business Week, O'Reilly, Wired, and the WSJ.

The idea that the Google APIs will provide commonality (and thus direct network effects) by combining a range of 2nd tier social networking sites, including Friendster, LinkedIn and Google's own Orkut. Noticeably absent are the US market leaders, MySpace and Facebook. (This confirms the point I made a few years back that shared or common APIs are always a strategy of losers trying to catch winners).

As Business Week reported:

If the plan is successful, Google could bring its leverage to bear on the social networking market and potentially slow the momentum of high-flying Facebook. "This is an open version of what Facebook has done," says Marc Andreessen, a co-founder of Ning, which provides tools for building social networks. Andreessen was the founder of Netscape Communications in the '90s. ...

For Google, OpenSocial is the first step in a plan to hit back at Facebook and Google's chief rival, Microsoft (MSFT), which on Oct. 25 announced a $240 million investment in Facebook (BusinessWeek.com, 10/25/07), beating out Google for a stake in the fast-growing company, now worth an estimated $15 billion.

Today was also the day that Google's march to world domination reached another milestone with a $700+ stock price and a $220 billion market cap that left America's largest banks in the rear view mirror. Only four US companies have a larger market cap: Exxon Mobile, GE, Microsoft and AT&T.

A pretty good week for a company that still has yet to announce its major platform initiative of 2007 (the gPhone).

Who's ready for the mobile web?

In January, Mike Mace and I both had an intuitive feel that the iPhone was going to change the mobile phone industry. Four months after the first iPhone shipped, I think our intuition has been born out to a greater or lesser degree.

Aided by very satisfied customers and the consequential word of mouth, Apple sold nearly 1.4 million iPhones in the first 94 days. This is AT&T's top selling phone (at 13%) and 4th overall in the US. Of course, Apple is not #4 overall since most vendors sell dozens of models.

In particular, one thing came through loud and clear last week at the CTIA Wireless IT conference (the premier mobile web conference in the US). Admirers and rivals admitted that Apple finally did a mobile browser right, and that accounts for much of its success (an advantage emphasized by their current advertising).

Web browsing solves the fragmentation of the US market, and provides a least common denominator between desktop and cellphone. If all app developers, content providers, cellular operators and mobile phone makers all agreed to use the web -- based on W3C and IETF open standards -- then the mobile Internet couldn't be any more open than that. This openness and ubiquity would eanble all sort of positive network effects to spur adoption, and leverage off the installed base of the wired Internet. Another factor for openness is that Apple's iPhone browser is based on WebKit, the open source project Apple created (from KHTML), which in turn reduces the barriers to imitation for its web browser. (In case web apps aren't enough, this month Apple adddressed the criticism about a "closed" iPhone by announcing it will release formal software development kit for native apps in February.)

If Apple establishes the browser as the key enabler of the mobiler Internet, how well situated are the major handset vendor? Based on Q3 2007 sales estimates, here's the list and my prediction:

• Nokia (38.6%). It ships more smartphones than anyone, owns S60 and the largest share of Symbian Ltd. It has been taking more risks with software than any other cell phone company, including its Maemo web tablet platform. Even if we worried about Nokia falling behind, they are already ready to match Apple by porting WebKit to S60.
• Samsung (14.7%). Has a wide range of software strategies, including Symbian S60, Windows Mobile and its own OS. Historically the Koreans don't grok software, but S60 will have a good browser and Windows Mobile could too (assuming Mobile IE is a fully compatible browser) -- so it may depend on the mix of software platforms they are selling.
• Motorola (12.9%). Like Samsung, Motorola has a mix of platforms: Windows Mobile, Symbian UIQ and its own solution (now shifting towards mobile Linux). Although in principle Linux should have a great browser, Motorola once said that the browser choice was up to the carrier.
• Sony Ericsson (9.0%). SE's smartphone strategy is tied to UIQ -- a Symbian OS layer that it used to own but is now going to share with Motorola. Since UIQ 3.0, UIQ has depended on the Opera browser, which has yet to inspire the enthusiasm of WebKit.

