The Smartphone Wars: The iPhone Design Was Inspired by Sony

Wired magazine brings us a fascinating revelation from the Apple-vs.-Samsung brouhaha.

Think Apple’s iconic iPhone design was born deep within the catacombs of Apple’s Cupertino campus? Think again.

According to Samsung’s unredacted trial brief (.pdf), the inspiration for the look of Apple’s original iPhone actually came from an idea for a Sony smartphone.

“In February 2006, before the claimed iPhone design was conceived, Apple executive Tony Fadell circulated a news article to Steve Jobs, Jonathan Ive and others. In the article, a Sony designer discussed Sony designs for portable electronic devices that lacked buttons and other ‘excessive ornamentation,’ fit in the hand, were ‘square with a screen’ and had ‘corners [which] have been rounded out,’” the document explains. An Apple industrial designer, Shin Nishibori, then mocked up the design, even using Sony’s logo on the back of the CAD drawing.

According to Nishibori’s testimony, his design changed the course of the iPhone project, and pointed it toward the iPhone of today.

This isn’t speculation – an Apple employee copied Sony’s design, circulated it to his bosses, and testified to these facts in court.

From now on, when anyone heaps phrase on Apple’s design excellence and superlative innovation, just point and laugh. Some of us have been saying for years that what Apple is really good at is ripping off other peoples’ ideas and stealing the credit for them with slick marketing. This, right here, is the proof.

362 thoughts on “The Smartphone Wars: The iPhone Design Was Inspired by Sony

  1. There is a huge (and legal) difference between a design study based on another company’s overall “look” and a marketed product. The mockup was based on Sony style, not a Sony phone, and is still distinct from what iPhones ended up looking like. Apple also creates things in a Dieter Rams style, which also does not detract from their design excellence or innovative qualities.

    Apple’s beef with Samsung is not that Apple’s design iPhone and iPad designs are entirely unique in history, but that Apple was selling products, and then Samsung came out with nearly identical products: so nearly identical that Samsung lawyers had a hard time picking them out in court, and so nearly identical that Google warned Samsung about it (an important part of the Wired article you didn’t mention).

    And no, the designs of iPhones and iPads are not “obvious”: just look at earlier smartphones and tablets.

  2. Apple has *never* been an innovator. Apple did not create any of the markets it is currently in. Desktops, laptops, media players. smartphones, and tablets all existed well before Apple touched them. The original Mac had design roots in Xerox PARC and the Smalltalk operating environment (and I believe Apple hired a bunch of the PARC folks to work on the Mac.)

    Xerox had the bright idea. Apple turned the idea into a salable product.

    What Apple *has* been good at is *refining* concepts. Jobs and Apple had a total focus on the user experience, and it showed. In general, Apple products behave as the user expects them to, and icon clicks, button presses, and menu choices do pretty much what the user thinks they will do. Apple has touted ease of use almost from the beginning, and their focus on UX has largely provided it. The infamous “walled garden” is in service of that approach – Apple is fanatical about UX, and imposes standards apps must meet. Apple *users* do not see this as a problem, because they can get Apple certified apps that do anything they need to do.

    Did Sony come up with the original design concept? Sure. So what? Designs don’t exist in vacuums, and everyone is constantly watching what everyone else is doing, looking for things they can adapt. Like it or not, there are *reasons* the iPhone is the single most popular smartphone on the market, with a market share an Android phone maker would kill for.

    Sony never actually *built* the phone. Apple *did*. The rest is history.

  3. Of course, that ignores completely Apple’s own moves into that design space circa 2002-2004 as also cited in that article, and more clearly documented here:

    http://www.networkworld.com/community/blog/earliest-known-photos-apple-ipad-prototype?page=0%2C1

    Also note that the design in question was a mock up generated by an Apple employee, not an existing Sony design. And this here (http://web.archive.org/web/20100119002641/http://www.businessweek.com/innovate/content/feb2006/id20060221_140419.htm) appears to be the news article in question, hardly Sony describing a picture perfect concept for an Apple engineer to copy.

  4. This entire post is disingenous at best, and asinine FUD at worst. As others have posted, there’s a difference between dreaming and shipping. Apple ships. Get over yourself.

  5. Soa, the design “patent” which Apple uses against competition was not original. And the patented features were copied from Sony.

    If these had been real patents, this might have constituted a crime. But this is only design. Now they only lied in court.

  6. That Apple’s design is derivative says nothing of its quality. All design is derivative.

    The iPhone 4/4S, though not unique, is one of the most beautiful phones in circulation. The only phones in my opinion that hold up in terms of beauty and feel are the Nokia N9/Lumia 800 and the HTC One X. You can rip my Galaxy Nexus out of my cold, dead hands, but I don’t pretend the industrial design is up to snuff.

    With design, music, culinary skills, etc., the most important skill of the creator is good taste, if you hope for a repeat performance.

    That all said, Apple execs and fanboys need to get off of their fucking high horses about everybody copying their shit. They’ve shamelessly copied all the good parts from everyone else’s stuff from Xerox to KDE to Google, and rightfully so. They just wish to deny others the same privileges.

  7. >That all said, Apple execs and fanboys need to get off of their fucking high horses about everybody copying their shit.

    That was more or less my point.

  8. DMcCunney, where do you get your info. Samsung has sold over 50 million phones this quarter. That’s double what apple has sold. Also Android market share is 2/3. So are you saying that Android wishes it had a lower market share?

  9. >That all said, Apple execs and fanboys need to get off of their fucking high horses
    >about everybody copying their shit. They’ve shamelessly copied all the good parts from
    >everyone else’s stuff from Xerox to KDE to Google, and rightfully so. They just wish to
    >deny others the same privileges.

    And yet the only Android phone manufacturer facing a design lawsuit from Apple is Samsung, it’s almost as if it might be more nuanced than simple design propagation, something like, oh I don’t know …

    ” Samsung came out with nearly identical products: so nearly identical that Samsung lawyers had a hard time picking them out in court, and so nearly identical that Google warned Samsung about it (an important part of the Wired article you didn’t mention).”

  10. @Rich – you better check your facts before calling out anyone else. Here’s a hint: How many phones does Samsung sell, and how many does Apple sell?

    Also, your “2/3 marketshare” is delusional.

  11. And yet the only Android phone manufacturer facing a design lawsuit from Apple is Samsung, it’s almost as if it might be more nuanced than simple design propagation, something like, oh I don’t know …

    The fact that Samsung by itself is outselling Apple in smartphones 2 to 1?

    And judging by the lesser but still not trivial lawsuit difficulties HTC has been having, it’s almost like the degree of lawfare Apple wages against Android vendors is proportional to that vendor’s market success…..

  12. “The fact that Samsung by itself is outselling Apple in smartphones 2 to 1?”

    That “fact” is false. The error in it is the word “smartphones” – what is actually true is that Samsung sells a boatload of cheap older-design phones such that the total number of PHONES it sells is about twice what Apple sells.

  13. The dark humor of the 90s was that “Windows” meant the time between when you briefed Microsoft on your revolutionary idea and when that shipped in a Microsoft OS. Maybe it’s time to update the joke.

    I think that’s maybe what you had in mind about the Apple fanbois and getting them off their high horse.

  14. Some guy at SONY was speaking in an interview in general terms about a minimalistic phone design (no pictures even, just blabbing).

    Reading this article triggered some guys at Apple to actually design, manufacture, market and sell a phone with capacitive touch, glass screen, and no physical dial or call/hangup buttons.

    If you think this is ‘copying’, you better join the legal team of some patent troll, because that is some far out ideas to make lawsuit money on.

  15. ‘Earliest known photos of an Apple iPad prototype’

    It’s pretty easy to provide photos of a design you made and *say* it was done however many years ago. I don’t trust any of these dated submissions so far, its like rewriting your own history to make it look like it was planned a decade ago…

  16. OK, well the iPod was stolen from someone else. Creative Labs.

    “Apple® and Creative Technology, Ltd. today announced a broad settlement ending all legal disputes between the two companies. Apple will pay Creative $100 million for a paid-up license to use Creative’s recently awarded patent in all Apple products.”

    http://www.apple.com/pr/library/2006/08/23Apple-Creative-Announce-Broad-Settlement-Ending-Legal-Disputes-Between-the-Companies.html

    So for all the folks defending Apple for stealing Sony’s design idea, please explain this one away…

  17. >It’s pretty easy to provide photos of a design you made and *say* it was done however
    >many years ago. I don’t trust any of these dated submissions so far, its like rewriting your
    >own history to make it look like it was planned a decade ago…

    Fine, disbelieve the pictures. Do you believe the patent (http://www.google.com/patents/USD504889), filed Mar 2004, and granted May 2005, 9 months before this news article was released? Or are we supposing that the US government and patent office is now complicit in rewriting history for Apple so that they can file lawsuits against Samsung?

  18. Came for the rabid iFanbois, leaving satisfied.

  19. So the Apple fanbois are all saying that even though some design elements already existed, Apple took those elements and made a product even better?

    Fine. Let’s accept that, and therefore also accept that Google and Samsung took all of those design elements plus what Apple added, and then made a product even even better better.

    I just love my Galaxy S2. I find the iPhone experience irritating and annoying.

  20. Etch-A-Sketch. The PADD from Star Trek: TNG. A clipboard. Palm Pilot. Nearly every touchscreen monitor design. Which of these did not directly inform the iPad?

  21. From a recovering fan boy I would like to add my cent and a half. I was looking at my deck of cards and what did I find rounded corners I guess Bicycle owes apple 24 dollars a deck for their infringement. I was reading an article about apple’s new genius add campaign that had folks upset because it seemed to present mac and ipod users as idiots. Nice to know what apple thinks of their customers that they are so dumb that they can’t tell the difference between the so called superior iphone and apple’s claimed inferior samsung android phones.

  22. But it did. It designed something, based on a range of aesthetic influences, including a “if Sony, a company whose design principles we have always admired, were to make a phone, what might that hypothetical phone look like?” brainstorming session, built it, tested it, refined it, and shipped it.

    Samsung just copied what Apple had done. Like all the other smartphone manufacturers did.

  23. The thing I don’t understand is why this is even covered by a design patent.

    Screens are rectangular. That’s functional.

    Rounded corners keep it from snagging in the sofa or hurting you. That’s functional.

    A lack of buttons — let’s just say that my 15 year old blender buries buttons under a touch pad because that makes it easier to keep clean. The natural progression of the touch pad to capacitive touch and to being overlaid over the screen to maximize the use of surface area — again, functional.

    I really don’t understand how/why this has gotten this far in court. Design patents are most explicitly not supposed to cover functional elements.

  24. SHG: Yes.
    Patrick Maupin: There’s nothing preventing a design patent from being functional. The point is that if someone has rights to a certain design, copying it becomes illegal. Look at the links I posted at the top of the thread. Of course the elements that make up iPhone/iPad design existed before they did, but somehow, smartphones and tablets did not look like iPhones or iPads. Then, afterwards, many did. Copying a functional design that is “obvious” only in retrospect is still copying.

  25. Pingback: QotD: Playing “The Last Post” over the notion of Apple’s innovation « Quotulatiousness

  26. @PapayaSF: Of course the elements that make up iPhone/iPad design existed before they did, but somehow, smartphones and tablets did not look like iPhones or iPads.

    And bikini was used in Ancient Rome yet somehow was forgotten till Louis Réard. Do you really believe it’s production should be limited to one particular brand for that reason?

    Just like Réard claimed that bikini is not a genuine bikini “unless it could be pulled through a wedding ring” Apple can claim phone is not an iPhone and pad is not an iPad unless they have round “home” button which is not functional and easily recognizable. But to claim that they have a monopoly on a rectangle with rounded corners… that’s just crazy.

    Note that most early prototypes of iPad and iPhone don’t include this distinctive design element – they only include functional elements… if even that.

    Yes, pieces of technical appliances also follow fashion, there are trends in everything – from refigerators and TV to cars and laptops, but only Apple thinks it can patent fashion. Sorry, guys: patents are only for non-obvious inventions and what you did may be a great achievement in inducing fashion craze but it neither “new” nor “non-obvious”.

    As for design patents… “Design patent” is oxymoron. Patent is “monopoly in exchange for the exposure” type of deal. Inventor is given a monopoly for the idea which can be lost without such an incentive, but… what’s invisible and hidden in a design, really? Where’s the “exposure” part of deal? Just WHAT exactly can you glean from patent application which is not obvious from a first glance of an iPhone?

  27. All designers and artists take inspiration from others. No creative work happens in a vacuum. That Steve Jobs admired Sony and took inspiration from the company is well known, and this latest story is certainly no surprise.

    >From now on, when anyone heaps phrase on Apple’s design excellence and superlative innovation, just point and laugh.

    That Apple’s designers were influenced by another design says absolutely nothing about their ‘design excellence’. Their products *do* exhibit excellent design, and I hardly think there are many people in the world who would disagree. And just because they were influenced doesn’t mean that they don’t ‘innovate’ either. The process of creative influence/inspiration should be well known to a creative person like you.

    >>That all said, Apple execs and fanboys need to get off of their fucking high horses about everybody copying their shit.

    >That was more or less my point.

    If that was your point then your should consider re-wording the article, because as written it conveys quite a different point.

  28. @PapayaSF
    “Of course the elements that make up iPhone/iPad design existed before they did, but somehow, smartphones and tablets did not look like iPhones or iPads.”

    But it is the design elements that are “patented”. This is not a trademark dispute. As Jeff Read once crowed on this blog:

    Every distinguishing characteristic of a modern smartphone is now Apple’s protected IP. Meaning that it could soon become illegal to sell any Android or Windows phone in the USA. (I doubt the EU would let that one stand.)

    http://esr.ibiblio.org/?p=4444&cpage=1#comment-384084

    But there are clay tablets dug up in Iraq which combine the patented design elements. They are rectangular with rounded corners, are covered in icons, convey information, and you could write on them.
    http://www.hartford-hwp.com/image_archive/ue/tablet02.jpg

    And then we have these nice shots from “2001, A Space Odyssey” from 1968.

    Apple is “inspired” in their designs by others, but wants to forbid others to be to be inspired by them, or even by the same sources.

  29. The issue is not that Samsung sells things that are “rectangular with rounded corners, are covered in icons, convey information, and you could write on them.” It’s that they are so close to Apple’s designs that they arguably cause confusion in the marketplace.

    According to one document, Samsung even had a number of reports from Best Buy stating that customers were returning Samsung’s Galaxy tablets because when they bought them, they thought they were getting iPads.

  30. @Tom:
    >>That was more or less my point.
    >If that was your point then your should consider re-wording the article, because as written it conveys quite a different point.

    It’s pretty much the point I took from it.

  31. @Winter: I’m sure Dutch judges disagree with me all time. Probably ones from other countries, too.

    As for the confused buyers, perhaps they first saw the unit outside the box, and don’t keep track of computer company names? Maybe granddad went to the store to buy that flat computer thing the grandkids want, and got the wrong one? All I know is what was reported: that Best Buy told to Samsung that “customers” (plural) were confused. That’s hard evidence for Apple’s position.

  32. Oops, posted too soon. In other words, it’s not just Apple claiming that Samsung’s designs are too close: it’s also Google saying the same thing, and Best Buy reporting real-world evidence of it.

  33. @PapayaSF
    “As for the confused buyers, perhaps they first saw the unit outside the box, and don’t keep track of computer company names?”

    It says Samsung on the case, in rather big letters. And if a buyer does not care for the company name, why bother at all.

    Samsung does not say the Galaxy Tab is an iPad, nowhere. It says Galaxy Tab and Samsung. If they ask the staff for an iPad, they can sue the shop when they do not get one. If they buy an article that nowhere says it is an iPad, why sue Samsung?

  34. >It says Samsung on the case, in rather big letters. And if a buyer does not care for the
    >company name, why bother at all.

    Having spent some long years in retail, I can assure you that the average consumer doesn’t read anything. If you ever want to depress yourself, go hang out in any major retailer and count the number of people who walk up to a sales person and ask them a question that could be answered simply by reading the box they have in their hands, including how much an item costs.

    >If they buy an article that nowhere says it is an iPad, why sue Samsung?

    They aren’t suing Samsung. Apple is, for causing “market confusion”

  35. >Their products *do* exhibit excellent design, and I hardly think there are many people in the world who would disagree.

    I would, which is why I don’t buy Apple (or most other consumer electronics when I can afford professional or hobbyist). Excellent design for me includes flexibility, modifiability, extensibility, and repairability. These are not always available, in fact they are often not available at all in a lot of modern electronics, but they are more often than most realize, since the inherently hardest to repair and modify parts (ICs) are the least likely to need either.

    Slightly off-topic, on walled gardens, a thread on HN Ubisoft “Uplay” DRM exposed as rootkit; dozens of popular games hacked elicited this comment from me:

    When a walled garden actually is better for users, they could choose to participate. When users aren’t allowed to choose, you can be pretty sure who the primary beneficiary is.

  36. When Apple resorts to the courts, it ceases to innovate, refine, improve. Instead, trying to use the state to enforce the market. Apples image (which I would argue has far more worth than some of its products) will drastically lose its shine and its massive fan boy base will quickly realize how they have were recruited into a corporate cult. Apple will rapidly become as much “hated” as Microsoft. Oh and the same applies to google. Google has the “hacker freedom” image but it too is a massive corporation with a loyal following of sheeple. It seems that each new generation of consumers don’t realize that is what they are until they grow up; usually the epiphany relates to the wallet. This new generation is just taking a bit longer than usual to figure the game out.

  37. If the extent of grandad’s knowledge of tablets is “that flat computer thing the grandkids want”, then no amount of design differentiation is going to prevent confusion — unless you grant Apple a monopoly on selling tablets. I would guess that’s what really was going on. That and buyer’s remorse. When your friends poke fun at you for not getting an iPad, you return your iPad and tell the clerk you don’t know how you got a Galaxy Tab when you clearly wanted an iPad. People will come up with all kinds of excuses when returning merchandise, even when simply saying “I changed my mind.” would suffice.

  38. +1 with Tom, the initial post can be interpreted a number of different ways. Interesting topic, anyways.

    That being said, the real problem is the fact that such a broad description was accepted as a patent. If any kind of crap is accepted as a patent, patents en up useless. A good patent is supposed to be a kind of secret revealed, in exchange for protection. I did see many of that in the industry(before I was computer programmer); there is a “secret” method to be more efficient(be it on the product or on the process), but there is a risk of leak(there always is), therefore, it is strategic to reveal it, so that you can protect it. I’m especially thinking about a complex device that was gaining 0.8 seconds on manufaturing a plastic bucket(for a 9 seconds cycle time, it’s huge). Could have stayed secret. Did not, but was “reserved” by the inventor for 20 years. That’s correct use of patents. The world progresses as secrets are unveiled, yet their founder is protected and can use them as a competitive advantage. Win-Win.

    I can also speak of the Dyson airblade. Other firms don’t make as good products, but clearly did improve after having seen the patent. Without equalling the quality of the airblade, so Dyson keeps a competitive advantage(and their desing erally was unheard of).

    What the hell is secret, in 2007/2008, in a tablet(exists since 2002), with round corners(not even innovative 3000 years ago), and with no buttons(automated subway doors have no buttons, at least since 1998 in Paris, and probably earlier elsewhere). That’s just patented blahblah. You think I can patent “blahblah” & sue anyone using it? I’d make a lot of money…..

  39. Evidently not:

    “Apple claims otherwise: the latest documents have revealed prototype “Purple,” a concept device that bears all of the hallmarks of the iPhone while predating the “Jony” concept that suggested Sony’s ethos had heavy influence in Apple’s internal brainstorming sessions.”

    “Update: Judge Lucy Koh has now issued an order that Samsung will not be permitted to present evidence during the trial on the Sony-inspired designs for the iPhone.”

    http://www.theverge.com/2012/7/30/3201162/apple-refutes-claim-they-cribbed-notes-from-sony-reveal-prototype

    More prototype pics:

    http://allthingsd.com/20120729/court-case-offers-rare-glimpse-at-dozen-of-iphone-and-ipad-prototype-designs/#

    Going to post an update on your blog post?

  40. @patrioticduo
    “Google has the “hacker freedom” image but it too is a massive corporation with a loyal following of sheeple. ”

    There is a crucial difference. Google spends quite a lot of money on producing and distributing FLOSS. They also have hired quite a number of important FLOSS (eg, Linux) Hackers to hack on FLOSS.

    Anyone who contributes massively to FLOSS code and its distribution is a friend of free software in my book. When they stop contributing or start obstructing the distribution of FLOSS, they stop being a friend.

    It is that simple.

    No amount of flinging around “sheeple” will distract me from these simple rules.

  41. @PapayaSF:

    There’s nothing preventing a design patent from being functional.

    That’s not what the patent office says:

    A design for an article of manufacture that is dictated primarily by the function of the article lacks ornamentality and is not proper statutory subject matter under 35 U.S.C. 171. Specifically, if at the time the design was created, there was no unique or distinctive shape or appearance to the article not dictated by the function that it performs, the design lacks ornamentality and is not proper subject matter.

  42. @Winter:

    So how do you distinguish Apple — they do lots of open source, too: the OSX kernel, CUPs, WebKit, LLVM, etc. And unlike the other big evil OS corporation, they are happy to tell you about all the open source they leverage:

    http://www.apple.com/opensource/

  43. ESR, you seem to have jumped the gun again. Apple moved this morning to suppress the evidence that they cribbed the iPhone’s design from Sony, citing other designs that pre-date the Sony article by six or seven months (link).

    Can we point and laugh now?

  44. Ugh. Here’s the breakdown of the patent claims from The Verge:

    http://www.theverge.com/2012/7/30/3199424/apple-vs-samsung-trial-guide

    From the article, Apple’s claims:

    US Patent D618,677
    The front speaker slot, uncluttered front face, display borders and the edge-to-edge glass of a smartphone.

    US Patent D593,087
    The home button, uncluttered front face, rounded corners and the front edge border of a smartphone.

    US Patent D604,305
    The general grid layout for icons, and a dock of separate icons at the bottom of a mobile device display.

    US Patent D504,889
    The thin bezel, outer edge border, rounded corners, edge-to-edge front glass, and minimalist aesthetics on the front, sides and back of a tablet.

    Really? “Uncluttered face”, “edge-to-edge glass”, and “rounded corners”? So, Apple claims to own phones that are black rectangles.

  45. >Can we point and laugh now?

    Wow. That’s pretty good by Apple’s lawyers, getting damning testimony by one of Apple’s own designers suppressed.

    Make me wonder what handle they got on the judge.

  46. I think the phrase “I made a mistake.” is even more likely to work.

    I want Apple to prosper because we cannot afford a monoculture. Android should *not* take over the cellphone world, even if forks are relatively easy. Mind you, I don’t want Apple to take over the world either. I think at least three healthy OS producers would be even better.

    In addition, the end users are Apple’s primary customers. For google the end users are their product.

  47. “Nobody reads anymore but only Chauncey Gardiner is brave enough to admit it.”

  48. @Patrick
    Apple spend more money to prevent the distribution of FLOSS than to support the creation and distribution of new code.

  49. >Make me wonder what handle they got on the judge.

    Also :
    “Apple requests that the Court enforce Judge Grewal’s Order by excluding evidence that Apple’s designs were derived from Sony’s design language, from Mr. Nishibori’s exercise in applying Sony-style design details to the iPhone, or from Sony handsets of the time,” Apple attorney Michael A. Jacobs writes in the motion. “Because this evidence is not admissible to prove the invalidity of Apple’s patents, it should not come in for any purpose.”

    http://news.cnet.com/8301-13579_3-57482028-37/apple-says-purple-iphone-concept-predates-sonys-art/

    Ad of course, all the evidence pointing to the fact that they were already on that design path before Feb 2006.