Any others? I think HTC will do well, because it thus far has made its impact with Windows Mobile, but now also has the prospect of the Google phone. On the other hand, while RIM has always understood software and has done well with e-mail, it is not known for its browsers.

Of course, this is a very US-centric view. For Europe, I expect browsers to be important too, but the smartphone market is much less fragmented than the US and much of the market can be reached by writing a native S60 application. Meanwhile, in Japan, the mobile Internet (as Jeff Funk as noted) is whatever DoCoMo says it is.

A blow for cell phone freedom

A momentous story moved late yesterday afternoon on the AP wires. Sprint has agreed to allow its customers to take their phones with them if they switch to another carrier.

As part of a proposed class-action settlement [Sprint] has agreed to provide departing Sprint PCS customers with the code necessary to unlock their phones' software.

That would allow the phones to operate on any network using code division multiple access technology, or CDMA. Competitors using that technology include Verizon Wireless and Alltel Corp. ...

Sprint made the offer as part of the proposed settlement of a California class-action lawsuit, filed last year, accusing the company of anticompetitive practices. The plaintiffs claimed the software "lock" forced anyone wanting to switch carriers to buy a new phone, throwing up a barrier to competition.

The settlement covers phones purchased between August 1999 and July 2007. It is not clear whether Sprint will implement this as a policy going forward, but that would be a reasonable guess.

Similar suits are pending against T-Mobile and Cingular (over the iPhone). I'm surprised no one has sued Verizon yet.

Unless I misread the report of the ruling, the impact of this should be minimal. If you have a contract that says "pay for 2 years of service or pay a $300 early termination fee," then you wouldn't be able to unlock your phone unless you settled those terms. I would imagine all the carriers have contracts that recover the $200 handset subsidy if you leave early (and perhaps also the $50-200 cost of customer acquisition that amortizes their large ad budgets). So this would mainly cover people who were willing to pay the full price of the phone, or had a two-year-old phone they wanted to carry to another carrier.

Still, this would be a start in a shift of power between carriers and customers. It would also disproportionately hurt Apple (if they eventually lose), since -- unlike other carriers -- their business model assumes an ongoing revenue share by the carrier. I wonder if Apple can get the NPV of their revenue share built into the early termination fee.

The rewards of platform control

This semester, my MBA students have become familiar with Symbian and its relationship with Nokia. Although little known on this side of the pond, Symbian is the leading supplier of operating systems for those high-end cellphones that are most driving development and adoption of the mobile Web.

At Monday's Smartphone Summit, Symbian's Executive VP of Research David Wood delivered an important keynote on Symbian's plans and expectations for competing with mobile Linux and other platform rivals. I'm sorry I couldn't hear my friend talk, but this fall I'm spending Monday and Wednesday morning's imbuing 20-somethings with the tools and techniques of competitive strategy. Fortunately, the talk was covered by one of the two main US cellphone trade journals, RCR News.

Seeing the dead tree version of RCR News was one of the highlights of my visit to the CTIA conference, as it brought back memories of my subscription to RCR 12-13 years ago when I started doing research on the cellphone industry. Reading the articles from the RCR weekly (and show daily), it was interesting to note that the "reporters" were quite opinionated (if not caustic) in their interpreting of the news. The coverage of David's talk by Phil Carson was no exception:

With no authoritative, tech-savvy rebuttals to slow Wood’s steamroller, the all-roads-lead-to-Symbian view may have carried the day for the uninitiated.

To be fair, Wood’s data on Symbian’s current market dominance may be irrefutable—even if his rhetoric would have you believe that market trends spell nothing but doom for competitors. Smartphone sales now outstrip laptops, seven of 10 smartphones run Symbian and the latter has successfully defended its market share against rivals for two years. One can understand how Symbian’s most fervid evangelist would declare: Game over!