    Seems to add up to http://www.law.cornell.edu/rules/fre/rule_403

  50. >Apple spend more money to prevent the distribution of FLOSS than to support the
    >creation and distribution of new code.

    Do you have something specific in mind?

  51. >I want Apple to prosper because we cannot afford a monoculture.

    That’s not a good reason to want Apple to prosper. It’s a good reason to want Meego, OpenMoko, and Taizen(?) to prosper.

  52. >I want Apple to prosper because we cannot afford a monoculture.

    That’s not a good reason to want Apple to prosper. It’s a good reason to want Meego, OpenMoko, and Taizen(?) to prosper.

    I think Apple and Microsoft bring a lot of good stuff from a UI/UX perspective to the table. That’s why I want them to do well. I’d love to see their platforms not be data jails, but so long as there is a real alternative that allows real access to one’s stuff, I’m really unconcerned. I’d be really unhappy if, for instance, the three players were MS, Apple, and RIM. But the open platforms that you mentioned above (along with the open sourced carcass of WebOS) really have not chance of picking up steam at this point. The only reasonably credible thing I forsee is Mozilla’s boot to Gecko project, and that’s based on Android’s core libs, and still highly unlikely to succeed. I don’t think the market can bear more than 3 major players, Apple and Google are already entrenched, and Microsoft has the money and muscle to elbow its way in, no matter how long it takes.

  53. @phil these lawsuits are a sideshow. Other than the odd court appearance for Sir Ives there’s minimal impact on product development.

  54. Wow. That’s pretty good by Apple’s lawyers, getting damning testimony by one of Apple’s own designers suppressed.

    Make me wonder what handle they got on the judge.

    LOL…THAT’S what you came up with? That’s as lame as some apple fanatics being upset because the judge’s ethnicity is Korean and of course she’s gonna be biased toward Samsung.

    She’s screwed either way she rules on anything I guess.

    The FACT is that Apple had iPhone prototypes that looked like iPhones before the Sony thing.

  55. @esr

    I want Apple to prosper because we cannot afford a monoculture.

    That’s not a good reason to want Apple to prosper. It’s a good reason to want Meego, OpenMoko, and Taizen(?) to prosper.

    You’re that sure?

    Hubris is not only a fault, it’s dangerous.

  56. @Nigel “Other than the odd court appearance for Sir Ives there’s minimal impact on product development.”

    Tim Cook is certainly involved in both PD and the legal BS.

  57. >Hubris is not only a fault, it’s dangerous.

    I must be missing something. How is it hubristic to want the healthy non-monoculture to consist entirely of open-source platforms?

  58. >I must be missing something. How is it hubristic to want the healthy non-monoculture to consist entirely of open-source platforms?

    I don’t think it’s hubristic, but I do find it hard to understand why a libertarian would want the world to be changed in such a way as to deny millions of people a choice that they want to freely make.

    Why can’t you just accept that some people want to use open-source systems and some want to use proprietary systems, and that having both in the world allows the highest number of people to have their desires satisfied?

  59. >I don’t think it’s hubristic, but I do find it hard to understand why a libertarian would want the world to be changed in such a way as to deny millions of people a choice that they want to freely make.

    Don’t be silly. A libertarian can consistently advocate anything but the use of force or fraud. No libertarian is required to refrain from arguing against choices he judges to be stupid and self-destructive, no mattere how popular they are.

    Indeed, when millions of choices have effects that pose a long-term danger to liberty (which is exactly the case here) it is not only consistent but required that a libertarian speak in opposition to them.

  60. @esr

    … How is it hubristic to want the healthy non-monoculture to consist entirely

    Emphasis added.

    There could yet be a flaw discovered in your reasoning. You’re smart, but are you smart enough to decide for 7 billion people? Admittedly I don’t think you’ll get what you want, but still. It’s the deciding for 7 billion people part that is hubristic.

    Most people don’t want to know how their devices work. Some aren’t smart enough, some have other fish to fry. Either way the iOS/Mac ecosystem or some other proprietary system might actually fit their needs better than Android. Sometimes it makes sense to hand off security to someone else. If Apple treats them badly enough they can get rid of Apple.

    Phones will get malware. It’s already started. iOS is a big fat juicy target. Apple will take a real beating when the first malware successfully infects its ecosystem.

    Android is a big target too, unlike Linux. How will the Android community cope? How will they deal with all the naïve users? No doubt Google has a cunning plan.

    I’ve said it before. There are plenty of people smarter than I am. There are plenty (if fewer) of people smarter than you are. Some of them wear black hats. At any rate they outnumber you.

    The Maginot Line really was the smart thing to do as long as the threat was Imperial Germany.

  61. @rich: “Samsung has sold over 50 million phones this quarter. That’s double what apple has sold. Also Android market share is 2/3. So are you saying that Android wishes it had a lower market share?”

    I believe my basic point is that trying to do iPhone vs Android is an apples vs oranges comparison. Compaer phone to phone, not phone to OS.

    What I said was “the iPhone is the single most popular smartphone on the market,”

    Emphasize “single” above. Sure, Samsung sells a boatload of phones. But that number is spread over how many different models?

    Name me *one* phone model from *any* other manufacturer that has even a small fraction of the iPhone sales. Not “all models from a manufacturer”, or “all Android phones combined” – one single phone. A Motorola Droid, a Samsung s3, a Nokia…whatever you like, and compare sales for that model with the iPhone. Then tell me the respective manufacturer wouldn’t kill to have that model sell even a quarter as well as the iPhone does.

    Market share is only meaningful if it translates into revenue and profit. I believe there are still more Nokia phones in use than any other brand, but what position is Nokia currently in?

    If I’m Apple, I don’t *care* if Android may have a bigger market share than iOS. *I* have revenues and profits. More revenues and profits, in fact, than many of my competitors combined.

    Samsung is about the only one I can think of at the moment who presents any sort of viable challenge to Apple, which is why Apple is pulling out the stops to try to impede them, but no single Samsung model is as successful as the Apple product it competes with.

  62. >The Maginot Line really was the smart thing to do as long as the threat was Imperial Germany.

    You’re not making a lot of sense. From a security perspective, it’s closed-source platforms that are the Maginot Line. Perhaps some study of Kerckhoffs’s principle would benefit you. It explains why open-source software has the better record on this.

    To continue your analogy, I want closed source gone because it’s like having unexploded mines buried all over the landscape.

  63. > Samsung came out with nearly identical products: so nearly identical that Samsung lawyers had a hard time picking them out in court

    So? Why is that a problem? Why is it a bad thing that a good design gets propagated? It might suck for Apple, but let them use their amazing innovative capacity to do better. Does anyone actually believe that in the absence of design patents Apple would fold up shop and stop making stuff?

    It is the plain stupidity of the patent laws, namely that all design work is derivative. If patents on all these included designs were enforced you’d have a chain going back thirty years and ever product would be deeply encumbered by thousands of patent royalty payments.

    We don’t do that because the courts are too expensive for most folks, and the patent system is a creaking, rusty machine. For the most part only rich corporations have much access to patent law (trolls excepted), and they use them capriciously to grind down competition and use monopoly pricing power to make us all poorer.

    Shame of anyone who advocates for a system like patents that drain the lifeblood out of our economy like some creepy, bureaucratic giant vampire.

    Hooray for the patent trolls who are doing their very best to destroy this dreadful system by eating their own young.

  64. Oops, I shouldn’t have use angle brackets as punctuation. One more try.

    @Bobw
    >>… How is it hubristic to want the healthy non-monoculture to consist entirely…

    >There could yet be a flaw discovered in your reasoning. You’re smart, but are you smart >enough to decide for 7 billion people? Admittedly I don’t think you’ll get what you want, but still. >It’s the deciding for 7 billion people part that is hubristic.

    The difference is that ESR is trying to pursuade people that Open source is ‘The one true way’.
    His ‘religion’ forbids him to use “force or fraud” to further this goal. How is this advocation of what he believes in, in any way ‘evil’. He is quite consistent in this position, it should surprise no one that he does so. Further more, near as I can tell, he is telling us that using closed source is for the most part ‘stupid’, very seldom does he go so far as to label things as ‘evil’, and for the most part on those occasions I agree with him.

    You, on the other hand seem to disagree that . You are entitled to your (probably incorrect) opinon — and are entitled to use this forum to espouse your views, subject only to a modicum of decorum and rationality in your arguments.

    Do you really feel that ESR is ‘evil’ to use this forum to push the agenda that he openly and consistently espouses? Unlike the ‘Liberal Intelectuals’ I do not believe that all ‘opinions have merit’ and ‘on one knows what the right answer is’.

    I prefer rational opinionated people who openly voice those opinions.
    It is his web site after all, the rest of us are guests.

    Jim

  65. Persuasion is good.

    I never said esr is evil. I said his attitude smacks of hubris, though I’m sure there are wordsmiths on this forum who could word it better than I did even though they disagree with me.

    Hubris is the arrogant presumption that provokes the wrath of the gods. No more, no less.

  66. @Tom:

    Why can’t you just accept that some people want to use open-source systems and some want to use proprietary systems…

    Really? I can understand that some people want to use systems that happen to be proprietary because of other features of the system, but really? Please show me examples of sane, rational, unbribed people who actually say “I want to use this particular system because it can only be maintained by this single entity and nobody else can see or modify the source code.”

  67. Tom@”Why can’t you just accept that some people want to use open-source systems and some want to use proprietary systems…”

    I think you mean “some don’t care if it’s proprietary”?

    If so, that’s probably 95%+ of the general population.

  68. @Jessica Boxer, I am not defending the current patent system, but the reason for design patents is to avoid confusion in the marketplace and encourage unique designs. If any company can simply copy the successful, the successful are hindered, which is actual harm, both to the successful and to the market in general.

    There’s a big difference (though admittedly not a clear line) between “derivative” and “rip-off.” After Ford had a big success with the Mustang, Chevrolet came out with the Camaro. Clearly it was inspired by the Mustang and derivative of it, but it wasn’t a slavish copy: remove the badging and they are still distinct. Nobody bought a Camaro thinking it was a Mustang. Samsung was copying Apple so closely that there is evidence of confusion in the marketplace, so I think Apple has a point.

  69. @PapayaSF:

    the reason for design patents is to avoid confusion in the marketplace and encourage unique designs.

    And as I pointed out, they aren’t supposed to cover functional items, and all the described features are functional. (You disagreed, but you never responded to my quote from the patent office.)

    Nobody bought a Camaro thinking it was a Mustang.

    Are you lamely attempting to imply that people are buying other tablets thinking they are iWhatevers?

  70. PapayaSF
    > but the reason for design patents is to avoid confusion in the marketplace and encourage unique designs.

    Not true. In the USA the reason for design and all other patents is to “promote the progress of science and the useful arts.”

    Can you cite the study that demonstrates that patents do this? It seems to me that if the government is granting broad based monopolies, which is precisely what patents are, then the evidence of the benefits had better be pretty loud and clear.

    Ask a patent lawyer for the evidence proving their existence is beneficial. I have, they have no such evidence. Patents are basically rent seeking encoded into law. We cannot being to imagine how much they have impeded the progress of science and the useful arts to the financial agrandizement of the lazy mega corp.

  71. Name me *one* phone model from *any* other manufacturer that has even a small fraction of the iPhone sales. Not “all models from a manufacturer”, or “all Android phones combined” – one single phone.

    And of course while people are laying down money on different names (that are conceivably not “Samsung Galaxy S3″) you’ll be, of course, limiting your definition of “iPhone sales” to a single model of iPhone (one would assume the 4S since it’s the latest). Right?

    I mean we want to stick to “one single phone” rather than “all models from a manufacturer” right?

  72. @JonCB:

    You don’t understand. iWhatevers are all the same model; they just have a limited shelf-life. You have to throw them out and get a new one after they expire, but if you’re poor, you can buy one that doesn’t taste so good for a discount.

  73. @patrick

    Are you lamely attempting to imply that people are buying other tablets thinking they are iWhatevers?

    You missed that Samsung’s own documents indicate that Best Buy had reported to Samsung that folks were returning samsung tablets because they thought they were getting iPads.

    Here’s a link again:

    http://allthingsd.com/20120726/documents-in-apple-v-samsung-give-reporters-plenty-to-chew-on/

    More interesting is 23% to 32% profit margins on iPads. If they accept 23% gross margins on the iPad mini then a $250 7″ iPad is about right…

  74. @Nigel:

    No, I saw that. But if anybody really made that mistake (and it wasn’t just people embarrassed that they didn’t buy a cool enough tablet), then Best Buy has to share a lot of the blame for where they positioned the product. Sure, the box is white, but you couldn’t possibly get a good look at it and think it was the iWhatever, unless you thought that Apple was all about Samsung and little green androids. But if you picked up a box from a stack where you had seen one and didn’t glance at the box you picked up (seriously, how many people do that for a > $500 purchase???) it could happen.

    http://www7.pcmag.com/media/images/258026-box.jpg

    Would be interesting to see if any other retailers had this issue. Would also be interesting to see which Best Buy stores had the issue. Were they all near Apple campuses?

  75. @Nigel:

    Also, that would be a different trade dress issue than the rounded corners on the tablet itself.

  76. > Sure, the box is white, but you couldn’t possibly get a good look at it and think it was
    >the iWhatever, unless you thought that Apple was all about Samsung and little green androids.

    To be fair, a lot of consumer computer products are branded all over the box (and in some cases, all over the product) with other companies brands. So it wouldn’t be unusual for a product from one company to have another product’s logo on it. That said, it is unusual for the third party logo to be prominent. On the third hand, people routinely mistake these (http://www.geardiary.com/2008/06/15/ihome-ip99-iphone-radio-dock-reviewed/) for Apple products, even though its clear to me that it isn’t.

    > But if you picked up a box from a stack where you had seen one and didn’t glance at the box
    >you picked up (seriously, how many people do that for a > $500 purchase???) it could happen.

    How many people signed their names to housing loans that they apparently didn’t read? Or again from personal experience, I’ve had customers sign work order contracts for sums greater than $500 and then turn around and tell me they never signed such a thing. Their excuse when I produce the signed document: “I never read those things anyway.”

    So yeah, grabbing the first pad box you see and ringing it out without ever looking at the box? I could see it happening. Alternatively, I could also see Bestbuy employees pushing people coming in for that new “iTablet thingy” to the tab because they likely get a higher commission on that. In which case Best Buy is as much to blame as Samsung for that confusion.

  77. @Jessica Boxer: In the USA the reason for design and all other patents is to “promote the progress of science and the useful arts.”

    Fine. That’s just a different way of saying what I was trying to say. It does not “promote the progress of science and the useful arts” if someone can invent something, and others can immediately steal it. Many past inventions were lost because the inventors had to keep them secret (e.g. the Baghdad battery). But I am not going to argue patents in general right now. I will agree that the system is screwed up in many ways, but in this case I think Apple has a point.

    @Patrick Maupin: Regarding “lacking ornamentality”: it’s a matter of judgement. Apple uses minimalist designs, but many minimalist designs have been protected. The Chemex coffee maker comes to mind. The zipper. Or maybe these padded corner covers.

  78. @PapayaSF
    “It does not “promote the progress of science and the useful arts” if someone can invent something, and others can immediately steal it.”

    In the extreme, this is just a legal ban on competition. If I “invent” a way to sell apples (the fruit) where there is an unmet demand, then everyone else would be prohibited from selling apples where I sell them.

    Economic research has shown that the costs of patent protection are higher than the benefits. That is a lot less competition for just a little faster innovation.

  79. @Patrick

    >Really? I can understand that some people want to use systems that happen to be proprietary because of other features of the system, but really? Please show me examples of sane, rational, unbribed people who actually say “I want to use this particular system because it can only be maintained by this single entity and nobody else can see or modify the source code.”

    Yes, fair enough. What I really meant was that a lot of people want to use certain systems that happen to be proprietary, and that they don’t see that as a problem.

  80. @Winter: This case doesn’t seem to me to be a “legal ban on competition.” Samsung is perfectly welcome to compete with Apple, but not by slavishly copying their products.

    I would like to see references to the research showing that the costs of patent protection are higher than the benefits. Patents and trademarks and copyrights seem sensible to me, as long as they aren’t abused by being too long (as copyrights are now) or in other ways.

  81. @PapayaSF

    I would like to see references to the research showing that the costs of patent protection are higher than the benefits. Patents and trademarks and copyrights seem sensible to me, as long as they aren’t abused by being too long (as copyrights are now) or in other ways.

    Even the most hare-brained ideas seemed sensible at some time.

    Note that over history, the patent system changed, just as the economy and the legal landscape changed. I will limit my comments to the current “strong patent protection” system with very liberal patent granting as found in the USA.

    The main study is:
    Bessen, J.E. and M.J. Meurer, (2008), Patent Failure: How Judges, Bureaucrats, and
    Lawyers Put Innovators at Risk, Princeton and Oxford: Princeton University Press.
    http://books.google.nl/books?hl=nl&lr=&id=DLGWiySQRP4C&oi=fnd&pg=PA1&dq=costs+and+benefits+of+%22patent+system%22+bessen+meurer&ots=uSiNLYdxx4&sig=hmfmS5bJteCBU4mCFz6sB3M4Q2c#v=onepage&q=costs%20and%20benefits%20of%20%22patent%20system%22%20bessen%20meurer&f=false

    Others:
    What are the Costs and Benefits of Patent Systems?
    http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1409503

    The benefits and costs of strong patent protection: a contribution to the current debate
    http://www.sciencedirect.com/science/article/pii/S0048733398000481

    When means become ends: considering the impact of patent strategy on innovation
    http://www.stuartmacdonald.org.uk/pdfs/Macdonald.pdf

    Patent systems for encouraging innovation: Lessons from economic analysis
    http://www.sciencedirect.com/science/article/pii/S0048733306001326

    Not sure about the scientific “status” of the following, the reader beware:

    Patents Are An Economic Absurdity
    http://fare.tunes.org/articles/patents.html

    PATENTS AND COPYRIGHTS: DO THE BENEFITS EXCEED THE COSTS?
    http://www.indytruth.org/library/journals/libertarianstudies/15/15_4_3.pdf

  82. @PapayaSF
    “I would like to see references to the research showing that the costs of patent protection are higher than the benefits. Patents and trademarks and copyrights seem sensible to me, as long as they aren’t abused by being too long (as copyrights are now) or in other ways. ”

    Even the most hare-brained ideas seemed sensible at some time. A comment with 7 links is waiting for the moderator. The main study is:

    Bessen, J.E. and M.J. Meurer, (2008), Patent Failure: How Judges, Bureaucrats, and
    Lawyers Put Innovators at Risk, Princeton and Oxford: Princeton University Press.

  83. @PapayaSF
    Note that patents are used with wide support “to protect American innovation”.

    So, from the policy speeches and publications, it seems that patent law and the courts are most definitely not installed to protect Korean or Chinese innovation.

  84. >Patents are basically rent seeking encoded into law.

    This. Never forget that they are a continuing holdover from the 18th and 19th century mercantilist system. They also have nothing to do with property rights, they are government granted monopoly “rights”. In some ways they are very similar to the medieval (and earlier) idea of “tax farming”.

  85. @PapayaSF:

    Good job decimating your own case. The zipper was covered by a utility patent. The padded corner patent application (which, btw, actually issued as a patent, so I’m not sure why you linked to the application) is also for a utility patent. Because both those things have, you know, utility. E.g., they are functional, not decorative.

    Like rounded corners.

    Unfortunately, even with the current state of the patent office, a utility patent for rounded corners on a slate-like device would probably be laughed out onto the street, so Apple back-doored it with a design patent. Which is not supposed to cover anything that’s purely or even mostly functional.

  86. > Get over yourself.

    AYFKM? This is Armed & Dangerous! We’re full of ourselves, to the brim!

  87. @Patric> [...] Apple back-doored it with a design patent. Which is not supposed to cover anything that’s purely or even mostly functional.

    I’ll just quote wikipedia:

    “A US design patent covers the ornamental design for an object having practical utility. An object with a design that is substantially similar to the design claimed in a design patent cannot be made, used, copied or imported into the United States. The copy does not have to be exact for the patent to be infringed. It only has to be substantially similar.”

    BOOM! Right back at ‘cha.

  88. @Winter, thanks so much for all those references. I’ll be taking the time to read them over the next weeks.

    Since I hate to live in an echo chamber (and who’d have ever though that Winter and I would be in an echo chamber together :-) ) if any of your pro-patent folks out there have some studies that advocate for the benefits of patents, I’d REALLY like to read them too.

  89. @Lars:

    > BOOM! Right back at ‘cha.

    Umm, no. You quoted “A US design patent covers the ornamental design for an object having practical utility.”

    Which is true. But you’re ignoring the fact that rounded corners are the utilitarian part, not the ornamental design, and the fact that I’ve already quoted from the relevant document from the actual patent office that explains that something that is primarily utilitarian is not patentable under a design patent. Here is that part again:

    A design for an article of manufacture that is dictated primarily by the function of the article lacks ornamentality and is not proper statutory subject matter under 35 U.S.C. 171.

    C’mon, Lars — I’ve seen you troll better than that. You’re losing your game.

  90. echo chamber? did someone say echo chamber?

    > This, right here, is the proof.

    Only, as others have shown, it really isn’t. (Purple is one big clue.)

    However, if you would dig just a bit harder than referencing the headlines, you might uncover this:

    http://www-bgr-com.vimg.net/wp-content/uploads/2012/07/07-2012-Samsung_unredacted_trial_brief.pdf

    Yes, it’s from an Apple-friendly website, No, it’s not Apple-friendly. Just read it and see how Samsung had iPhone-like designs a whole month before Jobs announced the iPhone in 2007.

  91. @Jessica
    There are a lot of studies claiming possitive effects. Most of them are either historical (back to the 15?th century) or they ignore the costs.

    Real cost benefit analysis is rare. But look at the references in the first two links after Others:

  92. @Patrick > something that is primarily utilitarian is not patentable under a design patent.

    LOL, .. and the very next sentence (same paragraph) reads:

    Similarly, a design for an article of manufacture that is hidden in its end use and whose ornamental appearance is of no commercial concern prior to reaching its end use, lacks ornamentality and is not proper statutory subject matter under 35 U.S.C. 171.

    For a design patent, you need both functionality and ornament, Patrick.

    They see me trollin’ They hatin’

  93. Patrick, Apple’s claim involves more than rounded corners: it also describes the way the front meets the sides and the arrangement of icons and the home button.

    I think that a combination of functional elements can be a patentable design, and “ornamental” in that sense, even if the design is minimalistic and doesn’t have curlicues or racing stripes.

    In the past I have argued here that one reason Android needs Apple is that they need someone to copy, because open source is usually weak in the areas of design and UI. Now, after Apple inarguably revolutionized the smartphone and tablet markets with distinct products, Android fans are arguing that Apple’s designs are “derivative” and “merely functional” and not eligible for design patents, so that Android can copy them…. Funny how these obvious and merely functional designs didn’t actually exist before Apple manufactured them….

    Winter, the book in your first link seems to specifically support drug patents, and seems less sweepingly anti-patent than you imply.

  94. PapayaSF – that apple was the first to the market with a phone and tablet with no buttons, because they were willing to bet that people wouldn’t care about having buttons, doesn’t mean the design wasn’t obvious. It’s a _lack of_ buttons that’s the “innovation” here.

  95. @Lars:

    > For a design patent, you need both functionality and ornament, Patrick.

    It is true that design patents cover functional devices. But is is most assuredly NOT true that a design patent covers the functional aspects of a device.

    http://www.uspto.gov/patents/resources/types/designapp.jsp

    @PapayaSF:

    I think that a combination of functional elements can be a patentable design

    Absolutely, if it is non-obvious and there is no prior art. But it is only valid subject matter for a utility patent.

    , and “ornamental” in that sense, even if the design is minimalistic and doesn’t have curlicues or racing stripes.

    I don’t disagree that some minimalistic things would be proper subject matter for a design patent. But having rounded corners and a seamless front that won’t catch dirt are still functional items.

  96. Here are some very functional items that got design patents: a head for a cosmetic applicator, a very simple jar, and a double-ended jar.

    I also found this quote: “More than 135 years ago, the US Supreme Court set forth the ‘ordinary observer’ test, which determined whether a design patent was infringed by comparing the patented design with the accused device ‘in the eye of the ordinary observer’. The US Supreme Court explained this test as follows: ‘[I]f, in the eye of an ordinary observer, giving such attention as a purchaser usually gives, two designs are substantially the same, if the resemblance is such as to deceive such an observer, inducing him to purchase one supposing it to be the other, the first one patented is infringed by the other. Gorham Co. v White, 81 US 511, 528 (1872).'”

  97. @PapayaSF:

    Here are some very functional items that got design patents: a head for a cosmetic applicator, a very simple jar, and a double-ended jar.

    You’re still missing the point. Yes, a functional item can receive a design patent. In fact, the item has to be functional (if it’s art, it’s subject to copyright). But the design patent doesn’t cover functionality, and ROUNDED CORNERS ARE FUNCTIONAL!!!!!

    More than 135 years ago, the US Supreme Court set forth the ‘ordinary observer’ test, which determined whether a design patent was infringed by comparing the patented design with the accused device ‘in the eye of the ordinary observer

    Yes, but the ordinary observer will have to be closer for a wristwatch than for a car. It was ludicrous several months ago for Judge Koh to hold up a tablet and ask a lawyer 20 feet away which one it was. That’s just stupid.

    [I]f, in the eye of an ordinary observer, giving such attention as a purchaser usually gives, two designs are substantially the same, if the resemblance is such as to deceive such an observer, inducing him to purchase one supposing it to be the other, the first one patented is infringed by the other.

    I sincerely doubt the evidence will show that “ordinary” observers were fooled into thinking a Samsung tablet was an iWhatever down at the Best Buy, at least given the ordinary meaning of the word ordinary.

  98. Is always fun to see open source advocates defending billion dollar companies that make closed source products like Samsung. Hahaha.

  99. @esr: after having read some of the response pieces around the webs, this piece seems to have been written in haste.

    Perhaps you simply haven’t had time to follow up, but the thesis of the piece (that the cited account invalidates claims that Apple’s designs are excellent) is simply no longer tenable.

    It just seems like you’ve finally gotten an chance to make an argument you’ve been wanting to make (perhaps for some time), and finally published having found a smoking gun… except the smoking gun turns out to be a Sega Master System Phaser Gun.

  100. Is thee a Webby for blogger who posts the emphatic disinformation? If so, your a lock. Did you read the Sony engineer’s article? Did you know the mockup was made by Apple and never even imagined by Sony? Surely you did. Therefore, we all must assume your deception was intentional.

  101. > The original Mac had design roots in Xerox PARC and the Smalltalk operating environment (and I believe Apple hired a bunch of the PARC folks to work on the Mac.) Xerox had the bright idea.

    Wrong. Just wrong. Engelbart at SRI was demoing mice, windows, hypertext, video-conferencing, etc. many years before Xerox PARC even existed.

    Stop giving the credit to Xerox. They were the first to implement a commercial product. They were not the first to come up with the “bright idea”.

  102. You’ve all been duped by this error filled article.

    As for those of you counting this phone outselling that… I’ll stick to who makes the best phones and does the best in the market to tell me who “wins”… as if geeks really need a “winner”

    P.S. You’ve been fireballed!!! http://daringfireball.net/2012/07/inspired

  103. Joe the Plumber, right? Just going by the article (and the picture).

  104. sigh.
    you don’t know the first thing about design, so you really shouldn’t mouth off about it.
    this was a design study. an exercise. designers do this kind of thing all the time. it’s part of the process. we explore different avenues with different jumping off points as inspiration. but there is a line between inspiration and blatant copying, and that’s where samsung crossed the line.

  105. You can’t give most people the respect they deserve, because “Cutting his throat is only a momentary pleasure and is bound to get you talked about.”

  106. > ROUNDED CORNERS ARE FUNCTIONAL!!!!!

    Rounded corners are not required for the utility of the device. One could make a device with square corners.

    Are you attempting to assert Richardson v. Stanley Works applies to the Apple/Samsung litigation?

    If Apple had attempted to claim rounded shape, but then in the specification, included is a specific note that “although the device is depicted as having a rounded shape, the term “rounded shape” is intended to include shapes that have rounded corners they would have a much tougher time.

    But they did not.

  107. To the Author. You have some integrity issues. Either that or you are too damned lazy to do some proper research and then retract your article. Sony only described a design, Apple built a mockup based on that description. There was no Sony phone to copy. The phone that Samsung references does not look one bit like an iPhone. There are iPhone mockups going back to 2005 that look like todays iPhone, way before the Sony design description. DESCRIPTION!

  108. @Lars:

    Rounded corners are not required for the utility of the device. One could make a device with square corners.

    It would be helpful if you would read what I read. My VERY FIRST COMMENT on this was about how rounded corners keep it from snagging in the sofa or hurting you. This is why, for example, you have been able to buy little chalk boards with rounded corners for aeons. Any sane person would agree this is functional rather than aesthetic.

    Are you attempting to assert Richardson v. Stanley Works applies to the Apple/Samsung litigation?

    Yes, Richardson v. Stanley Works is completely on-point. Which is why, of course, Apple filed an amicus brief in that case. I’m sure they hate the result.

    If Apple had attempted to claim rounded shape, but then in the specification, included is a specific note that “although the device is depicted as having a rounded shape, the term “rounded shape” is intended to include shapes that have rounded corners they would have a much tougher time.

    Sorry, I really don’t understand what you are getting at here.

    @PapayaSF:

    Note the before the iPad, Samsung’s tablets did not have iPad-like corners.

    Most of the phones depicted have rounded corners. The phone evolved to be mostly display, and the display grew tremendously in size. This was happening before the iPhone. When the goal is to make the display as large as possible, subject to the constraints that it be rectangular and that the phone still fits in peoples’ pockets/hands, the phone will naturally become mostly rectangular, yet preserve the functional rounded corners.

    Is this really that hard to understand, or am I really that bad at explaining things?

  109. This is the excerpt from the business week article about Sony which Samsung referenced in the court case — in fact the interviewer was asking a Sony designer about how iPod influences their design, and this is just a vague answer that saying iPhone copied this is crazy… we could then say Sony copied from the iPod ;-)

    ==============
    How much did the iPod influence your design?
    Morisawa: When I started this project, that was my concern. I looked at the first Walkman [which debuted in 1979]. Then I thought, “How can I give shape to the music?” Music doesn’t have shape; it’s flowing. I was listening to music and waving my hand in the air. I thought there shouldn’t be an end to its lines. So I started drawing a round shape, and I kept moving the line.

    My team had shown me their sketch: It was a square with a screen and buttons. Most other players have a screen and buttons. My first mock-up didn’t have buttons. I didn’t want buttons. With any digital-music player, the hard disk drive and chips are similar. I thought, “How can we make the layout different?” I knew what would go inside, so I could start the design from the outside. I knew how big the hard disk drive would be, how many chips there would be.
    ==============

  110. The actual Quote from Sony designer’s 2006 interview.

    The idea was to do away with excessive ornamentation. … I looked at the first Walkman [which debuted in 1979]. Then I thought, “How can I give shape to the music?” Music doesn’t have shape; it’s flowing. I was listening to music and waving my hand in the air. I thought there shouldn’t be an end to its lines. So I started drawing a round shape, and I kept moving the line. My team had shown me their sketch: It was a square with a screen and buttons. Most other players have a screen and buttons. My first mock-up didn’t have buttons. I didn’t want buttons.

  111. strike one, Wired gets the story all backwards and fails to quote the Apple engineer fully/accurately, just citing Samsung’s spin. plus in fact Sony never produced such a concept prototype.

    strike two, this site regurgitates Wired’s poor reporting and cites it as “proof” for its own anti-Apple prejudice.

    strike three, Apple reveals its own “Purple” prototype from the YEAR BEFORE that plainly is the concept ancestor of the iPhone.

    Pathetic. You’re Out!.

  112. I’ve been saying for many years that Global Warming is a MYTH, and if I fling enough mud at the wall it might stick.

  113. Patrick, I am not denying that rounded corners are functional. What I am saying, and linking to pictures that show, is that Samsung’s rounded corners pre-iPhone/iPad did not look like the rounded corners on iPhones/iPads, but afterwards, they did. Before, Samsung’s phones and tablets were “mostly rectangular,” then they became rectangular in a way verrrrrry close to Apple’s designs. There is nothing that required Samsung to switch to that particular radius: it’s not “natural,” as shown by Samsung’s previous designs, all of which were rounded in other ways. Since that particular style of rounding is part of the design that Apple patented, it is one of the things that makes those Samsung products obvious copies of Apple’s designs.

    And have you noticed that the Android phone icon (at least in the pic I linked to above) is a near-exact duplicate of the one in iOS? Will you say that an image of an old-fashioned handset, seen from the right side, tilted to the left, on a green square, and positioned in the lower left, is mere functionality? Come on, it’s a copy. Admit it.

    Let me close with a hypothetical. Setting aside the specs, let’s pretend that five years ago Google and Samsung came out with something like the current Galaxy smartphone running Android, and their current Galaxy tablet a few years after that. Some years after each of those, Apple comes out with iPhones and iPads, looking like they do, corner radii and green phone icon in the lower left and all. Would you say that Apple was copying Samsung and Google, or not? I certainly would.

  114. Admin,

    So exactly which Sony phone did Apple copy?

    After reading parts of trial brief on the supposedly Sony inspired phone, my understanding is that it was a CAD mock-up created by an Apple designer to see what they thought Sony would have created. The Sonly logo was added probably to make the mock-up look like a authentic Sony product.

    (That would be like Hyndai making several mock-ups of car chasis and slap put BMW badges on them to see if they will look like beamers. Of course, an Elantra with BMW badges still looks ugly and will never look like a authentic BMW).

    If the design CAD mock-up was in fact copied from a Sony phone, can you please kindly tell us which Sony phone?

    Because I find it strange that Sonly did not have any actual product that looked like the mock-up in 2006. The trial brief mentioned no such Sonly phone either.

    But I assume you did your journalistic due diligence and know all the facts.

    You would not have posted this article claiming that “an Apple employee copied Sony’s design” without knowing which Sonly phone Apple copied. Would you??

  115. “This isn’t speculation – an Apple employee copied Sony’s design”

    Where is this design? Where is the picture of the Sony prototype Apple copied? One has to have a pretty expansive view (perhaps even more expansive than Apple’s!) of what intellectual property is to call that description “Sony’s design”

    “Some of us have been saying for years that what Apple is really good at is ripping off other peoples’ ideas and stealing the credit for them with slick marketing.”

    I think you mean “with execution”. This post was rather below the standards of this blog.

  116. @PapayaSF:

    Before, Samsung’s phones and tablets were “mostly rectangular,” then they became rectangular in a way verrrrrry close to Apple’s designs. There is nothing that required Samsung to switch to that particular radius: it’s not “natural,” as shown by Samsung’s previous designs, all of which were rounded in other ways.

    It absolutely is a reasonably “natural” radius. As a device gets simultaneously wider and flatter, the ability to stuff it in your pocket is greatly reduced unless the radius of the corners increases. The thicker earlier devices were rounded at the top and bottom, probably partly for this same reason. Again, when the device is thin and is constrained by being big enough for the screen you want to put on it and being able to be stuffed in the pocket, this makes the most sense. But don’t take my word for it. It’s really easy to take blocks of wood and see how easy it is to put them in different pockets. This is pretty basic physics.

    The reason for the device to get thinner is obvious (less space), and one reason for it to get flatter is so that you can easily use it on the tabletop as well as in your hands. Like this:

    http://en.wikipedia.org/wiki/File:SinclairExecutive-01.jpg

    Come on, [an icon is] a copy. Admit it.

    Sure, the icon’s a copy. Which seems perfectly reasonable to me. Would you really want every play/pause/stop button to look different?

  117. I think that image of the Sinclair Executive contradicts your case: it looks to be almost identical in size and shape to an iPhone 4/4S, and yet has noticeably tighter radii at the corners.

    Re the icon, it’s nice to see you admit that, there at least, Apple created something as standard as the play/pause/stop buttons! ;->

    This is timely: Apple v. Samsung: How it was explained to the jury

  118. Eric, you are such a dimwit or a simpleton or a conspiracist devoid of comprehension skills. If you read the sources you quote, you will know that it never was a SONY phone, it was always designed by APPLE. It was a render based on characteristics described based on a Sony product.

    AND… the final iPhone released was designed a YEAR earlier to this rendered design. You really must read facts, understand them before you can submit your opinions. Else, you end up looking like… yeah, that’s about right!

    I hope you did not feed this tripe to children – please, don’t pollute them with falsehood.

  119. So we are all supposed to pretend Apple didn’t design the iPhone because some of the elements were derived from an interpretation of WRITTEN DESCRIPTION OF A PRODUCT THAT DOESN’T EXIST?

    There aren’t enough expletives to get a cross just how gods damned stupid the sentiments in this article actually are…

  120. I think that image of the Sinclair Executive contradicts your case: it looks to be almost identical in size and shape to an iPhone 4/4S, and yet has noticeably tighter radii at the corners.

    Bzzzt! It’s closer to an iPhone than, e.g. the Galaxy S3.

  121. Mmmm, maybe closer to an iPhone 4, but the S3 looks more like an iPhone 3GS to me. In any case, the issue is not that Apple sells phones that are shaped like old Sinclair calculators, or that Samsung sells things that have rounded corners, it’s that Samsung sells phones and tablets that look very much like Apple’s design-patented phones and tablets.

  122. But using your broad criteria, we could also “point and laugh” at Samsung, claiming that they are nothing but followers of Apple, since it’s been revealed in court that they had an internal manifest to “Beat Apple” and have shown an interest in Apple and its designs.

    However, we all know in reality, it’s more complex than that. So I wouldn’t subscribe to either broad, short-sighted judgment.

  123. Inspired by Sony

    Tuesday, 31 July 2012

    Eric Raymond:

    This isn’t speculation — an Apple employee copied Sony’s design, circulated it to his bosses, and testified to these facts in court.

    From now on, when anyone heaps phrase on Apple’s design excellence and superlative innovation, just point and laugh. Some of us have been saying for years that what Apple is really good at is ripping off other peoples’ ideas and stealing the credit for them with slick marketing. This, right here, is the proof.

    This whole “iPhone design inspired by Sony” (or, as these guys put it, “Apple Stole iPhone Design From Sony, Patented It And Sued Everyone Else”) argument from Samsung has a lot of people confused.

    Here’s the relevant portion from Samsung’s pre-trial brief (PDF):

    For its part, Apple’s “revolutionary” iPhone design was derived from the designs of a competitor — Sony. In February 2006, before the claimed iPhone design was conceived of, Apple executive Tony Fadell circulated a news article to Steve Jobs, Jonathan Ive and others. In the article, a Sony designer discussed Sony designs for portable electronic devices that lacked buttons and other “excessive ornamentation,” fit in the hand, were “square with a screen” and had “corners [which] have been rounded out.” Right after this article was circulated internally, Apple industrial designer Shin Nishibori was directed to prepare a “Sony-like” design for an Apple phone and then had CAD drawings and a three-dimensional model prepared. Confirming the origin of the design, these internal Apple CAD drawings prepared at Mr. Nishibori‘s direction even had the “Sony” name prominently emblazoned on the phone design, as the below images from Apple‘s internal documents show:

    The Verge has an image gallery of the “Sony” phone in question. Here’s the thing, though — it’s not a Sony phone. It’s an in-house mockup by an Apple designer inspired by a very broad description of Sony devices. There is no actual circa 2006 Sony phone that looks like this. [UPDATE: Here’s more on the Samsung-cited Businessweek interview with two Sony designers, including the relevant passage, which was actually in response to a question about how much Sony’s design had been inspired by, of all things, the iPod.]

    Via John Paczkowski, here’s the actual Sony phone Samsung is claiming Apple copied for the iPhone. Yeah, that’s a dead ringer for the iPhone.

    Feel free to continue believing what you want to believe about how original the iPhone design was (here’s a 2005 design by Apple, another fascinating nugget revealed by this lawsuit), but don’t make the mistake of thinking this “Sony” mockup was an actual Sony phone or even a Sony concept. It was an Apple concept showing what a Sony phone might look like.

  124. I don’t think I’ll ever understand why people post other people’s work as their own with no attribution. Especially when those other people have significant readerships. Darwin, did you seriously think that with the sizable geek population on this site that no one would recognize you stole that wholesale from Gruber?

  125. It is surprising how quickly intellectual honesty disappeared from the open-source bigots in the light of Android. Not even Google stealing Linux (and Java) and changing the licensing to something that suited their business model seems to upset anyone.

    In this case everyone close to thisd matters have testified the same story. They took one of Apples design studies and did another study, how would it look like with Sonys design language applied. Never intended to be used. Samsungs lawyers have another opinion and Eric Raymond beleives the korean lawyers more than the persons that actually did the work.

    If Samsung did just that. Take the Apple phone and applied its own design language. The there would be no confusion in the marketplace an no ground for Apple suing them. But of course less sales for Samsung. It is interesting to note that only surviving Android-maker is the one closely copying Apple (the others are losing money).

    The telephone market is changing quickly. What used to be Apple vs. Android has now moved on to being Apple vs. Samsung. They are the only two manufacturers left standing – every other phone maker is losing money. And in light of the Motorola deal and search becoming irrelevant (and more just a part of G+) we can start the countdown to Samsung going their own way with operating systems. If you look at what they are doing right now they are assembling the ecosystem necessary.

    iPhone is an innovation and disruptor. Apple opened up a global market for services by forcing telcos all over the world to accept a usable web browser/environment with full access to all services and the iTunes-store. With the curated/safe app-store Apple opened up the freedom/fun of access to variety of applications to users without an interest in technology – with an iphone/ipad the users are free from dependency on nerds to fix stuff that broke in the old model. This of course upsets the nerds – but the rest of us dont care.

  126. @PapayaSF
    “Winter, the book in your first link seems to specifically support drug patents, and seems less sweepingly anti-patent than you imply.”

    Indeed, the balance of evidence points to pharmaceutical patents to be cost effective. The second link in my comment gives good information on the breakdown.

    What are the Costs and Benefits of Patent Systems?
    http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1409503

    Personally, I think this is because society uses the patent income to fund medical studies. Pharmaceutical companies are forced to make extensive studies to prove that their drugs are safe and effective. The patent rent for pharmaceuticals can then be seen as a tax on the users to fund research. Whether this is the most efficient way to fund this kind of research is beyond my capabilities to phantom.

    Maybe a better example would be fine chemicals. This too might be an area where patents could be cost effective.

    No other field of patents has such requirements. A patent is valid even if it does not work (e.g., patents on faster than light communication).

    In any other field, including every patent Apple has ever yielded, patents have become a (huge) drain on the economy.

  127. @Wilhelm Reuch

    “with an iphone/ipad the users are free from dependency on nerds to fix stuff that broke in the old model”

    WTF are you talking about?

  128. “From now on, when anyone heaps phrase on …”
    I love it when people heap phrase on me. Praise is just too heavy but phrase fits just perfectly upon my body type and fitness level.

  129. WTF are you talking about?

    Reading comprehension fail, much?

    The “old model” was the PC model in which you had to have technical staff on hand to fix the PC in case it broke, got a virus, drivers were incompatible, etc. Owning a PC required either technical savvy or knowing someone who had technical savvy in order to keep the thing running or fix it in case it broke.

    In the new, post-PC revolution ignited by Apple, it just works, right out of the box. The iPhone and iPad were the first truly personal computers, devices an ordinary person could use and never ever have to worry about.

    Nerds care a lot about “open platforms” because such things allow them to freely ply their hobby. The thing that they have to learn, the lesson of Apple’s meteoric rise to potentially become the biggest, most profitable company in the history of capitalism is NOBODY ELSE GIVES A SHIT. It’s a sort of Stallmanite shell game: promote open source, open platform, yada yada as this virtuous and altruistic thing — for entirely selfish reasons, even though at the end of the day it hurts the end user.

  130. > Nerds care a lot about “open platforms” because such things allow them to freely ply their hobby.

    ‘Nerds’ are upset about Apple because, unless they are coders, Apple locks them out. In an Apple world, fewer sys-admins and Perl-slinging web monkeys are needed. The Apple world has no need of gpsd or ncurses.

    To channel Sinclair, “It is difficult to get a man to appreciate something, when his salary depends upon him hating it!”

  131. You’re the last guy who should be complaining about “ripping off” design.

    Design is just that, it should be ripped off, there should be no legal savour for design. I can see only attribution as a method of being polite.

    I am not angry that Apple “ripped off” Sony. Nor am I angry that supposed samsung rips off Apple. These are physical objects with physical limitations. What I am angry about is that somehow Sony, Apple, Samsung own some platonic idea of a design.

    Ripping off produces better products, banning “ripping off” just ensures monopoly, a lack of competetion and a pat on the back to first to market and the lazy.

  132. @Jeff Read
    > NOBODY ELSE GIVES A SHIT.

    That’s true. Doesn’t mean the minority crying foul about something terribly destructive in the long term is not laudable, and worthy of a good listen. Just because the vulgar crowd bays for bread and circuses doesn’t mean the pensive shouldn’t try to save them from themselves.

    If it were not for Android Apple’s control of stuff would be terrifying. Much worse than anything Microsoft ever achieved.

  133. > Just because the vulgar crowd bays for bread and circuses doesn’t mean the pensive
    >shouldn’t try to save them from themselves.

    Oddly enough, I think Apple would agree with you on that point. Though I don’t think you both would have the same things in mind.

  134. @Anonymous:

    > You’re the last guy who should be complaining about “ripping off” design.

    Read more carefully. esr’s not complaining about ripping off design. He’s complaining about ripping off design, and then using the legal system as a club to prevent others from re-ripping it.

    Think Disney.

  135. The new comscore numbers are out.

    http://www.comscore.com/Press_Events/Press_Releases/2012/8/comScore_Reports_June_2012_U.S._Mobile_Subscriber_Market_Share

    iPhone outgrew Android by nearly 3:1.

    More than 110 million people in the U.S. owned smartphones during the three months ending in June, up 4 percent versus March. Google Android ranked as the top smartphone platform with 51.6 percent market share (up 0.6 percentage points), while Apple’s share increased 1.7 percentage points to 32.4 percent. RIM ranked third with 10.7 percent share, followed by Microsoft (3.8 percent) and Symbian (0.9 percent).

  136. @Lars
    So, finding a country where iPhone grows faster than Android is real news.