Except that the market clearly demands diversity and the forces arrayed to compete with Symbian, particularly in the United States, are among the toughest competitors in the business. It might have been more entertaining if representatives for those camps suddenly popped out on stage to rebut some of Wood’s rhetoric—a sort of OS cage match. But, of course, that goes with the territory here at CTIA I.T. & Entertainment 2007.

Symbian's high market share worldwide has not translated (yet) into success in North America. Certainly Carson is right that Symbian faces more competition here, with the onetime dominance of Palm that's now been supplanted by RIM. Of course, the real problem is that carrier control determines which mobile phone technologies get in customer's hands, and for a GSM-based technology (like the Symbian-enabled Nokia phones), access to the US market means cooperation from AT&T, which thus far has not been forthcoming.

In between the sarcasm, Phil did seem (somewhat) persuaded by Wood's belief in the future of convergence mobile phones:

The smartphone, Wood predicted, will become life’s remote control, handling home functions and financial matters as well as stodgy old communications.

The upshot, according to Wood, is that smartphones are becoming a matter of lifestyle.

“You don’t have to be smart to use them and the device makes you smart,” Wood said.

And with 25% of all network operator revenue derived from smartphones that run Symbian—Wood’s figures, not ours—then Symbian is destined to rule!

Will mobility revolutionize Web 2.0?

On Monday, I moderated a panel at the Smartphone Summit, held in San Francisco as part of this week's Wireless IT & Entertainment conference. The main conference is organized by the CTIA (the main US cell phone trade association), while Monday's "Summit" was privately organized and heavily sponsored by leading mobile phone companies (notably Symbian).

The session I moderated was called "Smartphone Interactivity (Social Networking & Personal Communications)," one of two parallel sessions that closed out the summit. The claim of the program was that:

In today's world, MySpace, YouTube, Facebook, and many other social networking experiences have made their way into everyday life around the globe. The next natural extension of the social interactive experience is to the wireless smartphone device. With the capability to run audio and video along with GPS locating, there is no limit to the type of social interactive applications that could be deployed over smart mobile devices. Join the pioneers taking social networking wireless for an in-depth look at the implications of this technology, including how it may be monetized for ROI of those enabling these experiences, as well as security of the experience.

WIth only a few minutes to present, I focused on two goals. One was providing a preview of the study by my graduate students (Eduardo Sanchez and German Benitez) who are doing their theses on social media business models for the mobile phone industry. The other was to provide an overview of what's going on in the industry, based on what I know from working with Eduardo and German, reading the trade journals/websites and going to industry events (particularly last month's Mobile Monday event).

In my slides, I joked that the buzzwords "Social networking" or "social media" or "Web 2.0" seem to be used interchangeably, so it was a relief to hear that a morning panel had been unable to agree on a definition of "Web 2.0." (Tim O'Reilly claims to have invented the term "Web 2.0," but people seem to use his buzzword more than his definition.

I saw people taking pictures of my slides with a cameraphone (you can download them free from my website). I didn't think the slides were particularly insightful because I was rushed between two conferences and a backlog of grading (which I've been working to clear today).

I had a chance to attend a few earlier sessions, and what I heard confirmed most of what I'd prepared. "Social networking" (or "social media" or "Web 2.0") business models seem to be driven by two major trends. One is user-generated content (like this blog), and the other is taking advantage of the value created by direct network effects, i.e. the N x (N-1) possible linkages of a population of N users. (This is called Metcalfe's Law, but researchers last year showed that it grossly overstates the value of a network due to the long-known distribution of value via Zipf's law. In fact, this power law describes many of the interactions on the Internet.)

Obviously the strongest possible business models are those that combine both. While both Facebook and MySpace are about allowing friends to stay in touch, MySpace also plays a major role in spreading word-of-mouth for members' favorite music. (Jason Ling of MySpace was up from the fires in Los Angeles to speak on the panel, but his prepared slides were left behind when Delta lost his luggage.) However, in visiting a booth at the trade show Tuesday, someone showing Nokia's download site there is a difference between organizing around social networks like Facebook (I want to see people who I know) and around content as with Flickr or YouTube (I want to see a video of the latest politician's gaffe).