  137. >I, too am looking forward to Eric’s follow-up. I doubt same will occur, however.

    Not yet, anyway. I’m on the road at the World Boardgaming Championships.

  138. Whatever we do, let’s not use the F700 to try to back up Samsung’s claims…

  139. Lars: iPhone outgrew Android by nearly 3:1.

    Winter: So, finding a country where iPhone grows faster than Android is real news.

    Lars: You must work in PR or Marketing. Only a professional in one of those fields would attempt to turn that around.

    Me: No, Winter’s right. Globally, Android’s blowing the pants off Apple. Even domestically, you have to be careful what you mean by “outgrew.”

    Yes Comscore shows that Apple’s percent share of the installed base grew almost 3 times faster than Android’s, but in terms of the increase in absolute number of subscribers, it was much closer than that.

    In March, 30.7% of the 106.3 million handsets, or ca. 32.6 million, were iOS.
    In March, 51.0% of the 106.3 million handsets, or ca. 54.2 million, were Android.

    In June, 32.4% of the 110.5 million handsets, or ca. 35.8 million, were iOS.
    In June, 51.6% of the 110.5 million handsets, or ca. 57.0 million, were Android.

    Growth in iOS is 35.8 – 32.6, or 3.2 million handsets
    Growth in Android is 57.0 – 54.2, or 2.8 million handsets

    This, of course, is if you go back all the way to March. If you only go back one month, it’s a still different story. iPhone shipments seemed to pick up for a few weeks in the spring, probably partly because a couple of prepaids started carrying them, but in any case, Comscore’s numbers for May showed Android at 50.9% and Apple at 31.9%. So, according to Comscore, between May and June, Android added 0.7% to its installed base, and Apple added 0.5%.

  140. But Patrick, the surge in iPhone sales in the US contradicts the earlier predictions made around here that once Android got to 50%+, iPhone share would collapse into single digits.

  141. In the past, Apple successfully sued eMachines over the latter company’s use of blue and white translucent plastic in the body design of an all-in-one computer. The thing was butt-ugly and the wrong color blue, and looked a hell of a lot less like the Bondi Blue iMac than the Samsung GT-I9100 looks like an iPhone 4.

    Apple is right to sue Samsung. The distinctive appearance, fit, and finish of Apple products have become strongly associated with the company and are as much a part of Apple’s corporate image and branding as is that fruit logo. Samsung is trying to deceptively capitalize on this iconic brand image to benefit its own products. The GT-I9100 (Galaxy S II) looks almost identical to the iPhone from a front view; sometimes Americans commented on my Galaxy S, asking if it were an iPhone. (In Asia they had sharper eyes, as the Samsung and Galaxy brands have considerably more heft there.) It’s to be expected; when you make the best and most iconic electronics products in the world people will try to copy you. But don’t expect Apple not to litigate to protect its distinctiveness in the marketplace.

  142. I thought I remembered you as one of the people predicting that Android would drive iOS down in market share. Apologies if that is not the case.

  143. Android absolutely did drive iOS down in market share. Where do you think iOS would be today without Android?

  144. @PapayaSF @Patrick Maupin

    Android almost certainly drove iOS down in market share – it has too big a market share slice for it to be otherwise. That being said, making the case that Android has hurt Apple is harder than that. Android has also has dramatically expanded the smartphone market, increasing their visibility and penetration. It has driven down the cost of smartphone components of all kinds and encouraged carrier and other infrastructure upgrades that make smartphones more useful. Apple has even incorporated some Android features into iOS, making their devices more useful and attractive. For that matter, Android has pushed Apple to find ways to serve markets that are naturally difficult for them (e.g. prepaid, developing countries).

    Without Android, Apple would be a bigger fish in a smaller pond. In my opinion, the most likely possibility is, ironically, that the pond would have been smaller enough that Apple would have made significantly less money to date and would be making less money today. Of course, the future might be a different story.

  145. @PapayaSF
    “But Patrick, the surge in iPhone sales in the US contradicts the earlier predictions made around here that once Android got to 50%+, iPhone share would collapse into single digits.”

    But your eagerness makes you myopic.

    There is a very simple reason that Apple is bound to end up with single digit market share. This has nothing to do with the market share in the USA, nor with the Apple quality or branding. Mercedes and Porsche have single digit global market share in cars. They make better, much better, quality cars than Volkswagen (VW) or Toyota. Also, almost all owners of Volkswagen or Toyota cars would rather drive a Porsche or Mercedes Benz. Still, VW and Toyota each outsell them 10:1.

    The same with mobile phones. There are currently around 6 billion users of mobile phones in the world. Even if they all rather have an iPhone 5, Apple will never sell more than 500 million phones globally.

    The other 5.5 billion mobile phone users will have to settle for a cheaper brand. And that brand will almost certainly be some kind of Android phone. And that prediction is easy because Android crossed over to 50+% of market share globally.

    The Matthew Principle in ICT will drive everyone to the biggest “ecosystem”.

  146. @Ravi
    “Without Android, Apple would be a bigger fish in a smaller pond. In my opinion, the most likely possibility is, ironically, that the pond would have been smaller enough that Apple would have made significantly less money to date and would be making less money today.”

    You see the same with luxury cars. If there had been only luxury cars, say $100k and up, there would be less roads where you could drive a car. So, there would be less incentive to buy a luxury car. And with a smaller overall market, component prices would be much higher. So, indeed, in a smaller pond, fishes remain smaller too.

    This is actually a biological principle too. The maximal body size of animals is determined by the size of their range (~market). However, the causes in animals are that there is a minimal viable population size which is bounded by the size of the land mass where the animals can live. A few thousand Apatosauruses obviously need mores space than a few thousand tree shrews.
    http://ichthyology.usm.edu/courses/bsc452/Burness_et_al_2001.pdf

  147. Winter, Apple has sold about 410 million iOS devices to date, though that includes the iPad and iPod Touch. They’ll “never” sell 500 million iPhones? I’d take that bet.

    Along with many others, you trumpet Android numbers that I don’t think will mean as much as you think. Many if not most of those phones are barely used as smartphones, won’t have the OS upgraded, and due to that and fragmentation and for other reasons, won’t benefit the Android software ecosystem nearly as much as the numbers imply. Plus, lots of Android users will move up to iPhones when they can. I also don’t think that Apple will ever be the Mercedes or Porsche of smartphones and tablets. They’re not exactly Ford, but they have Model-T-like economies of scale, and I suspect they will reach downmarket as they can (e.g. the iPad 2 at $399, the iPhone 4 at $99 with contract, etc.), just as the did with the iPod.

  148. @PapayaSF
    ” They’ll “never” sell 500 million iPhones? I’d take that bet.”

    Reading comprehension: “Apple will never sell more than 500 million phones globally.” And I did not mean to limit that to 0.5B+1, but used a round number to compare it to 5.5B phones. Whether that would be 400M or 600M in the end, is completely irrelevant.

    Anyhow, an iPod touch is not a Smartphone, because it does not replace a phone.

    @PapayaSF
    “Many if not most of those phones are barely used as smartphones, won’t have the OS upgraded, and due to that and fragmentation and for other reasons, won’t benefit the Android software ecosystem nearly as much as the numbers imply.”

    You still are obsessed with monetary profits. That is completely beside the point.

    A Smartphone allows a user to do “ICT” in the literal sense. It allows easy access to information and communication services that used to be restricted to desktop computers and land-lines. The biggest hits in this are texting, photos, weather forecasts, news, and chatting (sound and text). Giving 6 billion people access to these services is a historical development on par with the introduction of the printing press and newspapers, or the Internet.

    But you only look at the balance sheets of Apple and Google. Gutenberg went bankrupt several times. In your terms, his invention was a total failure.

  149. Owning a PC required either technical savvy or knowing someone who had technical savvy in order to keep the thing running or fix it in case it broke.

    Which is why lots of geeks both use Macs and recommend them to friends and family. Mac OS X itself is a counterexample to the ridiculous notion that a platform can’t appeal to both geeks and ordinary users.

    The Apple world has no need of gpsd or ncurses.
    It has as much need for them as any other platform, Apple just arbitrarily declares that you’re not allowed to use them.

    If it were not for Android Apple’s control of stuff would be terrifying. Much worse than anything Microsoft ever achieved.
    Exactly. If Microsoft had the power 20 years ago that Apple is trying to assert today, the web as we know it wouldn’t exist.

  150. @Brian_2
    “If Microsoft had the power 20 years ago that Apple is trying to assert today, the web as we know it wouldn’t exist.”

    The haunting question now is:
    What technological marvels and progress did Microsoft succeed to nip in the bud?

  151. @Ravi:

    That being said, making the case that Android has hurt Apple is harder than that. Android has also has dramatically expanded the smartphone market, increasing their visibility and penetration. It has driven down the cost of smartphone components of all kinds and encouraged carrier and other infrastructure upgrades that make smartphones more useful.

    I absolutely agree with all this. It has been phenomenal for the consumer, and in the short term, it’s been phenomenal for Apple, too. But right now part of what we see may be Apple worried about whether it’s good for them in the long term. They might have preferred slow and steady growth. They got huge growth and showed themselves to be prepared to deal with it masterfully. But now they have this huge machinery, lots of shareholders counting on them, and lots of competitors, and they’re competing in court rather than in the marketplace. Even if they “win” in court, that’s tactical. They may think it’s strategic — that it will discourage other competitors, but as long as they are sucking that much profit out of the market, the hordes of barbarians will keep coming at the wall.

  152. @Winter
    > What technological marvels and progress did Microsoft succeed to nip in the bud?

    Exactly what power do you think MS had to nip any technology in the bud? Excepting of course stuff they developed and didn’t make public, I really don’t know what power they had to stop anything. The big problem with Apple is that if they want to squash Google Maps with Apple Maps on the iPhone, they can do it at the flick of a switch. Microsoft never controlled what you did with your PC. The worst they did was controlled code signing certificates, and everyone ignores these anyway.

    And, I know it is an uncomfortable truth for all you Microsoft haters, but the plain fact is that much of what we think of as the modern web can be partly credited Microsoft, and the invention of Ajax, which was mostly created to make Outlook Web Access work well. IE 6 might be a pain in the ass browser today, but that is only because it was such a step forward at the time in a vacuum of standards. It was a matrix for many of the best features in today’s browsers.

  153. @Jessica
    MS controlled what hardware was developed and what not. They also killed BeOS and several others OS’.

    They paid ~$1B per year in fines and settlements for illegal business behavior over two decades.

  154. @Winter

    They paid ~$1B per year in fines and settlements for illegal business behavior over two decades.

    Now who is looking at the wrong things?

    Whether or not Microsoft or another company gets sued for antitrust seems to depend mostly on how deep the regulator thinks their pockets are. That is, how much money the regulator thinks they can pay in fines. The statutes are vaguely worded and the courts don’t seem to pay much attention to them anyway.

    If Microsoft were a monopoly the proper remedy would be breakup.

  155. @BobW:

    > If Microsoft were a monopoly the proper remedy would be breakup.

    It is possible, if you squint really hard and cock your head, to envision a monopoly that got that way honestly and diligently.

    Such a Unicorn monopoly should be lauded and not harassed worse than any other business.

    Alas, such things don’t happen in real life. No monopoly ever gets that way without the help of the government. This is why the regulators hardly ever manage to fix a monopoly — they are fighting the entire rest of the government.

    For example, one of Microsoft’s worst sins or best innovations, depending on how you looked at it, was to charge per PC sold, rather than per PC with DOS installed. This tactic made DOS “free” and drove up the cost of all other operating systems exponentially, by drastically reducing the size of the market.

    This isn’t even a tactic that anybody else can counter, once a certain size is reached and network effects kick in.

    A real, responsive regulator would have said “hey, you can’t charge for services not delivered!” but that’s not what we have.

  156. @BobW:

    (Although on the surface Android appears to have this same characteristic, there is a huge difference: Android itself, like most google products, is a free service that anybody can use and leverage without google seeing a dime. But don’t take my word for it — ask Amazon.)

  157. iOS global market share down 2.5% YOY according to Canalys:

    http://news.cnet.com/8301-1035_3-57486377-94/apple-slips-android-big-winner-in-china-during-q2/

    Their shipments rose by 28%, but total market shipment rose by 46.9% and Android shipments rose by 110%, so their market share dropped by 2.5%.

    Obviously carrier subsidies are helping to prop them up in the U.S. They have been very clever at playing the carriers off on one another, which gives them a lot of profit, but now so many people are switching to prepaid that Apple had to follow. It will be interesting to see how they balance their profit per unit vs. market share in the coming quarters.

  158. The FACT is that Apple had iPhone prototypes that looked like iPhones before the Sony thing.

    And the FACT that Samsung had similar-appearing products to *both* Sony and Android says that the various characteristics Apple claims are innovative and distinctive are simply functional, and an obvious to the solution of “Make me a finger-friendly pocketable device.”

  159. @BobW
    “Whether or not Microsoft or another company gets sued for antitrust seems to depend mostly on how deep the regulator thinks their pockets are.”

    Ideological blindness. They were sued for simple IP infringement, breech of contract, and abuse of monopoly against specific partners. Think WordPerfect, Lotus123, Stack, and many many more.

    Also they got fined for breaking very specific laws and refucing to abide by court orders.

  160. East Asians are known for their propensity to copying other people’s work (look at other products and see it’s so; my opinion is because they don’t have so much imagination as Europeans, Middle Easterners, witnessed in their technological stagnation for many years before Portuguese arrival; of course, their ossified society – where despots ruled with a bamboo stick :) – and respect for the white hair of master contributed, too). That’s why I think this a part of explanation for Samsung’s smartphones looking so similar with Apple’s.

  161. Another interesting thing about the Canalys numbers is that they claim that Microsoft is starting to take off.

    I guess Nokia has a big enough footprint that if they are only selling Microsoft, they are bound to sell something, even if their total sales drop by 90%.

    But the real mystery is this: where are all the fanboys complaining about the discrepancy between sold and shipped, and explaining that all the Android devices are really just sitting on store shelves and in warehouses? I miss ‘em.

  162. @ Patrick Maupin
    This isn’t theoretical. Alcoa was one such unicorn.

  163. @marenostrumad
    “East Asians are known for their propensity to copying other people’s work”

    You might want to read the 7 volumes (most in several parts) by Joseph Needham “Science and Civilisation in China”
    http://en.wikipedia.org/wiki/Science_and_Civilisation_in_China

    There is also quite a lot available about “East Asian” art history. It is rather difficult to determine who copied whom most and when.

  164. @Doc Merlin:

    > This isn’t theoretical. Alcoa was one such unicorn.

    Ah, could be. I’ve been jaded by studying things like Bell history and Standard Oil. But you’re right that Alcoa was much better than either AT&T or Standard Oil, either at being ethical or at least at whitewashing history.

  165. (Having said that, Alcoa in its infancy was certainly protected by patent monopoly grants from the government.)

  166. @Patrick
    “Another interesting thing about the Canalys numbers is that they claim that Microsoft is starting to take off.”

    5.1 million Windows Phone. But we know that 4 million of those were shipped by Nokia. So, besides Nokia, only 1.1 million WinPhones were shipped.

  167. @Patrick
    “Android shipments rose by 110%, so their market share dropped by 2.5%.”

    Note that Android accounted for 68% of global shipments (into channel). So, we are not talking about 50%, but 2 out of every three smartphones. And with 16%, iOS is coming “dangerously” close to “single digit” market share.

    But an even bigger omen is the following:

    A new report by Canalys finds that during the second quarter, Android was the operating system on 81 percent of smartphone shipments in China — which accounted for some 27 percent of global smartphone shipments overall. (By comparison, the United States accounted for 16 percent.)

  168. @Winter:

    I agree. Cue the fanboys explaining how Apple (and now Samsung, to some extent) are sucking all the profit out of the market, so market share doesn’t matter.

    One of the interesting exchanges in the current Apple v. Samsung trial occurred when (IIRC) the Samsung lawyer was trying to get the Apple exec to admit that Apple was a “premium” product and there was room below them for a product for the rest of us, and the Apple guy explained that no, iPhones were cheap, and usually bought at $200. Complete, utter BS, of course.

  169. Samsung seems to be pretty good in the courtroom. I hope the jury is seeing through all the BS as well as the reporters are.

    Other examples (all paraphrased from my memory of short tweets):

    1) Apple witness: we’re outraged! Samsung copied our stuff! Of course they would want to — our stuff is beautiful. Samsung lawyer: This phone copied your stuff? Apple witness: yes! Lawyer: Is it as beautiful as the iPhone? Apple witness: Umm, no, not as beautiful…

    2) Apple witness: people carry iPhones partly because of the distinctive look. Samsung witness: studies show that 78% of iPhone users put it in a case.

    3) Apple witness: people are confused in the store and buying other stuff when they meant to buy an iPhone. Samsung witness: studies show that the average consumer researches his smartphone purchase for 6 weeks before buying.

  170. Pingback: He’s Probably Not Alone, Either | Daily Pundit

  171. I’m not sure I’d say that all copies are exactly as beautiful as the thing copied. Nor would I say that all beauty is obscured by a case. But hey…

    Anyhow. FWIW, Patrick, if you really want to have worthwhile discussions with people who like Apple products, you should start your own blog. I disagree with you a lot, but I’ve always wished there was a less toxic environment for discussion. When the blog owner says he doesn’t have to respond to your sincere observations because you’re a fanboi, it is annoyingly difficult to maintain objectivity towards those — like you — who don’t need to make it a religious argument.

  172. @Bryant:

    The only way I know of to make a blog less combative is to erase all the posts you really don’t like. Groklaw is mostly civil like this, but on a few topics it’s mostly an echo chamber.

    Whatever esr’s opinions, he doesn’t erase posts unless people go WAY over the line. Personally, I’d rather see frothing at the mouth on both sides of a subject than only see one side represented.

    I’m not sure I’d say that all copies are exactly as beautiful as the thing copied. Nor would I say that all beauty is obscured by a case. But hey…

    Here’s a good article on why some of these points made by Samsung matter:
    http://www.cultofmac.com/182797/why-apple-is-losing-the-samsung-lawsuit-so-far/

  173. Charge $10 for comment privileges and take great care to have moderators who aren’t ideologically uniform. It usually breaks down eventually, but it’s a slower breakdown. Once you make people put some skin in the game, they put greater psychological value on their comments plus they have something to lose.

    The problem with Eric’s strategy of mocking anyone who likes Apple gear, no matter how reasonable, is that you wind up driving off anyone who is interested in civil discussion. And all you get is frothing Apple fans, frothing Android fans, and reasonable Android fans. To me this is fairly indistinguishable from only seeing one side represented.

    Anyways, off for another few months. Bout of nostalgia and all.

  174. I’m not a frothing Apple fan. I dislike their tactics and some of their products. I carry a ThinkPad and an HTC Android phone.

    It’s just that I realize betting against Apple being wildly successful is universally stupid.

    Apple guy explained that no, iPhones were cheap, and usually bought at $200. Complete, utter BS, of course.

    iPhones ARE cheap. They cost the same or less than an Android phone of equivalent specs — and often outperform that similarly-specced Android phone because of Android’s shitty, mobile-hostile architecture.

    The fact that they’re making huge margins when everyone else is virtually making pennies per unit sold is largely because Apple has much better supply-chain management and manufacturing processes in place than the competition.

    Now it’s true that Android can compete on price, but that’s because Android can be installed on shit phones.

    The whole myth of Apple kit being far more expensive because of Veblen-good status was started back when Jean-Louis Gassée was heading up the Mac group. He positioned the Mac as a low-volume, high-margin product that was expected to be sold at inflated prices to a faithful, price-unconscious user base on the basis of cachet alone. This continued throughout the 90s until Steve Jobs took over, at which point the Mac was transitioned to become a mass-market good which, while still more expensive than many PCs, was priced at a comparable price point to PCs of similar performance specs and had vastly better build quality.

    Apple couldn’t possibly have achieved the market penetration it has in the PC, personal audio, and phone markets if it had kept the inflated price, Veblen good strategy it employed through the late 80s and 90s.

  175. @PapayaSF:

    Ummm, I consider myself a reasonable Apple fan….

    Of course you do! ;-)

    @Jeff Read:

    It’s just that I realize betting against Apple being wildly successful is universally stupid.

    I’m not shorting Apple. Short-term, that’s all about market sentiment, and long-term, they might pull another of a long line of rabbits out of the hat.

    iPhones ARE cheap.

    In this country, for most people, Apple has managed to make them look cheap.

    They cost the same or less than an Android phone of equivalent specs

    Even if that were true sans subsidy, it doesn’t make them cheap. If one luxury sports car costs less than another, it’s still not “cheap.”

    — and often outperform that similarly-specced Android phone because of Android’s shitty, mobile-hostile architecture.

    Sure, iOS is more hand-crafted, and Android was playing a mass-market catch-up game. But, in case you hadn’t noticed, (a) they’ve pretty much caught up, and (b) one of the smartest things that Bill Gates did consistently was to design Windows to run well on fast CPUs with lots of RAM. The hardware will catch up, faster than you think.

    The fact that they’re making huge margins when everyone else is virtually making pennies per unit sold is largely because Apple has much better supply-chain management and manufacturing processes in place than the competition.

    No, you’re not paying attention. Their main strengths are that they play in the premium segment, and manage to avoid giving any sort of significant discount to the retailer or carrier. The retailer is either trying to make it up in accessories, or is Apple itself, or is a carrier falling all over itself trying to give Apple all its profits and then some. Nokia or LG can put a prepaid phone in your pocket for $15 without going negative on gross profit. Feel free to pretend they do this with shitty supply-chain management and manufacturing processes, but I certainly don’t buy it.

    Apple also has different strategies for different products. I always felt that the iPad was relatively good value for money, because Apple was trying their hardest to create a consumer tablet market. (There had been a tablet market for over a decade; just not a consumer one.) Recent court filings prove this:

    http://www.reuters.com/article/2012/07/26/us-apple-margins-idUSBRE86P1NI20120726

    Now, what kind of company gets significantly better margins in a marketplace where they have lots of competition than they do in a marketplace where the competition is just now catching up to them? Apple has managed to do this because they sell lots (over 30% IIRC) of their phones in the US with heavy subsidization. In order to not screw this up, they aren’t dropping prices in non-subsidized markets, because they realize that global shipping is really cheap these days and small companies will do arbitrage for a dime.

    Now it’s true that Android can compete on price, but that’s because Android can be installed on shit phones.

    Which is it? “Android can be installed on shit phones” or Android has a “shitty, mobile-hostile architecture?” Hint: the perfect is the enemy of the good, and incremental improvements in both Android and the underlying phone hardware are relentlessly pressuring Apple.

    The whole myth of Apple kit being far more expensive because of Veblen-good status was started back when Jean-Louis Gassée was heading up the Mac group.

    It’s not a myth. In China, iPhones are definitely Veblen goods. In the US, I’ve seen people whining about iPhones becoming more widely available, but Apple just couldn’t say no to the carrier subsidies. Pricing is an art and a science. Too low, and either nobody wants it, or you’re leaving money on the table. Too high, and you’re getting a lot per unit, but not moving enough units. Apple stumbled into the phone market with its subsidies, and really learned how to play that to completely change the equation.

    iPad is different — they’re still getting margins that some producers would kill for, but in order to jumpstart that market, they had to sell something that it didn’t seem that anybody really needed. The entire premise of the iPad at the outset was that it was a Veblen good.

    Apple couldn’t possibly have achieved the market penetration it has in the PC, personal audio, and phone markets if it had kept the inflated price, Veblen good strategy it employed through the late 80s and 90s.