One of the unresolved questions regarding mobile social media is whether there will be mobile-only and PC-only networks, or whether the successful sites will support both. (I almost said "platform agnostic," but with 500 different phones out there, developers of mobile applications have to do a lot of work to be platform agnostic just within the mobile space.) Of course, it takes considerable work to turn a PC website into a good cellphone website, which is why everyone was excited to see how well Google Maps works on the iPhone.

I think such dual PC/mobile content drives a related trend that I picked up on at the Summit, which is the rising use of web-based applications. One reason is that developers need to span not only the PC and phones, but also the various platforms within each. The other reason for web-based apps is that it's finally practical: the iPhone has one of the first decent phone-based browsers, but Nokia (and others) are going to make sure that it's not the last.

This led to the only heated argument on our panel, in which Faraz Hoodbhoy (CEO of PixSense) said I was wrong. Perhaps I didn't make myself clear, or he wasn't listening clearly, as I never said web apps are the be-all or end-all. My point about mobile web apps is that they're a least common denominator which are getting more practical and will be good enough for many of the Google-, Yahoo- and MySpace-type applications that are already designed for them.

There are plenty of apps that require offline access, or low latency, or persistence, for which a native app will be a much better solution. There's many things you can do on the native Google Earth application that you can't do on Google Maps. I don't know what the relative mix of the two approaches will be -- and even web apps have to be tuned for the different form factors -- but I think mobile web apps are here to stay.

What's with "taxing" music downloads, eh?

Just back from my visit to Calgary for a conference.

In a decision Thursday that made headlines here in Canada but was largely ignored elsewhere in North America, a government body decided to retroactively impose a mandatory 3.1% royalty on legal music downloads to compensate songwriters and composers.

Among the very limited news coverage south of the 49th parallel, Slashdot proclaimed "Canada May Tax Legal Music Downloads," based on a secondhand report in Electronista (called "Canada to tax legal digital music downloads"). Any money collected under the coercive power of the state is a form of taxation. On the other hand, the money is not being paid to the government, but to SOCAN (Canada's answer to ASCAP).

In the only decent story on the subject, the Global and Mail notes that the new 3.1% royalty adds onto the 7.9% fee being made to music publishers. On a 99¢ (CDN) download, the label gets 60¢, these royalties run 11¢, the bandwidth is about 1¢ and the credit card companies (for small transactions) get 10-20¢. While the iTunes Store has set a 99¢/song ceiling on prices, one executive predicted these royalties could push pricing past one loonie (CDN 1.00). Canada also has a tax (or mandatory royalty) on blank CDs and music players to collect royalties for artists.

In some ways, that's double jeopardy because [if it's at all like the US] the songwriters were already getting compensated by the record labels out of that 60¢; however, I suspect (as on the US) the royalties were based on a physical good rather than an information good. When I did my “digital music" case 5 years ago, I estimated that 28% of the wholesale price of a CD was for manufacturing and distribution, which record labels used as an excuse to limit songwriter royalties. With digital downloads, everything but the royalties is gross profit: if the download volumes ever match physical ones (they won't), record company profits should be higher than they are today.

Despite this potential inequity, I think it's a bad idea to set royalty rates via government fiat. Exhibit A is the March 2007 decision by the equivalent US panel to increase record label payments by Internet radio stations (beyond those of other countries) to more than 100% of revenues. Over the centuries, the only accurate way of setting prices has been through negotiations between with multiple competing buyers and sellers. Whether or not the artists were getting a fair price beforehand, the actions of the US Copyright Royalty Board and now the Copyright Board of Canada have only reinforced that point.

Will the gPhone change the mobile industry's business model?

Blogging while attending a conference.

Rumors are that the long-rumored Google phone will be announced soon. A Fortune blog quotes the rumor that the announcement is coming next week (Oct. 24) while the blog of ZDNet's editor repeats the rumor that the announcement is Nov. 5.

So people are writing (if not reading) are rumors about rumors about rumors. The interest in the gPhone today is comparable to that on the iPhone 11 months ago, and exactly parallels the buildup to Apple's Jan. 9 unveiling. It's not clear whether this is because these firms are highly visible, because they're good at using secrecy, because the industry needs another entrant, or because bloggers just need something to write about.

The Fortune article quotes a securities analyst as saying 50,000 phones will ship this year, which seems very optimistic timing. Apple unveiled the iPhone in January (for June 29 availability) because details were going to leak in the FCC certification process. If the gPhone isn't being evaluated by the FCC today, it seems unlikely that it will pass by Dec. 15.

More interesting is the claim that HTC is (a) firm that's going to make gPhones. This seems a lot more plausible, because it knocks down (silly) speculation that Google would make gPhones. Also, HTC is quite plausible as a gPhone maker, since they are a generic Taiwanese ODM (trying to become a branded vendor) with US presence via Cingular (AT&T), and in fact is only known in the US because they have already used someone else's software (Windows Mobile) as a market entry strategy. But of course, if Google is a mobile software supplier, there will be many other vendors.

The main reason I raise this is not to speculate on release dates, features or partners, but because of one of the few new insights that I've seen on this topic over the past 6 months. This morning on Forbes.com, Brian Caulfield argues that the gPhone business model is far more important than its features -- because (like everything else Google does) it will presumably be ad-supported, and leverage Google's core competence in ad targeting.

Since Microsoft and Apple are targeting the high end, and Google (with open source) is targeting the lwo end, Caulfield's speculation is also that the gPhone will have the greatest impact on the developing world. That makes sense since the gPhone in the developed world, would be a substitute/replacement for existing cellphones, while in the developing world (India and China are oft-mentioned) is the only place left with any new adoption possible, not to mention the most cost-sensitive users who might be more willing to put up with ads.

This would be a quite a change for the mobile industry. A lot of people run around saying Asia is the leader of mobile innovation, with Europe second (except possibly for smartphones) and the US last. But "Asia" normally means Japan, as with NTT's i-mode or FOMA (UMTS), or the J-Phone creation of the cameraphone category. More recently it has also included Korea, with nearly universal adoption of 3G (via cdma2000 migration) and experiments in things like music downloads and mobile TV).

India and China were already the world leader in mobile phones as a substitute for wireline -- most countries adopted wireline then wireless but these countries (and others) are on a path to bypass wireline altogether. Could ad-supported mobile phones in India and China be the beginning of a global trend? In this case, it really would be an important step in Google's inexorable march towards Total World Domination.

On the other hand, it might be that Americans and Europeans and Japanese will be quite happy with their existing cellphone and business models and not interested in switching to an ad-based model. In that case, the gPhone would reflect a strategy for part of the world (and the most rapidly growing part) but an inevitable wave for the whole world. In that case, what influence will Google have on the mobile industry in the developed world?

Apple decides to ship UNIX(R)

Finished one course but still behind on grading.

Apple has finally decided to ship a UNIX operating system — its Leopard (OS X 10.5) shipping October is fully compliant with two Unix validation suites: the Open Group’s Single UNIX Specification (SUSv3) and the IEEE’s POSIX 1003.1.

Since March 2001, has been shipping OS X based on two Unix-derived operating systems — FreeBSD and Mach (which was mainly associated with NeXT). However, its rivals have been sniping at its claim of shipping a UNIX operating system because it had not (previously) passed compliance tests.

A decade or two ago, people fought for the rights to use the UNIX® trademark. POSIX was invented so people could legitimate UNIX clones without having to pay to use AT&T's code or trademark. The 4.4BSD-Lite release in 1994 marked the first full release of a UNIX-like operating system without AT&T code.