    Just because you realize that you can’t make enough money to sustain a company by selling to the 1% doesn’t mean that your strategy of targeting the 10% takes you completely out of the Veblen category. And in the markets where Apple dominates, a large part of that domination is due to other factors (iTunes or carrier subsidies).

    But the iTunes advantage is disappearing, and I think the carrier subsidy advantage is disappearing as well now that more people are buying prepaid.

  176. @Jeff Read:

    As Patrick notes, you’ve been effectively bamboozled with mobile subsidies. Here’s the simpled (and, to me most mind-boggling) reality check:

    It costs more ($375) to get an unlocked 8GB iPhone 3GS direct from Apple (flagship released June 2009) than it costs ($350) to get an unlocked 16 GB Galaxy Nexus direct from Google (flagship released November 2011).

    Here’s a TCO analysis about why the iPhone does much better in the US than in the rest of the world: http://www.ben-evans.com/post/25177869096/iphone-pricing-and-us-market-share
    Because of high US mobile phone bills (and the associated subsidy games) the TCO gap is small in the US (10%) and huge overseas (160% in the UK).

    Apple is finally trying out actually cheap ($200ish) iPhone 3GSes in a few prepaid markets (e.g. India), but that has its own hurdles (e.g. durability, newer competition, etc.) and doesn’t change the overall reality that, without distortions like handset subsidies, iPhones aren’t cost-competitive.

  177. Tomi Ahonen analyses the Q2 global results. Samsung wins:

    Dispatches From The Battlefield – Some Digital Jamboree Notes from various Smartphone Makers
    http://communities-dominate.blogs.com/brands/2012/08/dispatches-from-the-battlefield-some-digital-jamboree-notes-from-various-smartphone-makers.html

    And why Apple fights so hard to prevent Samsung from selling phones:

    Apple, be afraid… be very afraid
    http://www.iol.co.za/scitech/technology/gadgets/apple-be-afraid-be-very-afraid-1.1356320

    I’ve just spent a few days with Samsung’s much hyped Galaxy S3, and I can see what the late Apple boss was so worried about. The Android powered S3 is superior to the iPhone 4S in almost every respect. Not surprising then that Samsung’s already sold more than 10 million of them.

  178. Spain is a good example of what happens when price-conscious consumers front the entire cost of the phone by themselves:

    iOS was matched by Symbian, and outsold 2:1 by RIM.

    (and Android had 87% market share)

  179. >iOS lost marketshare YOY in every market in the report except the US and GB.

    That’s a pretty strong indication that Apple’s U.S. share is being propped up by carrier subsidies, right there.

  180. @esr
    “That’s a pretty strong indication that Apple’s U.S. share is being propped up by carrier subsidies, right there.”

    It is also a pretty strong indication that the predicted “collapse” of Apple global market share to single digit might even be reached in Q2 next year. iPhone were at 16% in Q2 2012, down from 19% in Q2 2011. A stronger than expected growth in the global Smartphone market could easily get iPhone down to below 10% in Q2 2013.

  181. @esr:

    That’s a pretty strong indication that Apple’s U.S. share is being propped up by carrier subsidies, right there.

    Yeah, and another thing that may be changing is Apple’s vaunted stickiness:

    Apple continues to enjoy very high loyalty across the world. In Great Britain among Apple consumers who have changed device, loyalty currently stands at 80%, while 92% of current Apple consumers plan to buy another iPhone when they upgrade. With this in mind, any dip in Apple share is likely to be short-lived with the release of an updated iPhone in quarter three bringing momentum back to the Cupertino giant.

    So 92% of iPhone users are going to buy another iPhone when they upgrade, but only 80% follow through and do that? Maybe people have every intention of getting another iPhone but some of them just can’t justify the price difference (especially if the reason they are getting a replacement is because the old one broke or was lost).

  182. @ Patrick

    On the other hand, every model iPhone outsells all previous models combined. Of course, this trend is not sustainable, but it certainly suggests, especially given that Apple is not making massive marketshare strides, that they have plenty of loyalty left in their user base. Certainly I’d be happy to be selling a product that each generation outsells all previous generations. It does lead to the interesting question of what becomes of all those old iPhones though. There’s a healthy used market, but I can’t imagine it’s big enough to absorb all the iPhones sold every 2 years.

  183. @tmoney:

    On the other hand, every model iPhone outsells all previous models combined. Of course, this trend is not sustainable, but it certainly suggests, especially given that Apple is not making massive marketshare strides, that they have plenty of loyalty left in their user base.

    Yes, some of their base is quite loyal. But a large part of the reason they sell more of each phone than the previous one is that they have been opening up to more and more carriers and countries on each release. This low-hanging fruit is probably pretty much all gone. In the US, all that’s left is T-Mobile, and some regionals, and more play in prepaid (which will not help their ASPs unless the carriers keep playing along).

    No, they’ve got really good reasons to try to expunge Samsung from their sandbox. But good luck with that internationally. Heck, good luck with that domestically. It will be interesting to see if the jury is as prejudiced as the judge seems to be, but I wouldn’t count on it.

  184. “Low-hanging fruit”? You don’t think that term would apply better to Samsung selling lots of low-end smartphones to first-time smartphone buyers? Phones that may never get an OS upgrade?

    One of the odd assumptions I see in the discussions here is the idea that once someone buys an Android phone, they’ll never want anything else. The user surveys I’ve seen (and am too lazy to find right now) don’t support that assumption: Android users are noticeably less satisfied than iPhone users. And since many don’t take advantage of Android apps, it’s easier for them to switch platforms.

  185. > In the US, all that’s left is T-Mobile, and some regionals

    Neither MetroPCS (9.5 million subscribers) or US Cellular (5.8 million customers in 126 markets in 26 U.S. states. Perhaps that’s “regional” to you.) have the iPhone, yet.

    iPhone has only been available on Leap since June 22.

  186. Spain is a good example of what happens when price-conscious consumers front the entire cost of the phone by themselves:
    iOS was matched by Symbian, and outsold 2:1 by RIM.
    (and Android had 87% market share)

    There has never been any doubt that consumers given the choice would buy less expensive phones than they need. And because they would be spending less on those phones their utility / enjoyment of their carrier related services would decrease and thus not only their total spending but their spending carrier services. There is no argument about why carriers use subsidies.

    But that doesn’t change the fact that Verizon is perfectly happy to collect an extra $1000 over 2 years even if $300 of that money goes to Apple or Samsung. If people were buying their own phones the average smart phone would be in the $100-200 range and the majority dataplans would be $10 for something like 200mb + $.10 / mb. Instead the carriers are going to be able to charge $40 per smart phone + $5 / gb and be averaging something like $60 in data (with $15 going to subsidy).

    The economics of subsidy make sense. They only stop making sense if the prepay carriers start becoming a huge share of the market.

  187. @Lars:

    Yes, that’s “regional” in that, if you fly from somewhere to somewhere else in the same country, then your phone might not work. And don’t for a minute think that the lack of coverage is unrelated to the number of subscribers. Those two together have around 6% of the subscribers of the top 3. As I said, the low-hanging fruit is gone.

    @PapayaSF:

    Low-hanging fruit”? You don’t think that term would apply better to Samsung selling lots of low-end smartphones to first-time smartphone buyers?

    The world has billions of potential first-time smartphone buyers. Lots of low-hanging fruit there. Maybe you weren’t really paying attention, but Apple’s strategy seems to require carrier subsidies in the US and rich people elsewhere, while Samsung sells to a much broader spectrum. Also, plenty of people upgrade Android phones. Maybe not as religiously as they do Apple phones, but even people who can’t afford Apple like the occasional shiny new thing.

    One of the odd assumptions I see in the discussions here is the idea that once someone buys an Android phone, they’ll never want anything else.

    Nobody has made that assumption that I know of. Network effects and ecosystems are real, and help provide stickiness, but it’s a much freer world than it would be without Android. As that Kantar survey showed, 80% of iPhone users purchased something else for their next phone in GB, so it’s not completely sticky either direction.

    GB is interesting — has subsidies (as has been discussed here before), but not as great as the US, but greater than most other places. YOY, Android’s share of sales went up 12.5% and Apple’s went up 2.1%. So obviously when price is a consideration, Android doesn’t fare so badly.

    The user surveys I’ve seen…

    You mean the ones like this one.

    I’d be interested in a complete picture. We have a survey that shows 38% of current US iPhone buyers had something else before, and earlier I linked to the Kantar survey that shows that 20% of UK iPhone owners bought something else later. But there’s a lot of data missing in this picture, and unless you have a more complete survey, you’re fooling yourself if you extract too much from either of those statements. The thing I extract from the latter is that there are unsatisfied iPhone owners, too. Which I knew implicitly after taking my daughter to the Apple store to try to get her iPhone fixed on multiple occasions.

  188. @CD-Host:

    There has never been any doubt that consumers given the choice would buy less expensive phones than they need.

    Sorry, that’s the stupidest thing I’ve read all week, so I’m not going to bother with the rest of your post.

  189. >This rumor just won’t go away:

    Verrry innnteresting. I think the obvious interpretation is that AT&T wants to improve margins in a tough market and has decided one way to do that is stop throwing a huge subsidy to Apple.

    One recent analysis finds a very strong correlation between Apple market share and levels of carrier subsidy. This is a serious vulnerability.

  190. @Patrick: ” Apple guy explained that no, iPhones were cheap, and usually bought at $200. Complete, utter BS, of course.”

    This just in, Sprint iPhone 4S is now $149.99. Samsung Galaxy S III 16GB on Sprint is $199.

  191. @Lars:

    > You appear to be wrong.

    OK, so it’s “regional” as in you have to be roaming on a different network and paying exorbitant fees (roaming and maybe even long distance) to get your phone to work if you’re on the other side of the country. Or you can buy their national plan that actually costs more than T-Mobile’s. Whatever. They try their hardest not to sign up subscribers where they don’t have their own towers or really good deals.

    @Patrick: ” Apple guy explained that no, iPhones were cheap, and usually bought at $200. Complete, utter BS, of course.”

    This just in, Sprint iPhone 4S is now $149.99. Samsung Galaxy S III 16GB on Sprint is $199.

    That doesn’t at all address my point that the true cost of either of those phones is a lot higher and is ultimately borne by the customer. See the link that Ravi posted earlier.

    Question: are you really surprised that Sprint has a lot of old stock iPhones to get rid of before they’re only worth $100?

  192. Bonus question: Are you really surprised that Sprint is pushing the iPhone like hell, given their contract commitments to Apple?

  193. > Question: are you really surprised that Sprint has a lot of old stock iPhones to get rid of before they’re only worth $100?

    I’m not surprised that you want to have it both ways.

  194. @Lars:

    > And the oft-lauded-herein T-Mobile is #4.

    Perhaps you missed where I said all that’s missing is T-Mobile and some regionals. In any case, the point is that Apple can’t count on those for unlimited growth. It will be interesting to see in a few months if the rest of the world really was waiting for the next iPhone, or if the world is past Apple. I think they will certainly get a bump that takes them past what they sold last quarter, but the question is how far?

  195. @Lars:

    > I’m not surprised that you want to have it both ways.

    What are you on about? My premise is that Apple sells more in the states than other places due to subsidies that reduce the real cost of phones, and that if people had to buy their own phone outright, the US would look more like the other countries.

  196. >> Question: are you really surprised that Sprint has a lot of old stock iPhones to get rid of before they’re only worth $100?

    >I’m not surprised that you want to have it both ways.

    @Patrick: We have a real comprehension issue here. I do believe he is latching on to the text “worth $100″ and using that as some kind of ‘gotcha’ to contradict your claim that iPhones aren’t cheap.

  197. One recent analysis finds a very strong correlation between Apple market share and levels of carrier subsidy. This is a serious vulnerability.

    Well sure. But there are several correlations here:

    1) Increased carrier subsidy correlates strongly with increased usage, my point above.
    2) Increased usage correlated strongly with higher total monthly fees per customer
    3) Higher monthly total fees correlate strongly with higher telco profits per customer

    Finally in the USA these higher profits make a subscriber model more common. I.E. higher telco profits per customer correlate strongly with additional marketing to acquire new subscribers

    The market in the USA is characterized by two factors:
    a) Higher total bills
    b) Better basket of services
    c) The vast majority of customers on long term subscription models with “brand loyalty” as far as carriers making high costs of customer acquisition plausible.

    Its entirely possible that the global market will move in the direction of the US market rather than visa versa. This is a much better model (on average) for carriers than the sim prepay model that is more common in Europe even at today’s numbers. But from a growth perspective it is even more important. In many of those countries most of the population is already using cell phones, if they want growth its gotta come from encouraging more use rather than getting subscribers.

    The USA is starting to get the mainstreaming of prepay plans were people are being given a worse basket of services, a basket that often discourages usage, in exchange for reduced monthly cost. These plans are more like the European situation, and so far domestically the appeal of these plans is limited but growing rapidly.

    I’d say that Apple is vulnerable to the prepay market coming to the USA. On the other hand they potentially benefit with the USA model going to the rest of the world. I’d also say that those correlations fail to take into account Apple’s terrible job of pricing themselves in Europe.

  198. @CD-Host:

    The US mobile market is most certainly *not* characterized by a better basket of mobile services compared to the mobile market in most developed countries (Canada being a notable exception). Especially if you limit yourself to the technologies the iPhone is capable of using, you see slower speeds, poorer coverage, tighter data caps, more limitations on usage [e.g. video calls, tethering], and on and on.

  199. Ravi —

    I’m not expert, but I don’t see that. Just to pick Spain’s largest counter since that came up in the article: http://www.movistar.es/particulares/movil/tarifas-contrato/
    If you want to pick a discount illiad, which is bottom of the barrel. €19.99 / mo for 3g of data unlimited calling and texting which is comparable to Verizon. But that’s for a network that only hits 27% of houses.

    As for the list:
    — more limitations on usage [e.g. video calls, tethering] — I don’t know about the video call limitation. In any case the carriers are all dropping these rules and just charging for data. So while this may have been the case it is less and less. I’ll agree that American carriers are very careful about protecting revenue streams even at the expense of customer quality (i.e the move to pay ringtones).

    — tighter data caps: norm here was 4g. I’d say if anything there is a lack of of plans with low datacaps in the USA. This is a market begging for 100m plans with low fees.

    slower speeds — yes though the USA is always terrible on speeds and quality. Lower population density and complex terrain.

    I was thinking more in terms of things like total minutes, and all the exempted minutes. Or total data (where we are just disagreeing).

  200. @CD-host
    The main characteristic og the US market is a lack of competition.

  201. Rave —

    I have a reply to you that might be stuck in moderation jail?

    ____

    Winter —

    I don’t see that. We have 4 networks in the United States and regional carriers on top of some of them with their own infrastructure. We have 2nd tier carriers reselling wholesale versions of each of these and mixing between them. Those 2nd tier services are exposing all sorts of interesting alternative pricing models. And that’s in addition to all the corporate bundles with MPLS services for accounts over $100k / mo.

    The US in fact is one of the only countries in the world with competing radio standards. Given the population density and geographic features of the United States how would you suggest that competition be raised above current levels?

  202. > Given the population density and geographic features of the United States how would
    >you suggest that competition be raised above current levels?

    It would be nice to have more regional carriers again. While Patrick might deride them, I found the best service generally came from the regional operators. Back when the iPhone was new, I was on Suncom, and I had one of their “truth in wireless” plans. For $65 / month (all taxes and fees included) I had two subsidized phones, 1500 shared minutes, 200(ish) text messages per month, FNW and M2M, and all you can eat data with no hard caps for both phones. Sure, I was only in network in 4 states, but truth be told, the only time I traveled out of those 4 states was to visit family up north, and for that once a year event, I could buy a pre-paid SIM card (including from Suncom since they offered national plans as well) for the week or so that I was gone. At the time I got this plan, the closest comparable plan from any of the big 3 (ATT, Cingular, VZW) was >$100/month before taxes and fees. Even now, good luck finding a comparable deal, the closest I have is I use Virgin Mobile and got in on their $25 unlimited web/text, 300 minutes deal, and my wife has T-Mobile’s $35 for 1500 minutes or texts 250MB of data. Not exactly comparable, and our nights and weekends aren’t free. And unlike T-Mobile, Virgin, VZW AT&T or Sprint today, when I was unlocking my iPhone, Suncom was more than happy to help me figure out what settings I needed to put in to get it working on their data network.

    So while I agree with you that the US is huge and our coverage and services reflect that fact, we could certainly do to see more regionals.

  203. @tmoney:

    > While Patrick might deride [regional carriers]

    I’m not deriding them, per se. For the most part, they aren’t doing all that well right now, and that just means that between them, they don’t have enough subscribers to sustain Apple’s growth for very long.

  204. @CD-Host:

    Its entirely possible that the global market will move in the direction of the US market rather than visa versa.

    That seems an extremely difficult proposition. Customers who are used to pricing transparency aren’t easily going to be snowed into paying a lot more every month just so they have the option of acquiring a new handset every two years without a big cash outlay.

    This is a much better model (on average) for carriers than the sim prepay model that is more common in Europe even at today’s numbers.

    Yeah, it’s a good model until one company defects and lots of customers follow them.

    But from a growth perspective it is even more important. In many of those countries most of the population is already using cell phones, if they want growth its gotta come from encouraging more use rather than getting subscribers.

    This is a complete non-sequitur. Fair, transparent pricing almost always encourages more use. US companies are fast running the other direction — they seem to be trying to encourage more spending with less use. Have you looked at the travesties that are the AT&T and Verizon family data plans? Completely ludicrous.

    The USA is starting to get the mainstreaming of prepay plans were people are being given a worse basket of services, a basket that often discourages usage, in exchange for reduced monthly cost. These plans are more like the European situation, and so far domestically the appeal of these plans is limited but growing rapidly.

    Prepaid doesn’t necessarily mean worse services. Some prepaid is good services at a high price, just no contract. But consumers want several seemingly irreconcilable things: good, cheap handsets, low prices, good services, no monthly billing surprises, and no lock-in. Different customers weight those differently, but at the end of the day, the carrier that can find the sweet spot here will kick ass.

    I’d say that Apple is vulnerable to the prepay market coming to the USA. On the other hand they potentially benefit with the USA model going to the rest of the world.

    Like I said, I don’t think the USA model will fly that well in the rest of the world. People expect to pay less money for a cell phone plan when they bring their own device, or after their contract expires. In the US, only T-Mobile seems to support this for postpaid.

    I’d also say that those correlations fail to take into account Apple’s terrible job of pricing themselves in Europe.

    Global arbitrage is way too easy these days and Apple knows it. If they “fix” their European pricing, they will screw it up somewhere else.

  205. Comscore releases teaser data from its tablet user survey:

    http://www.comscore.com/Press_Events/Press_Releases/2012/8/comScore_Introduces_TabLens

    Two takeaways:

    1) Despite the raft of no-name cheapo Android tablets available, average satisfaction with non-Kindle Android tablets is still quite high — 8.2 on a 10 point scale. Apple gets 8.8, and Amazon almost ties them at 8.7.

    2) 1/3 the smartphones (owned by tablet owners), 1/3 the Amazon tablets, 1/3 the kindle tablets, and 46.3% of the iOS tablets are owned by households making more than $100K per year. There’s still a LOT of room at the low end for growth.

  206. Argh!

    Forgot the most important takeaway:

    Somewhat surprisingly, consumers did not place strong importance on having the same operating system across their tablet and smartphone, with this factor falling outside of the top five consideration factors for iPad, Kindle Fire and the average tablet owner.

  207. tmoney — my first cell phone was $10 / mo, 20 prime minutes 500 night / weekend, regional calling 1 year contract and phone was free. That would still be a good deal today.

  208. Patrick —

    Most of your post assumes that customers would prefer transparency. I’m not sure that’s a given, in fact I’m fairly sure it is false. In the USA we have transparent and non transparent plans and the non-transparent ones are vastly more popular even though they are marginally more expensive. Even in Europe most people go for some sort of complex plans. Having sold corporate plans, I’ve frequently found that even mature executives hate the idea of breaking apart all the expenses and are it is often much easier to just sell them a basket of services.

    As further evidence, the prepay carriers are moving towards more complex plans involving some subsidy of phones. So I think a case needs to be made that customers actually prefer this system given that when we conduct a controlled experiment they seem to go for complex packages.

    And I should mention your own comment about the new bundles is indicative of this. The carriers move away form using high SMS and voice fees to subsidize their data plans where they are incurring costs and your reaction is rather negative. Your own comments about “the travesty” of a the new more transparent plans I think proves my point. You don’t even like transparent pricing.

    So I see considerable counter evidence that “fair transparent pricing promotes use”. I think the carriers are absolutely correct in their belief that this is false. I certainly don’t think it is reasonable to just assume this. Both between countries and within countries subsidy customers seem to buy more services.

    As for some carriers cutting subsidy last year carriers increased their subsidy heavily. I think we need to look at the overall trend. If AT&T was really flipping $400 subsidies every 12-18 mo… that’s likely just effectively a subsidy for AT&T MNVOs.

    Global arbitrage is way too easy these days and Apple knows it. If they “fix” their European pricing, they will screw it up somewhere else.

    Apple’s pricing is Europe is often much higher than it is in the USA, even including compensating for VAT.

  209. @CD-Host:

    In the USA we have transparent and non transparent plans and the non-transparent ones are vastly more popular even though they are marginally more expensive.

    No, they’re vastly more popular because most of the transparent plans are more expensive for many use cases. But this is not a failure of transparency. It is because the carriers have been scared of transparency.

    Even in Europe most people go for some sort of complex plans. Having sold corporate plans, I’ve frequently found that even mature executives hate the idea of breaking apart all the expenses and are it is often much easier to just sell them a basket of services.

    There is nothing that prevents transparent pricing on a basket of services. And most of the postpaid carriers offer different baskets that allow the customers to pick and choose what they want in their monthly price. For everything except the phone subsidy. Only T-Mobile allows you to say “I want a cheaper plan because I have a phone” and that’s very recent.

    As further evidence, the prepay carriers are moving towards more complex plans involving some subsidy of phones.

    You obviously haven’t been paying attention. This is absolutely nothing new. Prepaid carriers have been subsidizing phones for years, distorting the market so badly that they have to get suspect laws passed and enlist the aid of armed government agents in order to thwart arbitrage.

    Arguably what’s new is that the subsidy is going down. When Virgin Mobile sells you a new phone for $15, there’s probably some subsidy, but when they sell you an iPhone for $649, they might actually be making a little money on it.

    So I think a case needs to be made that customers actually prefer this system given that when we conduct a controlled experiment they seem to go for complex packages.

    No, a case can be made that only crap phones have been available on prepaid, that you can get good prepaid voice with crap data or vice-versa, but that the carriers have deliberately failed to put it all together. This is changing as the underdogs without the iPhones realize they have to compete via other mechanisms, and then the carriers with the iPhones counter.

    http://www.twice.com/article/487603-Analysts_See_Prepaid_Penetration_Hitting_33_In_Year.php

    And I should mention your own comment about the new bundles is indicative of this. The carriers move away form using high SMS and voice fees to subsidize their data plans where they are incurring costs and your reaction is rather negative. Your own comments about “the travesty” of a the new more transparent plans I think proves my point.

    My question where I mentioned “travesty” was “have you looked at the plans?” Now I either know that you haven’t, or that you’re a phone company shill. How is $30/month per added device on AT&T’s plan — without getting any extra data — a good deal in any universe?