While POSIX provided technical interoperability, by the time standardization was completed (and the “Unix Wars” were over), Windows had achieved total world domination. Jim Isaak — chair of the POSIX committee for 15 years and recently a candidate for IEEE Computer Society president — wrote about all the dilemmas of POSIX standardization in a paper for my HICSS minitrack on IT standards. He published two slightly different versions of the story in the HICSS (IEEE) proceedings and a special issue of JITSR.

Inexorable march to domination

The WSJ this morning published the latest installment of the Googometer, showing Google’s market cap. At $190 billion, Google has passed HP, Coca-Cola, Intel, IBM and now Wal-Mart. Next up: Cisco. After that, SBC (aka AT&T) and Microsoft. GE and Exxon Mobile are still a ways off.

At one point, there was a satire article about Microsoft buying a small country. When Google’s stock goes up another 50% or so, that baton will pass to Google.

Killing those Apple bears

I am not an Apple cheerleader. And I have not owned the stock in a decade — every time I've wanted to get in, I’ve considered it overvalued. A P/E of 46 is pretty rich for a 30-year-old growth company.

Nonetheless, looking for an answer to an unrelated question, I was amused to find an Seeking Alpha recommendation (elaborating on one from Piper Jaffray) from last March to short Apple. The stock was at $95; Wednesday it closed at $166.

This reminds me of a friend (now at Apple) who wanted to short eBay in the late 1990s; his wife fortunately talked him out of it. Shorting Microsoft and Cisco in the past decade could have been very smart if you timed it right — but the timing was not about the company’s competitive advantage, but shifts in market demand and growth multiples.

I never did find the answer to my question, which is how many AppleTV units has Apple sold. Projections prior to the March 21, 2007 ranged from 800,000 to 2 million. I would be shocked if they sold 1 million this year. My MBA students, Seth Baron and Richard Burnside, estimated 206,000 units sold in April-June, which implies (absent a model refresh) they’d be lucky to sell 600,000 units this year. But, as Seth & Rich noted, AppleTV is an “extendable software platform,” so who knows? Maybe important functionality will be added down the road.

I was dying to buy the rumored iTV, but then when I saw one in January, I said “what’s the point?” I don’t buy that much from the iTunes Store (10 songs over 3 years), but I would buy a DVR replacement for time-shifting 24.

Get off e-mail and pick up the phone!

Will probably remain behind on blogging under both sets of MBA grades are filed. For decent blogging productivity, I also need a few hours to reinstall/reconfigure my blogging software.

One of the points I try to remind students is how e-mail can cause more problems that it solves. For example, some people (unknowingly) adopt a passive-aggressive stance that says “this is what I’m going to do — let me know if you have a problem with that.” As in “I’m going to miss class tomorrow. Let me know if you have any questions.” And maybe they don't intend it to be passive-aggressive, but without context it’s hard for the reader to tell.

Certainly around our house and at the office (both industry and now university), more than one or two back-and-forth prompts the cry “just pick up the phone.”

The NYT this week has an article about all the reasons that e-mail is prone to misunderstanding. In trying to be the definitive article on the subject, it perhaps takes itself a little too seriously, but it provides a comprehensive view of why excessive reliance on e-mail can be very risky for your career and relationships.

Favorite innovation movies

In my MBA class tonight, guest speaker Vincent Paquet (celebrating the one year anniversary of his company’s public launch and 3 month anniversary of joining the Google mother ship) talked about the life of a successful startup entrepreneur.

After Vincent left, the topic of startup funding came up. It reminded me of my favorite startup movie, Startup.com, about about an unsuccessful dot-bomb. The scenes about the CEO trying to get VC funding are the closest thing I’ve ever seen to the real process about getting funding.

I don’t believe in showing movies in class, but these VC scenes in Startup.com are one exception. The other exception is the open source documentary, Revolution OS. I normally show the scenes providing insight into the two key figures of the free/open source software movement, i.e. Richard Stallman and Linus Torvalds. If I have time, I show excerpts of the 2nd DVD, specifically the interviews of these key protagonists.