    You don’t even like transparent pricing.

    No, I think it’s great. Especially when it shows you exactly how you’re getting raped, or how to avoid getting raped, without having to read the fine print.

    So I see considerable counter evidence that “fair transparent pricing promotes use”. I think the carriers are absolutely correct in their belief that this is false. I certainly don’t think it is reasonable to just assume this.

    Yeah, but you’re the same guy who said “There has never been any doubt that consumers given the choice would buy less expensive phones than they need. ” so please forgive me if I don’t put too much stock in your ability to parse the evidence or think clearly.

    Both between countries and within countries subsidy customers seem to buy more services.

    You haven’t presented any decent evidence for other countries, and your US evidence is severely flawed, because until recently, postpaid “all you can eat” pricing was not much more than the next lower tier pricing, and prepaid “all you can eat” pricing was non-existent. Now, postpaid is moving away from all you can eat data, and prepaid offerings are becoming much more competitive.

    As for some carriers cutting subsidy last year carriers increased their subsidy heavily.

    Yes, because Apple has them in a prisoner’s dilemma. But the customers are helping them out of this by switching to prepaid in droves. And AT&T is cutting back as much as they can according to all reports. Let the hangover begin.

    I think we need to look at the overall trend. If AT&T was really flipping $400 subsidies every 12-18 mo… that’s likely just effectively a subsidy for AT&T MNVOs.

    It is starting to be that now. For the longest time, they wouldn’t let you activate an iPhone even on their MNVO. But now you can unlock it and even use it on T-Mobile. Probably due to FCC or FTC pressure:

    http://www.tmonews.com/2012/04/att-begins-unlocking-out-of-contract-iphones-today-good-news-for-t-mobile-refarming/

    Apple’s pricing is Europe is often much higher than it is in the USA, even including compensating for VAT.

    Amazon UK has unlocked iPhone 4S 32GB starting at 550 GBP At a 20% VAT rate, that would be 458 GBP, or 715 USD. In the US, they start at 750 USD.

    Well, that’s the real market. Let’s try the UK Apple store, where you can get it for 600 GBP, or 500 GBP before VAT, or 780 USD, vs. the US Apple store where you can get one for 750 USD.

    Doesn’t look much higher to me. OOHHH, I get it. You were talking about through the carriers. Yeah, that’s what happens with lower subsidies.

  210. @CD-host
    “I don’t see that. We have 4 networks in the United States and regional carriers on top of some of them with their own infrastructure. We have 2nd tier carriers reselling wholesale versions of each of these and mixing between them.”

    You must be joking. The Netherlands has 17 million inhabitants, three independent cell phone networks ( our “beloved” former national monopolist KPN, T Mobile, Vodafone) and more than a dozen second tier suppliers. On top of that even some retail chains sell their own branded cell phone services.

    @CD-host
    “The US in fact is one of the only countries in the world with competing radio standards.”

    Replace “radio” with “power voltage and frequency” and you see how ridiculous this is.

    These competing radio standards are simply a way to lock in users and reduce competition. The very fact that (almost) every phone bought in Europe can be used with every provider in Europe by exchanging the SIM card made Europe a really competitive market.

    And prepaid is extremely popular. Also, if I get a locked subsidized phone, I can go to a market stall, or a shop, and they will unlock it for me for some 25 euro. All legal. Also, after a year or so, the provider is required to give me the unlock code if I ask for it.

  211. No, they’re vastly more popular because most of the transparent plans are more expensive for many use cases. But this is not a failure of transparency. It is because the carriers have been scared of transparency.

    Well first off the transparent plans buy services wholesale and resell them. Being more expensive for many use cases is what you would expect in a market where the non-transparent plans were being designed well to meet customer needs and thus create high usage. The same way that buying all the parts in a car plus its assembly is just called “buying a car” because a non-transparent solution is a much better deal for most people. Now, what evidence do you have that carriers are “scared” of transparency? If that were the case then why offer it their corporate customers?

    There is nothing that prevents transparent pricing on a basket of services. And most of the postpaid carriers offer different baskets that allow the customers to pick and choose what they want in their monthly price. For everything except the phone subsidy.

    No the postpaid don’t offer transparent baskets, SMS and voice being a good example where they were over changing for this feature until the new plans. They always engage in cost shifting. For the dumb phone customers, who are the ones not taking advantage of the subsidy, the subsidy was something like $7 / mo. And not uncommonly the dumb phone customer had gotten some sort of pricing deal which was more than that. I actually was in that situation personally where I had an extra $6 / mo price break, I would lose if I upgraded to get the $7 / mo subsidy.

    But of course they are never going to unbundle the phones subsidy for the reason I’ve discussed above.

    You obviously haven’t been paying attention. This is absolutely nothing new. Prepaid carriers have been subsidizing phones for years, distorting the market so badly that they have to get suspect laws passed and enlist the aid of armed government agents in order to thwart arbitrage.

    I’m not sure how these are “suspect laws”. Phones are regulated devices, you aren’t allowed to tamper with them. And what’s legal for individuals certainly isn’t allowed for commercial entities. I don’t know how “armed government agents” comes into play. These people are being charged with property crimes, not assassinated, only if they resisted would arms be used.

    CD: So I think a case needs to be made that customers actually prefer this system given that when we conduct a controlled experiment they seem to go for complex packages.

    Patrick: No, a case can be made that only crap phones have been available on prepaid, that you can get good prepaid voice with crap data or vice-versa, but that the carriers have deliberately failed to put it all together.

    That’s simply not true. I don’t know anyone who did it, but there would have been rule against putting a Vertu on most prepay plans. What was true was that until the last few years prepay often didn’t have much if any data. But most customers until recently had light data usage and bought dumb phones. Its only been in the last few years that smart phone usage has surged. And lagging slightly behind the postpay market the prepay market is offering data.

    If the issue were just the unavailability of high end data plans, then we would expect to see postpay getting almost all the data customers and prepay getting almost all the dumb phone users. But instead we see a break between prepay and postpay having far more to do with years in school completed not choice of device.

    My question where I mentioned “travesty” was “have you looked at the plans?” Now I either know that you haven’t, or that you’re a phone company shill. How is $30/month per added device on AT&T’s plan — without getting any extra data — a good deal in any universe?

    There are two $30 charges here, I’m not sure which you mean. Assuming the dumb phone: $30 isn’t meant to be a good deal. For people who aren’t heavy callers it is a high punitive number which is going to drive them towards the $30-45 for a smartphone. They are driving the remaining dumb phone customers up to smartphones the same way that starting about 3 years ago they drove feature phone customers up to smartphones.That’s how you shape a market encourage some behaviors and discourage others.

    Now if by $30 you meant the cost of devices on their smartphone plans. There is about a $15+ subsidy on higher end phones it does cost something to provide calls, texts a DID… But $10g + high phone charges is a huge price increase for AT&T. They are now more expensive than Verizon, and Verizon in addition to building a similar plan also is pushing through a roughly $10 / mo price increase. I suspect there is going to be a large backlash.

    CD: So I see considerable counter evidence that “fair transparent pricing promotes use”. I think the carriers are absolutely correct in their belief that this is false. I certainly don’t think it is reasonable to just assume this.

    Patrick: Yeah, but you’re the same guy who said “There has never been any doubt that consumers given the choice would buy less expensive phones than they need. ” so please forgive me if I don’t put too much stock in your ability to parse the evidence or think clearly.

    I understand that you think arguments of the form “you’re a poopy head” are actual valid. But you have yet to refute the above point. I had an entire post where I addressed this. You quite proudly announced you weren’t reading it, because it offended your presuppositions that customers always make choices that are in the their best interests when given the opportunity.

    CD: Both between countries and within countries subsidy customers seem to buy more services.

    Patrick: You haven’t presented any decent evidence for other countries,

    I’d assumed you knew it given this is one of your hobby horses. Just pick a country and pull the data on average spending per person on the postplay plans vs. sims sales. Read the earnings reports for Telefonica and Vodafone they tried cutting subsidies and total revenue fell horribly. People enjoyed their phones less and usage dropped. This year in the Netherlands there was a 3.3% growth in the customer base but a 2.7% drop in revenue (total not per customer) a year after cutting subsidies.

    Carriers hate, hate the distortion to their relationships caused by selling handsets. That article you pointed to with AT&T customers who spend $100 / mo or more being upset they couldn’t upgrade every 12 mo is a perfect example of the problems the handset business causes. The only reason carriers are in the phone business is because the alternative is much worse.

    (part 2 to follow)

  212. and your US evidence is severely flawed, because until recently, postpaid “all you can eat” pricing was not much more than the next lower tier pricing, and prepaid “all you can eat” pricing was non-existent.

    All you can eat is not transparent pricing. Transparent pricing is a per byte charge. The prepaid carriers are buying their data blocks based on data consumed not the number of customers. This is another example of where you are contradicting yourself on customer preferences for transparency.

    As an aside, I don’t agree with you that people like “all you can eat” pricing, I think they are much happier having tiered pricing for data they way they used to have tiered pricing for minutes. I think the carriers in the last 4 years have been responding to customer wants in moving towards a much fairer and frankly more transparent per gb model (though I agree that $10 per gb for AT&T is much too much margin).

    CD: As for some carriers cutting subsidy last year carriers increased their subsidy heavily.

    Patrick: Yes, because Apple has them in a prisoner’s dilemma. But the customers are helping them out of this by switching to prepaid in droves. And AT&T is cutting back as much as they can according to all reports. Let the hangover begin.

    OK but you were saying the opposite that the trend was towards less subsidy. If we agree they are at a much higher level than 2 years ago than that’s not a trend towards cutting. Further those high subsidies are not just for Apple, the Samsung Galaxy is doing well as well as it is because of the high subsidy. Verizon is not backing off their subsidy levels at all, they restructured their pricing to institutionalize them. And we are agreeing that many prepay carriers are increasing their subsidy. I think what’s fair to say is that AT&T let their subsidy get out of control and they are cutting.

    CD: Apple’s pricing is Europe is often much higher than it is in the USA, even including compensating for VAT.

    Patrick: Amazon UK has unlocked iPhone 4S 32GB starting at 550 GBP At a 20% VAT rate, that would be 458 GBP, or 715 USD. In the US, they start at 750 USD.

    Are you disagreeing with my “often” or just giving one example to show it isn’ always? UK is a market where the iPhone does well. Pick one where it doesn’t. That’s where you see higher prices.

  213. > a close reading of AT&T’s situation shows they’re trying to slow down upgrades as well:

    Yes, but ‘Why?’

    This can’t just be about subsidies. Yes, iPhone is expensive, but AT&T has managed the cost of iPhone for 5 years now. Sprint and Verizon (and several regional carriers) have, too.

    So what is different?

    There is an imminent launch of the next-gen iPhone. One possibility is that AT& doesn’t like the terms for this new iPhone. Another possibility is that Apple changed the terms, and AT&T has decided to either not carry the new iPhone or to carry it on a back-shelf. Perhaps AT&T’s LTE network isn’t up to snuff.

    Not having the iPhone will either go badly for AT&T, or .. nobody will care.

    So, an inflection point in September, perhaps. Either Android wins, or Apple shows its utter dominance in the smartphone wars.

    We won’t have long to wait.

  214. Winter —

    That’s pretty much the situation we have here. If you go to an urban areas you will see cell phone booths where people can buy phones, sim cards / pins for their plans. They jump semi-freely from plan to plan. Those plans use one of 4 different physical networks. That exists here. People who can afford not to use that system so far aren’t using it. You have to present something that doesn’t exist here. Most of what you are presenting exists in almost the same way in the United States, it is just vastly less popular than the alternate postpay system.

    For example on moving phones. I’ve moved phones off and on Verizon other than buying from them like 20 times. They’ve been nothing but helpful in either direction. So I’m not sure where you get the idea that this is unique to Europe. The carriers don’t want to get ripped off, but they are perfectly willing to be reasonable.

    As for CDMA vs. GSM. There are real advantages to both. GSM offers global (x asia) phones. CDMA offers better signal on highway driving. Verizon’s entire marketing campaign for years “can you hear me now” is all based on the advantage of CDMA over GSM. I’ve been to Europe and used your systems. I like the fact that I can jump on a carrier for about $10. But because you don’t have competing radio standards (i.e. CDMA) I end up using a Nokia phone that feels like the kind of phone I had in 2002 to do it. I’d love to be buying data from someone like Orange and using my iPhone.

    And I understand there are political reasons for this, but I think the local nature of GSM compounds the politics. So when I go 100 miles in Europe I have to either get a new sim or pay something like $.60 / minute.

    I’m not going to deny the situation in Europe is good. I think prices are on balance a bit lower, but higher population density really helps in controlling costs. But the idea that it is orders of magnitude better than what exists in the states is simply not the case.

  215. R Duke —

    I don’t think we know anything in September. Unless Apple’s phone is a disaster they are going to be manufacturing constrained not demand constrained until late January. The question is when and by how much their annual sales cycle starts to taper off, February – June. AT&T’s strategy for handling the stress on the network from the iPhone5 is $10 per gb data. I think that’s going to work to hold down use to levels AT&T can support.

    If you want my theory as to the why they care changing the upgrade rules. It has to do with the proportion of the population on smartphones. When smartphones were a niche item being used by their best 10% of customers frequent upgrades aren’t relative to the rest of the contract a huge expense. The latest numbers are: 105.2 million subscribers, with 43 million smartphone subscribers.

    My hypothesis as to what’s changed for AT&T is a higher percentage of low end Android phones. The average smartphone lasts 11.5 months. Apple has an excellent warranty and wants to provide service directly, so mostly not AT&T’s problem. But the Androids, especially the cheap Androids are the ones under the already bad average for lifespan. A 12 month early upgrade that is rarely being used, is very different from a cost perspective than one that’s being frequently being used. The carriers need their customers on an extended warranty, 3rd party warranty or insurance if they are not going to end up having to bundle this into their own costs. I think AT&T is trying to avoid having to bundle this in.

  216. @CD-Host:

    No, they’re vastly more popular because most of the transparent plans are more expensive for many use cases. But this is not a failure of transparency. It is because the carriers have been scared of transparency.

    Well first off the transparent plans buy services wholesale and resell them.

    This is historically true, and in agreement with what I said. The carriers haven’t historically engaged in direct consumer transparent pricing, because they wanted to relegate dealing with high credit risk consumers to third-tier vendors.

    The same way that buying all the parts in a car plus its assembly is just called “buying a car” because a non-transparent solution is a much better deal for most people.

    Buying a car is often non-transparent, but for different reasons. The fact that you’re buying a bundle has nothing to do with transparency. Saturn used to sell cars with pretty good transparency.

    Now, what evidence do you have that carriers are “scared” of transparency? If that were the case then why offer it their corporate customers?

    You can be scared of something, yet do it when you have no choice for competitive reasons. If they weren’t scared of transparency, they would offer more transparent consumer pricing.

    There is nothing that prevents transparent pricing on a basket of services. And most of the postpaid carriers offer different baskets that allow the customers to pick and choose what they want in their monthly price. For everything except the phone subsidy.

    No the postpaid don’t offer transparent baskets.

    They don’t offer very much granularity in their plans, but the pricing is relatively transparent except for the subsidy.

    But of course they are never going to unbundle the phones subsidy for the reason I’ve discussed above.

    I just showed you an article that said that prepaid is at 25% of the market and heading to 33%. Looks like they are unbundling it to me. They are just doing it as slowly as possible to reduce disruption.

    You obviously haven’t been paying attention. This is absolutely nothing new. Prepaid carriers have been subsidizing phones for years, distorting the market so badly that they have to get suspect laws passed and enlist the aid of armed government agents in order to thwart arbitrage.

    I’m not sure how these are “suspect laws”. Phones are regulated devices, you aren’t allowed to tamper with them. And what’s legal for individuals certainly isn’t allowed for commercial entities. I don’t know how “armed government agents” comes into play. These people are being charged with property crimes, not assassinated, only if they resisted would arms be used.

    That’s complete bullshit. If I own a phone, I can sell it to whoever the fuck I please. Obviously I’m not considered to own one of these phones. And if you don’t understand the connection between armed government agents and being thrown in PMITA Federal prison, you’re either naive or trolling.

    So I think a case needs to be made that customers actually prefer this system given that when we conduct a controlled experiment they seem to go for complex packages.

    No, a case can be made that only crap phones have been available on prepaid, that you can get good prepaid voice with crap data or vice-versa, but that the carriers have deliberately failed to put it all together.

    That’s simply not true.

    That’s a laughable assertion. You obviously haven’t been looking at the phones that were available on prepaid until recently.

    What was true was that until the last few years prepay often didn’t have much if any data. But most customers until recently had light data usage and bought dumb phones. Its only been in the last few years that smart phone usage has surged. And lagging slightly behind the postpay market the prepay market is offering data.

    The demand was there. It is just now being filled. This is not “lagging slightly;” it’s lagging by years, and not because of demand — that’s always been there.

    If the issue were just the unavailability of high end data plans, then we would expect to see postpay getting almost all the data customers and prepay getting almost all the dumb phone users. But instead we see a break between prepay and postpay having far more to do with years in school completed not choice of device.

    That demographic split has been changing dramatically. It used to be that poor people got prepaid because their credit sucked or because they couldn’t afford to spend much. The prepaid offerings facilitated this, with high per-minute usage, but low minimum minutes. Now, you can get much lower per-minute if you commit to more minutes per month. But you still can’t easily get, e.g. lots of voice with occasional data.

    There are two $30 charges here, I’m not sure which you mean.

    If you add a MiFi device, it will cost you $30. You can do that for a standalone prepaid plan for less than 5 bucks/month for low data usage. Why should it cost more than a couple of dollars to add a data device to a preexisting plan?

    CD: So I see considerable counter evidence that “fair transparent pricing promotes use”.

    I suppose that’s true if you think $30/month to add a MiFi device (without getting any additional data) is “fair.” This is why I think you must be an industry shill.

    I think the carriers are absolutely correct in their belief that this is false. I certainly don’t think it is reasonable to just assume this.

    We’ll never know until they try something fair, will we?

    Yeah, but you’re the same guy who said “There has never been any doubt that consumers given the choice would buy less expensive phones than they need. ” so please forgive me if I don’t put too much stock in your ability to parse the evidence or think clearly.

    I understand that you think arguments of the form “you’re a poopy head” are actual valid.

    This is not a “poopy-head” argument. It’s really pretty fundamental.

    But you have yet to refute the above point.

    It needs no refutation. It is not even wrong.

    I had an entire post where I addressed this. You quite proudly announced you weren’t reading it, because it offended your presuppositions that customers always make choices that are in the their best interests when given the opportunity.

    I’m sorry, but this is such a serious disconnect that you’d probably be much better off posting on a non-libertarian blog.

    Just pick a country and pull the data on average spending per person on the postplay plans vs. sims sales. Read the earnings reports for Telefonica and Vodafone they tried cutting subsidies and total revenue fell horribly. People enjoyed their phones less and usage dropped. This year in the Netherlands there was a 3.3% growth in the customer base but a 2.7% drop in revenue (total not per customer) a year after cutting subsidies.

    Those numbers are meaningless without more data. For example, if AT&T subsidizes an iPhone customer to the tune of $400 for 20 months, and the customer is paying $80/month, the revenue could drop by 25% and the profit would be the same without subsidy.

    Carriers hate, hate the distortion to their relationships caused by selling handsets.

    They used to love it. Back before iPhone. The ability to lock customers in for two years on an inflated plan was well worth $100 or $150.

    That article you pointed to with AT&T customers who spend $100 / mo or more being upset they couldn’t upgrade every 12 mo is a perfect example of the problems the handset business causes. The only reason carriers are in the phone business is because the alternative is much worse.

    If what you say is true, then they would have given discounts for not subsidizing handsets a long time ago. So I don’t believe it. T-Mobile is the only carrier doing this now, and they’re desperate to try anything to get new customers because they don’t have the iPhone.

    and your US evidence is severely flawed, because until recently, postpaid “all you can eat” pricing was not much more than the next lower tier pricing, and prepaid “all you can eat” pricing was non-existent.

    All you can eat is not transparent pricing. Transparent pricing is a per byte charge.

    Actually, all you can eat is much more transparent than per-byte charges. But don’t take my word for it. (a) look up the definition of transparent pricing; and (b) think carefully about how you don’t have a clue how much data you are going to use when you visit a webpage.

    The prepaid carriers are buying their data blocks based on data consumed not the number of customers. This is another example of where you are contradicting yourself on customer preferences for transparency.

    You’re conflating multiple things. The customer doesn’t give a flying fuck about the arrangement between his prepaid provider and the carrier. The customer would be quite happy to buy prepaid from the carrier and cut out the middleman and these strange arrangements, if the carrier gave him what he needed.

    As an aside, I don’t agree with you that people like “all you can eat” pricing, I think they are much happier having tiered pricing for data they way they used to have tiered pricing for minutes.

    I never said that people liked current all you can eat pricing. They love all you can eat service, if the price is right. You are right that people wouldn’t mind tiered pricing, but they hate it the way it is currently implemented. What they really want is for the web to keep working after they hit their cap, without getting gouged for the data. AFAIK, only T-mobile offers this — ‘x’ GB of fast data, then all you can eat GB of slow data. What would really be awesome would be to be able to pay to accelerate data for a day.

    I think the carriers in the last 4 years have been responding to customer wants in moving towards a much fairer and frankly more transparent per gb model (though I agree that $10 per gb for AT&T is much too much margin).

    (a) Customers don’t want this; and (b) it’s less transparent, not more. See above.

    As for some carriers cutting subsidy last year carriers increased their subsidy heavily.

    Yes, because Apple has them in a prisoner’s dilemma. But the customers are helping them out of this by switching to prepaid in droves. And AT&T is cutting back as much as they can according to all reports. Let the hangover begin.

    OK but you were saying the opposite that the trend was towards less subsidy.

    No, I didn’t. I agreed with your assertion that “last year” (e.g. 2011) “carriers increased their subsidies heavily.” Last year, Verizon got the iPhone and AT&T moved to counter, and then later in the year Sprint got the iPhone.

    If we agree they are at a much higher level than 2 years ago than that’s not a trend towards cutting.

    http://www.businessweek.com/news/2012-08-07/deutsche-telekom-gets-u-dot-s-dot-relief-as-rivals-curb-phone-subsidies

    And the trend of customers moving to prepaid reduces the subsidy as well.

    If we agree they are at a much higher level than 2 years ago than that’s not a trend towards cutting.

    But we didn’t agree.

    Further those high subsidies are not just for Apple, the Samsung Galaxy is doing well as well as it is because of the high subsidy. Verizon is not backing off their subsidy levels at all, they restructured their pricing to institutionalize them.

    When a carrier offers a Galaxy for the same price (or at Sprint, more) than an iPhone, they are supplying a smaller subsidy. This is pretty fundamental. They are trying to ease their way out of the prisoner’s dilemma. And the customers are helping them by switching to prepaid in droves.

    And we are agreeing that many prepay carriers are increasing their subsidy.

    No, we didn’t agree on this. At all. How’s that reading comprehension going for you?

    I think what’s fair to say is that AT&T let their subsidy get out of control and they are cutting.

    At least we agree on something.

    Apple’s pricing is Europe is often much higher than it is in the USA, even including compensating for VAT.

    Amazon UK has unlocked iPhone 4S 32GB starting at 550 GBP At a 20% VAT rate, that would be 458 GBP, or 715 USD. In the US, they start at 750 USD.

    Are you disagreeing with my “often” or just giving one example to show it isn’ always? UK is a market where the iPhone does well. Pick one where it doesn’t. That’s where you see higher prices.

    You made an unsupported assertion, I found a counter example, and now I’m supposed to find a different example to help you prove your point? Sorry, not my job.

  217. @CD-Host:

    Just for grins, I found the same iPhone 4S 32GB on the Spanish Apple store for 700 Euros. Spanish VAT is 18% (but going up in September), so that’s 593 Euros before VAT, or 732 USD. Seems right in line with the other prices, but what do I know?

    BTW, according to that Kantar data, iOS only had 2.8% of the smartphone sales in Spain last quarter. I hope that meets your definition of “not doing well.”

  218. @CD-host
    “So when I go 100 miles in Europe I have to either get a new sim or pay something like $.60 / minute. ”

    That was years ago. This has been brought down. Now it is 29 cents/minute.

    See the new tariffs:
    http://ec.europa.eu/information_society/activities/roaming/tariffs/index_en.htm

    Eurotariff maximum price while abroad
    Date – Making a call – Receiving a call – Sending an SMS – Receiving an SMS – Mobile Internet

    Summer 2009 43 cents 19 cents 11 cents free –
    Summer 2010 39 cents 15 cents 11 cents free –
    Summer 2011 35 cents 11 cents 11 cents free –
    Summer 2012 29 cents 8 cents 9 cents free 70 cents/MB*

  219. @R. Duke:

    This can’t just be about subsidies. Yes, iPhone is expensive, but AT&T has managed the cost of iPhone for 5 years now. Sprint and Verizon (and several regional carriers) have, too.

    Yes, it’s mostly just about subsidies. AT&T managed very well when they could charge a premium, before the other carriers had it. They were suffering a bit on EBITDA when they countered Verizon at the start of last year, but that really just helped to maintain the status quo.

    All hell broke loose when Sprint got the iPhone too — Verizon has only had the iPhone a year and a half; Sprint less than a year, a couple of regionals for the same amount of time.

    So, now, from AT&T’s perspective, the iPhone is not a differentiator. They can’t maintain higher margins because they are the only one that has it. So it’s silly to keep giving Apple money without getting anything in return. That’s why they want to moderate the subsidies — give it where they need to to keep high-dollar customers happy, but steer most people to other phones. So long term, it’s also about control — reduce the leverage Apple has on customers, so they can’t dictate terms.

    There is an imminent launch of the next-gen iPhone. One possibility is that AT& doesn’t like the terms for this new iPhone.

    More likely, they don’t like the capabilities. The new iPhone will probably run on any carrier. Apple’s trying to commoditize the carriers; the carriers are reciprocating by trying to commoditize Apple.

  220. I’ll admit I’m out of date on European pricing. With the fall of the Euro down to 1.2 from 1.4 or 1.6 when the iPhone first came out the European prices are getting reasonable (minus the VAT).

    As far as customer assumptions and libertarianism. I can agree that if you assume that customers are capable of understanding the implications of their phone choices and are responding to this information correctly you arrive at different conclusions. I would agree that psychological data, the marketing data, customer behavior… provide too much counter evidence for that. If you see that as disproving Libertarianism, I can see your point though I think it is a bit too strong. Once could still be a Libertarian and believe that many if not most regulations are advantageous, they would just believe that the sum total of all regulation is harmful. But I’m not here for politics.

    But regardless of what you think the carriers should believe, they are not Libertarians. They do not believe that customers are acting in a way consistent with their own rational self interests if they were fully informed. They have no problem believing that steering the customer towards a solution that is more mutually beneficial arrangement. It makes no sense to assume they are Libertarians and share your philosophical bent when analyzing their behavior.

    And what kind of a Libertarian uses terms like “shill for the carriers”?

    That’s a laughable assertion. You obviously haven’t been looking at the phones that were available on prepaid until recently.

    Again, as per my last post. I point to the Vertu which as far as I know are the most expensive phones made were available on prepay. Prepay didn’t have data, but data plans were expensive and the phone subsidy, relative to the cost of phones like Palm, was low. 5-10 years ago the data market looked a lot like what you think it should be like and notice how unpopular data was then.

    Those numbers are meaningless without more data. For example, if AT&T subsidizes an iPhone customer to the tune of $400 for 20 months, and the customer is paying $80/month, the revenue could drop by 25% and the profit would be the same without subsidy.

    I assumed you were aware… Telefonica had to eliminate their dividend their profits have crashed so badly. No these revenue drops per customer have been disastrous.

    Actually, all you can eat is much more transparent than per-byte charges. But don’t take my word for it. (a) look up the definition of transparent pricing; and (b) think carefully about how you don’t have a clue how much data you are going to use when you visit a webpage.

    Unless I’m paying a very high data rate the data I use on a webpage is not the relevant figure. For most people on smartphones with 100mb+ data plans the issue is usage per day for classes of activities. How much they burn per minute watching a TV show, how much they use per hour on pandora… and those numbers are published. Further the carriers try and provide calculators to help people figure that out, and also they provide daily updates of data usage. Perfect no, but a good attempt to keep customers informed about the data implications of their behavior yes.

    That’s complete bullshit. If I own a phone, I can sell it to whoever the fuck I please. Obviously I’m not considered to own one of these phones.

    There are lots of things in life you own you can’t sell to whomever you want. You can buy drugs from a pharmacy but if you try and resell them you will do hard time. Your can own your house but the state regulates the transfer of deeds getting quite involved in the process including terms of sale. To pick an example like your phone, I can own a home that is unsafe in NJ, but I cannot sell it to anyone but a contractor agent licensed to take on unsafe properties. You can own your car, but the state regulates the transfer of deeds, and quite frequently does refuse transfers for people.

    As for a tracfone heck I’m not even sure you do own them. You might just be licensed to use them with their service.

    They used to love [subsidy]. Back before iPhone. The ability to lock customers in for two years on an inflated plan was well worth $100 or $150.

    They didn’t like it with Blackberry / RIM either. I’d say that was the transition point recently. If you go back further though, when plans were cheap the cost of the sell phone subsidies was a major complication on selling services. A $10 or $20 / mo plan with a one year contract and a $150 phone subsidy makes things very complex. But it was those large subsidies (relative to plan prices) that got America to move to cell phones en-masse. And it is this round of subsidies that is getting America to move to smartphones en-masse. Certainly the carriers liked it better when the subsidy was small, but the lock-in still worked but they didn’t expect that to last.

  221. As for CDMA vs. GSM. There are real advantages to both. GSM offers global (x asia) phones. CDMA offers better signal on highway driving. Verizon’s entire marketing campaign for years “can you hear me now” is all based on the advantage of CDMA over GSM. I’ve been to Europe and used your systems. I like the fact that I can jump on a carrier for about $10. But because you don’t have competing radio standards (i.e. CDMA) I end up using a Nokia phone that feels like the kind of phone I had in 2002 to do it. I’d love to be buying data from someone like Orange and using my iPhone.

    Arguing the advantages of CDMA vs. GSM is like arguing the advantages of the internet vs. AOL or MSN. CDMA is not a universal standard; it is used only for vendor-locking capability. GSM is a universal standard.

    It’s why I laugh when libertarians like Eric wax rhapsodic about how soon, very soon, market forces are going to reduce the carriers to dumb bit haulers and give true freedom of choice to end users. That dream has already come true in Europe, it came true like a decade ago and it happened because of government regulation and standardization, not despite it! It’s like those people who think that any day now the Year of the Linux Desktop will be upon us. Yes, Linux desktops are pretty good — compared to what we had in 1999. But the rest of the world has moved on.

    Oh, and if you want to use your iPhone on Europe’s networks, get a GSM iPhone and swap your SIM cards as necessary.

  222. @patrick
    CD: That article you pointed to with AT&T customers who spend $100 / mo or more being upset they couldn’t upgrade every 12 mo is a perfect example of the problems the handset business causes. The only reason carriers are in the phone business is because the alternative is much worse.

    Patrick: If what you say is true, then they would have given discounts for not subsidizing handsets a long time ago. So I don’t believe it. T-Mobile is the only carrier doing this now, and they’re desperate to try anything to get new customers because they don’t have the iPhone.

    What? I’m saying the opposite. Carriers give subsidies because subsidy encourage people to buy an appropriate phone and thereby encourage usage. Without the subsidy people buy too little phone, for the amount of service they need/want to consume. When they try and use their phone/service combination it is not success. Thus to restore balance what frequently happens is they reduce their purchased service levels. Carriers don’t like that. So they put people in expensive phones and that way the customer has a satisfying experience. The carrier’s goal is for their customers to buy the maximum amount of minutes/sms/data they are willing to. To get them to do that they have to buy them the phone. They don’t like being in the phone business, but they like customers spending their money on stuff other than phone service even less.

    I never said that people liked current all you can eat pricing. They love all you can eat service, if the price is right.

    Of course. Everyone likes unlimited amounts of free stuff. But that’s not really relevant. If was assume data cost about $5gb to provide the carriers can do one of:

    a) They can charge about $5gb + margin. Tiered pricing.
    b) They can use other fees to offset that $5gb and charge a lower price for the service than what it costs to provide.
    c) They can have high data customers get subsidy from low data customers and charge a uniform price.

    Those are the options.
    When data plans first came out there weren’t many high data customers so (c) was a good model. As phones got better data usage increased and (b) became the model. As phones got better customers started using messaging / voice services to offset the cross subsidy so now carriers are moving to (a).

    I understand completely that people who use lots of data like the idea of other people paying their data usage. But that is not to the benefit of most customers. Most customers do fine with tiers. And as data costs come down, if they come down, we might start to see plans like we see for minutes or sms prior to unlimited.

    Fast + slow is a complex cap. Probably customers do like fast+slow more than a hard cap and I see no reason more carriers won’t offer this solution.

    Finally on the shift to prepaid. You presented an article that had 2 analysts speculating that the prepaid share of the market will rise from 25% to 33%. From that article you are now speculating that the shift will be a majority or supermajority of the revenue influencing the high end, like the Samsung Galaxy / iPhone customers. I think the shift from 25 to 33% is right. The carriers have finished shifting their feature phone customers up to being smartphone customers. Now they need to lean into their dumb phone customers. That’s going to drive the bottom towards the prepay carriers. It wouldn’t shock me if the prepay market were to hit 40 or even 50% of subscribers; though nowhere near that in terms of revenue. But that doesn’t do anything for the economics of the top tier. You haven’t presented evidence for that. The market for prepay looks like it always has but a bit bigger.

    ____

    In terms of my opinion of where this goes. There is a bit of split here in terms of interests. Verizon and AT&T’s retail business is doing well. Sprint’s wholesale business is doing well but their retail not as much. So I suspect that Verizon and AT&T will have their MVNOs on overcrowded and poorly performing 3G while they shift their customer base to 4G with much faster data plans at higher rates. Again emulating what minutes plans used to look like for prepay. And assuming they can get more spectrum as prices come down for the data they will be able to scoop these prepay customers back up.

    Sprint conversely doesn’t need to protect their retail base as much and so might offer the same data to their wholesale as their retail. The effect will be that Sprint MVNOs might very well be able to offer the best experience which means they capture the high end of the prepay market, which allows them to pay higher carrier fees which makes Sprint wholesale even more successful relative to retail… What then? I suspect though that this is where Sprint hits a barrier. For the same reason Verizon retail customers don’t switch to Sprint retail, i.e. they are willing to pay for a more reliable network, I don’t think Sprint MVNOs will be able to capture Verizon customers. Though Sprint will help to keep Verizon’s prices in check. As far as AT&T, I suspect by then they are going to have picked up t-mobile’s network either via. Deutsch working it out with DOJ or in bankruptcy and have a better network as well. And that is the market in 2016 according to my crystal ball. But I can’t see either Sprint or T-mobile taking part in more spectrum auctions or not wanting to sell the spectrum they have.

    So no i don’t see a massive shift. I see a surge in prepay based on AT&T and Verizon pressuring their customers and Sprint being competitive short term. The US market ends up with a duopoly offering a wide range of innovative low end services via. prepay and higher end services via postpay.

  223. @CD-Host:

    I’m only going to address a couple of things and then agree to disagree.

    As far as customer assumptions and libertarianism. I can agree that if you assume that customers are capable of understanding the implications of their phone choices and are responding to this information correctly you arrive at different conclusions.

    Yes, I assume that. That’s certainly part of our disconnect.

    I would agree that psychological data, the marketing data, customer behavior… provide too much counter evidence for that.

    That word “agree” doesn’t mean what you think it means.

    If you see that as disproving Libertarianism, I can see your point though I think it is a bit too strong.

    It doesn’t at all disprove Libertarianism. Your interpretation of what is going on, that these government-monopoly-granted rent-seeking companies are acting in the best interest of the consumers by denying them what the consumers would obviously buy, given a chance, is completely wrong.

    Once could still be a Libertarian and believe that many if not most regulations are advantageous, they would just believe that the sum total of all regulation is harmful.

    Fewer regulations than you might think.

    But I’m not here for politics.

    As soon as you invoke the carriers’ behavior as a nanny-state public good, you are, actually.

    But regardless of what you think the carriers should believe, they are not Libertarians.

    Duh.

    They do not believe that customers are acting in a way consistent with their own rational self interests if they were fully informed. They have no problem believing that steering the customer towards a solution that is more mutually beneficial arrangement. It makes no sense to assume they are Libertarians and share your philosophical bent when analyzing their behavior.

    I’m not assuming anything like that, and if you read more carefully you would realize that.

    And what kind of a Libertarian uses terms like “shill for the carriers”?

    One who recognizes the carriers for the rent-seeking control freaks they are and who sees an apologist claiming this is a good thing.

    I’m done here.

  224. >That was years ago. This has been brought down. Now it is 29 cents/minute.

    Wow. Are there reasonably priced multi-country plans? Given how frequently it seems Europeans travel between countries (almost as frequently as Americans travel between states), I can’t imagine having to deal with roaming charges all the time. Even when regional plans were more common in the US they usually included 2 or 3 neighboring states at a minimum.

    >Arguing the advantages of CDMA vs. GSM is like arguing the advantages of the internet
    >vs. AOL or MSN. CDMA is not a universal standard; it is used only for vendor-locking
    >capability. GSM is a universal standard.

    GSM may well be a universal standard, and CDMA may well be used for vendor lock, but neither part of that changes the fact that there are parts of the US that would be completely without cell coverage if it wasn’t for CDMA networks because they are just too far from major population centers to make putting up a GSM tower worth while, or the terrain just makes GSM a lousy proposition. And even where there is GSM coverage, there are plenty of places where because of terrain features, CDMA is a far more reliable service. In fact, the company I work for specifically buys verizon because where we send some of our people, there is no GSM coverage.

    It’s also worth pointing out that while GSM may be a “standard”, it’s certainly not “Universal”, just ask T-Mobile customers how well their unlocked AT&T phone gets 3G service.

  225. @Jeff Read
    > Samsung is going down.

    Please. “Pixel by pixel” my ass. I read through the whole document. The essence of every page is: “Apple does X, which is good because Y. We do Z, which is bad because !Y. Find a way to make it better using Y.”

    There is even a page on home screen icons that ends with “make icons look less like Apple icons.”

  226. > Samsung is going down.

    Samsung is not going down. Samsung may well lose the case, be guilty of copyright infringement, and have to pay Apple a few $billion, but it’s not going to destroy them. (Though it will all but wipe out any profits they’ve made from smartphones during the last couple quarters.)

    If (when?) Apple prevails, it’s not about the damages. Samsung and other Android OEMs will have a much higher hurdle to cross in order to not infringe various Apple patents. Apple will establish a larger gap in front of the “fast follower” of Android. Do not forget that HTC and Motorola (it’s not over) are also being sued by Apple for patent infringement.

  227. @Lars:

    Samsung is not going down. Samsung may well lose the case, be guilty of copyright infringement, and have to pay Apple a few $billion, but it’s not going to destroy them.

    Agree completely, although (as with OraGoogle and ScoIBM, I doubt the final tally will be anywhere near a few billion).

    While Samsung and the US have legal skirmishes going on all around the globe, this particular skirmish, in front of this particular possibly-but-not-known-for-sure-biased judge, only covers products that US patents cover — in this case, those products sold in the US.

    While the US accounts for a third of Apple’s smartphone business, it accounts for less than a tenth of Samsung’s, by volume. Probably more than that in profit, but Samsung can afford to withdraw from the US. Hell, until the Galaxy S3, the US was last on the list of their release markets, and there are a lot of nice Samsung smartphone/tablet thingies that are still really difficult to get here.

    The reason that the US moved up on release schedule on the S3, is that Samsung finally managed to pull an Apple and eschew carrier customization. So it will definitely suck for Samsung to lose this case, but it won’t kill them.

  228. After following some of the links in that article and another one it links to, I think I might have to try out ting:

    https://ting.com/plans

    I love the concept. Unfortunately there are 2 main problems. First is that this uses Sprint’s network which is truly horrific in my area. Second is that data is *really* expensive. (Even if Sprint’s network were usable where I am, for what I actually consume I’d pay double on Ting compared with what I pay now on Tmo.)

  229. Steve Balmer considers Android a threat on the desktop in consumer. One of the major strategic reasons for the shift to Metro (Win-8-UI) was to be able to counter these Arm based systems. If we assume that:

    a) Windows users are highly cost sensitive
    b) Windows users can be moved over the next decade off their application stack
    c) The trends towards computer literacy decreasing among the young continue, so that interfaces need to be simpler

    Its hard to see how something like Android doesn’t win. The whole Microsoft strategy is to extend the desktop stack quickly to offer a feature rich stack of high power applications consumers can’t do without even on mobile.

    The interesting this is that even if Microsoft is successful, success means driving the cost of x86 Windows hardware up. That’s going to create a substantial windows for x86 desktop systems or Arm systems at lower price points, something that until recently Microsoft wasn’t willing to tolerate (see their reaction to Linux on Netbooks). So I see Android or something similar getting desktop share regardless of Microsoft’s success. And while I think Microsoft’s strategy is a good one, I question their ability to execute given the competing interests inside the company.

  230. @Greg:

    First is that this uses Sprint’s network which is truly horrific in my area.

    Yes. It’s absolutely expected that the innovations in marketing will happen via an underdog networks. There’s no way in hell that AT&T or Verizon would support anything like this at the moment. T-Mobile just might.

    Second is that data is *really* expensive.

    The phone companies still get an inordinate amount of revenue for voice. Sure, everybody talks about how all the profit comes from data, but that’s true when the data is an expensive adder on top of the voice. If all the voice business went away, they’d be hurting.

    So, when a carrier like Sprint is dealing with an upstart MVNO, they are really careful to make voice/data arbitrage not quite worth it. At the highest tiers, ting charges 2.25 cents/Mbit, and 2 cents/minute, and with, e.g. a 13kbit/s codec, that would be 1.75 cents/minute using something like google voice, and then you still have to get to the PSTN.

    At half that rate, arbitrage starts to make some real sense, and Sprint doesn’t want to encourage that.

  231. Samsung is not going down. Samsung may well lose the case, be guilty of copyright infringement, and have to pay Apple a few $billion, but it’s not going to destroy them.

    It’d be hard to destroy a company as diversified as Samsung. But they will lose the case and lose it hard, and it will severely undermine their smartphone strategy, that is until current Galaxy models are pulled off the market and new ones butt-ugly enough to not be possibly confusable with an Apple product are shipped to retailers.

  232. Its hard to see how something like Android doesn’t win.

    Apple lawsuit.

    In order for something like Android to win long-term, it will have to blatantly copy from iOS a hell of a lot less. Which probably means being clumsy to use.

  233. In order for something like Android to win long-term, it will have to blatantly copy from iOS a hell of a lot less. Which probably means being clumsy to use.

    I think there are lots of phone GUIs. The actual app interface isn’t copied, its just the main GUI. For example, I bet Google could buy the rights to Nokia’s swipe for very little. That’s very much unlike iOS and arguably more advanced than iOS. Its especially better suited for multitasking.

  234. > only covers products that US patents cover — in this case, those products sold in the US.

    What you apparently don’t understand about patent law is that Apple more than very likely filed these as foreign patents, too. Both NAFTA and GATT/WTO have large effect here as well.

    Granted: not so much in Korea, but in Europe and North America, fer sure, d00d!

  235. @Jeff Reed> Which probably means being clumsy to use.

    Jesus… Jeff, seriously?

    I’m an Apple fan, and even I don’t believe this. The Perl and Python people always quote TMTOWTDI. The same applies here. Certainly Google and its OEMs can’t rip-off patented technology and techniques, but they can (and eventually will) design around the patents.

    Perhaps Android won’t have slide-to-unlock (etc. etc.) I’m sure it will have something “good enough”.

    And that’s the reality of it. The Best (iOS, BSD Unix, Lisp machines, SmallTalk) will always be the enemy of “Good Enough” (linux, Android, Java, etc.)

    Same as it ever was.

    So it shall always be.

  236. @Patrick> Samsung can afford to withdraw from the US

    Yes, but can Android afford to have Samsung withdraw from the US market?

    *that* is the question.

    HTC is already on the ropes. Motoogle is waiting in the wings, for sure, but Motoogle phones will lay waste to the Android ‘ecosystem’.

  237. @Jeff Read
    We have been promised the death of Linux and Android from the hand of the law from their inception. We are still waiting.

    Somehow, I suspect patent law was not intended to destroy technological markets. Because that is what Apple is trying to do: Prevent billions of people from buying a Smartphone. It seems the legal establishment shares this opinion.

  238. Somehow, I suspect patent law was not intended to destroy technological markets. Because that is what Apple is trying to do: Prevent billions of people from buying a Smartphone.

    Nonsense. Apple is suing Android which they see as taking ideas from them. They haven’t been suing: RIM for BBOS, Samsung for Bada, Nokia for Symbian Smartphones, Nokia for Windows Smartphones… Apple is making broad claims to the style of interface they created. The courts are going to decide what is too close. And if Apple wins then those Android companies are going to either change their interface or pay license fees to Apple. That’s all that’s going to happen.

    There are other ways to design a smartphone as the host of other interfaces proves quite well.

  239. @Lars:

    What you apparently don’t understand about patent law is that Apple more than very likely filed these as foreign patents, too.

    No, I get that. But they have to fight that in those different countries. With likely somewhat less biased juries. They’ve already been slapped down on the design patent in the UK.

  240. @winter> Somehow, I suspect patent law was not intended to destroy technological markets.

    Patent law offers a set of exclusive rights granted by a sovereign state to an inventor (or their assignee) for a limited period of time in exchange for the public disclosure of an invention. The rights offered permit the patent holder to exclude others from making, using, selling, offering for sale, or importing the patented invention during the term of the patent.

    In the case at hand, Apple disclosed several ideas, which the PTO found to be novel, non-obvious and useful. Patents were granted, and Apple is invoking its rights to exclude others (HTC, Samsung, etc.) from practicing the patents.

    There is a lot wrong with the patent system, but Apple is well within the current practice of patent law.

  241. @Patrick> They’ve already been slapped down on the design patent in the UK.

    That UK judge declared that there was no confusion, because the Apple tablet was “cooler” than the Samsung tablet. The EU patent was not declared ‘invalid’.

    The US version of the same patent was ruled valid by United States Court of Appeals for the Federal Circuit back on May 14th. The Court also ruled that Samsung infringed it.

    The ruling led to Judge Lucy Koh (the very same who various here have declared ‘biased’) to institute a nationwide sales ban on Samsung’s Galaxy Tab 10.1, despite her personal opinion that the patent was invalid.