EU considers Qualcomm as next Microsoft?

As predicted, the European Commission has wasted no time in going after another American firm using the anti-monopoly precedent established with Microsoft. This week, the target is Qualcomm. Still on deck are Intel, Rambus and Google.

The EC investigation of Qualcomm is following up on a request 23 months ago by Qualcomm’s two main chip rivals — TI and Broadcom — as well as European handset (and chip) makers Nokia and Ericsson, as well as Panasonic (Matsushita) of Japan. The investigation could take as much as two years, although the EC was careful to say the action “does not imply that the commission has conclusive proof of an infringement.”

The main issue is not that Qualcomm is blocking other firms from using its technology, but the price that it charges. Specifically, Qualcomm charges the same royalty (about 4-5%) for both major flavors of 3G mobile phones — cdma2000 and WCDMA. Its accusers — including the leaders of the WCDMA camp — argue that Qualcomm should charge less for WCDMA because they successfully added lots of other IP to the WCDMA standard and thus Qualcomm’s share is proportionately less. The WSJ [registration required] quoted these rivals as saying that the fee should be less than 2%.

The case may end up focusing on that most vaguely defined standardization concept, Reasonable and Non Discriminatory licensing terms, aka RAND aka FRAND (Fair, Reasonable and Non Discriminatory). Anyone who studies (or participates in) standardization knows that the term has been left deliberately vague as a way to win agreement among various parties. Rather than come up with a more specific ex ante definition to provide predictability for all concerned — something ETSI has notably shied from doing — key ETSI members want the chief EU regulator to impose an ex post definition based on its own judgment.

There are key differences between US and European law that make this action unlikely to succeed in the US. One is the (current) policy favoring patent holders in the US; the second is that US monopoly law requires demonstrating harm to consumers, while EU law considers harm to competitors to be an important issue. There is also the issue that the EC seems to be choosing unpopular defendants first — Qualcomm being the only company more hated than Microsoft in the European ICT industry — presumably to set a precedent. Once the precedents are established, they could be applied to other, less controversial firms (which today would still include Google).

Qualcomm faces other legal challenges, including its expired patent license with Nokia and its ongoing legal fights with Broadcom. Qualcomm hired a new general counsel Friday — Donald Rosenberg, formerly of Apple, and before that a 30-year IBM veteran. He certainly has his hands full.

Technorati Tags: 3G, antitrust, EU, Microsoft, standardization

iBrick fiasco

Still badly behind on grading, but wanted to quote a few quick articles.

The successful efforts to unlock the iPhone (by George Hotz and others) did not go over well with those that did the locking.

On Sept. 27, Apple released its innocuously-named iPhone 1.1.1 update. I don’t have an iPhone, but as I understand it, iTunes (on the Mac or PC) reports the availability of the update and recommends that users install it. It was nominally a security update with some small feature enhancements, but it also broke all the hacks that allowed the iPhone to work on networks other than AT&T.

I’m of two minds here. That Apple would respond should not be surprising, so it seems silly that people are shocked! SHOCKED! that Apple would try to disable these hacks. (Some are already trying to reverse the update, while others will eventually find ways to unlock the updated phones). It’s also unclear whether Apple is passionate about locking people in (not implausible) or if they have a contractual obligation to Cingular (now AT&T) to use all possible technical means to enforce such locking.

On the other hand, this is terrible PR for a company and a product that has enjoyed a charmed existence this year, earning the nickname “JesusPhone.” This includes:

• an online video mocking Apple’s image campaigns
• a new reluctance by iPhone owners to take security updates
• a new nickname — iBrick — that is being attached to Apple and the iPhone, potentially nullifying the 9 months of fawning PR.

Apple has been here before — they’ve overreached in their efforts to exploit their lock-in of loyal customers. Will they pull back from the brink? Can they? Or will they become even more aggressive (and even more Microsoft-like) in pushing around their customers?