  242. > And if Apple wins then those Android companies are going to either change their interface or pay license fees to Apple. That’s all that’s going to happen.

    Hmm. No.

    If Apple wins, they don’t have to license the patent to Android OEMs. They can decide they won’t allow Android OEMs to practice the patent. Unlike the patents invoked by Motorola, the patents in-question aren’t part of a standard, and aren’t subject to FRAND rules. Google or its OEMs could change their interface in an attempt to not infringe the patents, but some of them are quite broad.

    The likely effect is “no Android tables” for at least quite a while. The potential licensing revenue from these patents is not material to Apple.

  243. > We have been promised the death of Linux and Android from the hand of the law from their inception. We are still waiting.

    Linux, at least, has very strong friends. IBM, Sony, NEC, Phillips, Novell, etc. It’s not likely that a broad patent challenge to linux would do more than throw money at lawyers.

    Android is not in the same position, despite Google’s acquisition of Motorola and the membership of OHA.

  244. If Apple wins, they don’t have to license the patent to Android OEMs. They can decide they won’t allow Android OEMs to practice the patent. Unlike the patents invoked by Motorola, the patents in-question aren’t part of a standard, and aren’t subject to FRAND rules.

    That’s still being decided in Europe. European officials seem mixed if FRAND patents can be used defensively. Apple could easily find itself in a situation where failure to license its technologies under FRAND makes it lose access to technologies like 3G which are vital to its technologies. But ultimately Europe wants competition and what’s best for the consumer. Apple having a government enforced monopoly isn’t going to be in the public interest.

    European governments will feel free to whack Apple upside the head if they are unreasonable. Right now they believe Samsung is being unreasonable but that can easily change if Apple tries to shutdown the market.

    And Asia is going to be an even more hostile environment for Apple to try and assert this sort of one sided patent. That leaves the USA where Apple would be against: Google, Motorola, the carriers, the consumer electronics companies, Microsoft… No chance they get that sort of broad ban.

    Google or its OEMs could change their interface in an attempt to not infringe the patents, but some of them are quite broad.

    Apple’s claims are broad. What the court upholds on the other hand may not be so broad. For example I could easily see them saying that Apple owns the 4x(4+1) grid of icon format but not icon grids.

  245. > European officials seem mixed if FRAND patents can be used defensively.

    If this is true (big ‘if’), then both you and your “European officials” are confused about the purpose of standards-essential patents and FRAND terms for licensing same.

    If a patent is essential to a standard, then the holder gets a guaranteed income stream by agreeing to FRAND terms and participation in the consortium. The holder doesn’t get to pick-and-choose, that’s the non-discrimanatory part (the ND in FRAND), and the whole thing is covered by contract law.

    If the patent is not a SEP, then the holder is free to use the patent as a competitive advantage for the term of the patent.

    Those are the rules.

    > European governments will feel free to whack Apple upside the head if they are unreasonable.

    European governments are bound by GATT/WTO treaties, as is the US. You may wish to acquaint yourself with these before making similar assertions.

    As for Microsoft, have you forgotten that Apple and Microsoft have a broad patent cross-licensing arrangement? They’re on the same side in the Smartphone (and tablet) (patent) Wars.

    > What the court upholds on the other hand may not be so broad.

    I thought this implicit in my mention of some of Apple’s claims being quite broad.

  246. >Still waiting for that retraction.

    I’m actually not sure what I want to retract. There’s been a lot of ink squirted in the water by Apple partisans, but I’m not aware that the basic claim (Apple swiped industrial design ideas from a Sony design study) has actually been falsified.

  247. If a patent is essential to a standard, then the holder gets a guaranteed income stream by agreeing to FRAND terms and participation in the consortium. The holder doesn’t get to pick-and-choose, that’s the non-discrimanatory part (the ND in FRAND), and the whole thing is covered by contract law.

    Hold on a second. The promise is given to the European Telecommunications Standards Institute (ETSI) not to Apple. The ETSI has the right to determine if agreement to license is in the public interest. No one to the best of my knowledge believes this is automatic. Were the ETSI to indicate that they believed that Apple was not acting in the public interest they certainly can waive any obligation on Samsung’s part. As far as I know that’s never been questioned.

    What is being questioned is whether Samsung has the right on their own. In other words the contract is between Samsung and the ETSI, Apple is not automatically entitled to anything. The ETSI has found in previous cases that failure to reciprocate nullified a companies obligation to license. And the ETSI has consistently claimed that they get to determine what is reasonable reciprocation.

    The U.S. Federal Trade Commission has criticized the ETSI for being unfair to licenses and not allowing trade. Doing what you believe Apple would do, and disallow an entire class of products is not something Apple they have to the best of my knowledge ever advocated. As for GATT and WTO that’s an agreement between the ETSI and the US government. Apple doesn’t have any direct standing with respect to either. They would first have to get the government to agree with their claim that they should be entitled to refuse to license technology which is unlikely.

  248. @Lars:

    They’ve already been slapped down on the design patent in the UK.

    That UK judge declared that there was no confusion, because the Apple tablet was “cooler” than the Samsung tablet. The EU patent was not declared ‘invalid’.

    OK, if you want to be a pedantic asshole, they’ve already been slapped down on the design patent NOT BEING INFRINGED in the UK. I thought it was pretty obvious what I wrote was in conjunction with Samsung v. Apple, but whatever.

    BTW, if a court finds that a patent isn’t infringed, they sometimes don’t even need to reach the issue of whether it is valid or not.

    Geez.

    The US version of the same patent was ruled valid by United States Court of Appeals for the Federal Circuit back on May 14th. The Court also ruled that Samsung infringed it.

    OK, Mr. Pedantic Asshole, if a court has “ruled” (as in, a final judgment) that the patent is infringed, exactly what is the jury for?

  249. > but I’m not aware that the basic claim (Apple swiped industrial design ideas from a
    >Sony design study) has actually been falsified.

    Given that there was no “Sony design study” and the article in question spends at least a portion of time talking about how the iPod has influenced Sony’s newer designs, how do you figure the original claim hasn’t been falsified?

  250. @Patrick> if a court has “ruled” (as in, a final judgment) that the patent is infringed, exactly what is the jury for

    A jury trial is a legal proceeding in which a jury either makes a decision or makes findings of fact which are then applied by a judge. This is distinguished from a bench trial, in which a judge or panel of judges make all decisions.

    Availability of a trial by jury in American jurisdiction usually depends on the availability of a jury trial in a particular type of case under the common law of England at the time of the American Revolutionary War, which allowed jury trials in its courts of law but not in its courts of equity. (This despite the fact that jury trials are no longer available in the vast majority of such cases under modern English law.)

    In practice, this translates roughly as: jury trials are available in most US civil cases seeking monitary damages via tort or contract law theory, but are rarely available when non-monetary damages, such as an injunction or declaratory relief are sought.

    The simpler way to think of this is that in legal actions the term matter of law is used to define a particular area that is the responsibility of the court. Matters of law is distinguished from matters of fact. All questions concerning the determination of fact are for the jury, though a judge may determine the facts if a jury trial is waived or is not permitted under the law.

    Pedantically yours,

    Mr. A.

  251. @CD-Host> “The ETSI has the right to determine if agreement to license is in the public interest. No one to the best of my knowledge believes this is automatic. Were the ETSI to indicate that they believed that Apple was not acting in the public interest they certainly can waive any obligation on Samsung’s part. As far as I know that’s never been questioned.”

    You appear to be misinformed, perhaps because your education is at the hands of a biased media or mindset. I humbly suggest you do more reading from original sources

  252. @Lars
    “European governments are bound by GATT/WTO treaties, as is the US. You may wish to acquaint yourself with these before making similar assertions.”

    Since when are the USA bound by a treaty? They have flaunted every economic treaty they signed when it suited them. Very often, the non-US partners are bound by a treaty the US never even bothers to ratify.

    Anyhow, the EU has broad powers to act when some party gets dominant market power. As Apple has a majority in the “Tablet Market”, any attempt by Apple to restrict access to that market will be ground for action. Action can be a percentage of global revenue. Up to 10% if a party repeats an offense.

  253. @winter> Anyhow, the EU has broad powers to act when some party gets dominant market power.

    Well understood, mon ami. Article 102 TFEU prohibits the abuse of a dominant position which may affect trade and prevent or restrict competition.

    This is why the European Commission has opened formal antitrust proceedings against both Samsung
    and Motorola/Googlefor FRAND abuse.

    Non-FRAND patents are not subject to the same anti-trust regulation.

  254. @Lars
    “Non-FRAND patents are not subject to the same anti-trust regulation.”

    That was the defense of Microsoft too. And they lost big time.

    Any party with dominant market power can be forced to allow competitors into the market. It is completely irrelevant on what legal theory the power is based. FRAND can be forced upon such a party, at prices determined by the courts. As MS found out.

    It is the same legal system that is used to open up phone and cable networks to competitors.

  255. @Lars:

    A jury is currently deciding if Samsung’s rectangles are too round. As you admit, this is a fact matter. No permanent injunction can issue until this has been decided. AFAIK at one point Koh issued a preliminary injunction, but the appeals court stayed it.

    Unless you have some evidence to the contrary, this suggest that your assertion that “the Court also ruled that Samsung infringed it” is simply incorrect — the court may have ruled that it was LIKELY infringed, but it is up to the jury to determine whether it is actual infringement or not.

    Hence, my question: if a court has “ruled” (as in, a final judgment) that the patent is infringed, exactly what is the jury for?

    Which you managed to miss the point on completely and give me a lecture instead. Can you point to some evidence that a US court has issued a final ruling that Samsung infringed Apple’s orthogonally curvilinear patents? (And if you think you found such evidence, then what the heck is the jury up to? Why are they needed?)

    BTW, it’s OK to be pedantic if you have something useful to add to the discussion. A naked assertion that a court has already ruled that Samsung infringed Apple’s patent, which runs contrary to everything I have read, will certainly be a useful addition to the discussion if you provide some evidence this is true. Otherwise, you’re simultaneously being pedantic and wrong, which isn’t a very good combination around here.

  256. @Lars

    I read through that and I’m not seeing where you believe it contradicts what I said. Your original claim was that Apple had some sort of broad rights and instead I indicated the rights to require actions sit with the ETSI. That document doesn’t contradict anything other than giving the general spirit of FRAND.

    Certainly the ETSI has agreed to defensive suspensions. And the ETSI would be the one to determine whether Samsung was engaging in a defensive suspension or not. Apple can claim that Samsung’s patents are narrow to very specific technologies while their patents are broad on look and feel. But that’s a claim. The ETSI could hold that Samsung’s patents apply to “phones or radios” and that Apple in refusing to grant terms on its patents is failing to offer to pay FRAND terms.

    Obviously if you assume that:
    a) Apple wins every point of fact
    b) The courts and regulatory bodies interpret every subtle area as Apple would like them interpreted
    c) The courts and regulatory bodies then apply these rulings blindly, with no regard to the implications on customer choice. That is they act as if they were interested in these rules in the abstract and not in the particular.

    Then yes the situation is pretty good for Apple. But those are the assumptions you are making. The fact is there are really subtle areas about the standards and on some of the more subtle areas Apple is in a bit of a pickle. There is plenty of wiggle room for European regulators to do what they generally want to do: which is ensure customer choice and bring Apple into the fold. Winter is absolutely right, they have a long history of doing that.

    If the situation were 100% clear then fine. Its not.

  257. @CD-Host> Certainly the ETSI has agreed to defensive suspensions. And the ETSI would be the one to determine whether Samsung was engaging in a defensive suspension or not.

    If a standard acquires market power (most don’t), a patent owner who requires broad grant backs in the form of reciprocity or broad defensive termination provisions in exchange for its license of essential patent claims to implement such standard arguably may not be offering a FRAND license.

    With regard to defensive termination, if the standard has market power and if the trigger for suspension is much broader than the actual license grant, it is not clear that the term is FRAND. For example, if the defensive suspension is triggered by the implementer asserting any type of IPR against the patent holder (or even any litigation claim on any topic), then arguably the patent holder is receiving a free-of-charge cross-license to the implementer’s entire IPR portfolio in exchange for a license to just the patent holder’s essential claims vis-à-vis a standard.

    As with other reasonableness tests, these and other questions can be resolved through litigation in the relatively rare circumstances where business discussions fail (and the risks for each side inherent in such litigation of course inform the business discussions).

    Thus the lawsuits.

  258. @Patrick> Unless you have some evidence to the contrary, this suggest that your assertion that “the Court also ruled that Samsung infringed it” is simply incorrect — the court may have ruled that it was LIKELY infringed, but it is up to the jury to determine whether it is actual infringement or not.

    True, but both the Federal Appellate and District Courts determined that Apple was likely to succeed on the merits. The Federal Court also declared the patent ‘valid’. Read it for yourself.

    http://ia700609.us.archive.org/14/items/gov.uscourts.cand.239768/gov.uscourts.cand.239768.1135.0.pdf

  259. CD-Host> The ETSI could hold that Samsung’s patents apply to “phones or radios” and that Apple in refusing to grant terms on its patents is failing to offer to pay FRAND terms.

    Are Apple’s patents Standards Essential Patents? If so, which standard(s)?

    As for ETSI acting in the public interest:

    “[a]lthough the public interest inquiry is not necessarily or always bound to the likelihood of success o[n] the merits, . . . absent any other relevant concerns . . . the public is best served by enforcing patents that are likely valid and infringed.”

  260. @Lars
    EU anti trust is much less on legalities and much more focussed on ensuring competition. If a party with market power tries to impede competition in any way other than lower price for higher quality, that is ground for legal action.

  261. @Lars:

    True, but both the Federal Appellate and District Courts determined that Apple was likely to succeed on the merits.

    No, the appellate court ruled that the district court hadn’t done enough work to determine the opposite, and remanded.

    The Federal Court also declared the patent ‘valid’.

    No it didn’t.

    Read it for yourself.

    I did. Did you? Now is my turn to be pedantic:


    In the absence of a qualifying primary reference, we hold that the district court erred in concluding that there is likely to be a substantial question as to the validity of the D’889 patent. [6]

    6. Our holding that the alternative prior art references do not invalidate the D’889 patent is limited to our evaluation of the record at this preliminary stage of the litigation.

  262. Winter, I’m sorry I dropped off this for a while to do, well you know, stuff in the real world :-)

    @Winter
    >MS controlled what hardware was developed and what not.

    No they didn’t. They might have influenced it, but many people made many different products without kissing Bill Gates ring. Sure, MS gave license discounts for various actions that advanced their business model, but I could certainly make a new computer, and buy off the shelf windows if I wanted. They had influence but certainly not control.

    > They also killed BeOS and several others OS’.

    I don’t know much about this.

    > They paid ~$1B per year in fines and settlements for illegal business behavior over two decades.

    And that proves either than MS were evil or than anti-trust laws are evil. Wanna guess my take on that? :-)

  263. @Jessica:

    Anti-trust laws may be evil, but they are probably a necessary evil in the current system where the government goes out of its way to create monopolies in the first place. If we correctly reform the patent and copyright laws, there won’t be any real (e.g. non-astroturf) public outcry that gives a reason to apply the antitrust laws, and then maybe we can get rid of them.

    But getting rid of the reactionary antitrust laws before we get rid of the conditions that provoked them would probably be counterproductive.

  264. Jessica,

    And, I know it is an uncomfortable truth for all you Microsoft haters, but the plain fact is that much of what we think of as the modern web can be partly credited Microsoft, and the invention of Ajax, which was mostly created to make Outlook Web Access work well.

    “Much of the modern web” is an absolute shitfest. If you want us to be thankful to Microsoft for the HTML/CSS/Javascript clusterfuck that is Web 2.0 or Web (n + 1) or whatever, I say no thank you. Java applets were actually a stillborn attempt by Netscape, Sun, and others to turn the Web into a device-independent platform where code and data alike can be downloaded off the network, run, and interacted with.

    Microsoft, a platform vendor, didn’t like this much and used a bit of the old embrace, extend, and extinguish to make the Web dependent upon Windows, so that people would continue buying copies of Windows. The XMLHttpRequest was added so that Internet Explorer had a bit of “secret sauce” that Netscape didn’t have, and Outlook Web Access would degrade horribly except if you were using Internet Explorer. It’s a package deal: you either buy all Microsoft or you stay in the ghetto. Not only is it true to this very day that Outlook Web Access degrades into shit on non-IE browsers (despite the widespread availability of XMLHttpRequest-equivalents on all major browsers), but SharePoint is bolted to Office in similar fashion such that my co-workers are puzzled when I ask if I should upload my local (LibreOffice-created) document over the SharePoint version.

    Now what happened was, rather than stick with the vision, Netscape went into “Now Microsoft is going to eat ME! Oh my GOOOOOOOOOOOOOOOOD” panic mode, and they squoze out the three-coiled turd called Netscape Communicator 4.0.

    The Web we could have had might have been awesome, like a scaled-up, distributed, worldwide PLATO accessible through your PC with the UI stuff running locally. What we have is an overweight mess that pretends to be this, doesn’t quite get there, and is about fifteen years late. And Microsoft is largely responsible. Because they couldn’t afford for people not to be dependent on Windows.

    That’s the definition of evil.

    Of course they’re getting theirs: now they’re in “Apple is going to eat ME! Oh my GOOOOOOOOOOOD” panic mode, and look how great (not!) Windows 8 is turning out to be.

  265. > In the absence of a qualifying primary reference, we hold that the district court erred in concluding that there is likely to be a substantial question as to the validity of the D’889 patent. [6]

    So the Federal Court essentially said “not(not(valid))” or perhaps only “probably_not(invalid)”.

    > 6. Our holding that the alternative prior art references do not invalidate the D’889 patent is limited to our evaluation of the record at this preliminary stage of the litigation.

    You’re the one who said Judge Koh was biased, remember?

  266. @Patrick> Plagiarism isn’t nice, even if you do modify a few of the words after the cut and paste.

    You’re the one who asked how the judge could make a decision without a jury.

    If you can’t read Wikipedia, I’ll read it to you.

  267. @Patrick> I did. Did you? Now is my turn to be pedantic:

    Of course I did.

    “Apple’s interest in enforcing its patent rights is particularly strong because it has presented a strong case on the merits.”

    “In combination with the Federal Circuit’s determination that the D’889 Patent will likely withstand Samsung’s validity challenge, Apple has established a strong claim on the merits.”

    “Apple has established a strong case on the merits.”

    “Given the strength of Apple’s case on the merits, and its likelihood of irreparable harm, the balance of hardships tips in Apple’s favor.”

    “Although Samsung has a right to compete, it does not have a right to compete unfairly, by flooding the market with infringing products. As explained by the Federal Circuit, “[a]lthough the public interest inquiry is not necessarily or always bound to the likelihood of success o[n] the merits, . . . absent any other relevant concerns . . . the public is best served by enforcing patents that are likely valid and infringed.” Abbott Labs. v. Andrx Pharm., Inc., 452 F.3d 1331, 1348 (Fed. Cir. 2006). This Court is persuaded by Judge O’Malley’s concurrence that the public interest favors an injunction here “because the record at this stage shows that the D’889 Patent is likely valid and infringed, and there are no other relevant concerns, the public interest is best served by granting a preliminary injunction.” (emphasis mine)

  268. > Your original claim was that Apple had some sort of broad rights and instead I indicated the rights to require actions sit with the ETSI.

    My claim was that Apple’s patent claims are (quite) broad. Not that they have broad rights. They do have a (negative) right to prevent others from practicing those patents.

  269. @Lars

    the definition of non discriminatory is that it is offered to all players on the same terms. The cell phone market is characterized by cross patent agreements those are the terms these things are usually offered at. Apple’s claim is that FRAND requires a small payment (i.e. for example their suit with Motorola about the 2.5%) at most but that is not supported by law. ETSI is who gets to determine: is the payment reasonable. We know that European regulators have a long history of making these determinations in the interest of ensuring competition.

    As far as I know you aren’t disagreeing with those facts. Then it is pretty obvious to see what happens if Apple tries to apply their patents in a way that blocks Android from the European or global marketplace. If European regulators can plausibly define fair, reasonable… in a way not to allow the market to collapse they will.

    That’s on top of the fact that it won’t come to that. I think it is easy for Android to get around the Apple claims that are likely to be upheld. Apple’s best claims are about rather surface features that would be easy to correct. I don’t think any court is going to find nearly as broadly as Apple wants, because there is just too much prior art. As the joke goes, Apple didn’t invent the rectangle. The more broadly Apple claims something the more difficulty they will have with prior art. Claim the look and feel of the iPhone too broadly and the LG Prada disproves invention. Were it not for the tremendous extent of Samsung’s copying their counter arguments would be winning on the prior art grounds.

    But even if the courts do find so strongly for Apple, the next layer up is going to prevent the scenario you are outlining. That’s the point. The practical effect of these lawsuits is that Apple is going to get a moderate amount of money and Android is likely going to make some changes to their graphics or pay Apple a small ongoing license fee.

  270. @Jessica
    “Winter, I’m sorry I dropped off this for a while to do, well you know, stuff in the real world :-)”

    Welcome back to the virtual world ;-)

    @Jessica
    “No they didn’t. They might have influenced it, but many people made many different products without kissing Bill Gates ring.”

    See here. Eg, Intel’s NSP and much more (eg, BeOS)
    http://techrights.org/wiki/index.php/Petition_-_Part_II

    By 1995, Intel had developed NSP software which promised to “endow Intel microprocessors with substantially enhanced video and graphics performance.” Findings of Fact at ¶ 95. But because NSP had the potential to serve as a platform on which applications could be developed, Microsoft forced Intel into ceasing NSP development, flatly precluding that innovation from reaching consumers.

    @Jessica
    “> They paid ~$1B per year in fines and settlements for illegal business behavior over two decades.
    And that proves either than MS were evil or than anti-trust laws are evil.”

    Who said anything about anti-trust. This was all basic corporate crimes, espionage, copyright and patent infringement, and repeatedly flaunting court orders. For instance, almost all of the record fines leveled by the EU were not for monopoly abuse, but for repeatedly refusing to comply with court orders.

    See also my earlier comment.
    http://esr.ibiblio.org/?p=4479&cpage=1#comment-385551

  271. @Lars:

    So the Federal Court essentially said “not(not(valid))” or perhaps only “probably_not(invalid)”.

    Exactly. I did say it was my turn to be pedantic.

    You’re the one who said Judge Koh was biased, remember?

    I said that it appears that she might be. I never definitively said she was. But the appeal was a long time ago. Maybe she wasn’t biased then and Samsung pissed her off since then (they seem to be good at that). Or maybe the magistrate is biased or Samsung pissed them off. I don’t know, but Samsung seems to be having real problems getting evidence in, and Apple seems to be getting free passes on a lot of stuff. Is it really fair that the defendant is punished for not saving emails when they “should have known” they were going to be sued, and the plaintiff isn’t punished, even though they didn’t start saving them until after they started the lawsuit?

    Plagiarism isn’t nice, even if you do modify a few of the words after the cut and paste.

    You’re the one who asked how the judge could make a decision without a jury.

    No. I asked “if a court has “ruled” (as in, a final judgment) that the patent is infringed, exactly what is the jury for?” meaning, “I think, if you think it through, you will realize that the court has not yet ruled on this.” You, in fact, finally admitted this is true, yet you keep acting like it wasn’t a valid question, and that I didn’t ask it.

    If you can’t read Wikipedia, I’ll read it to you.

    See, you’re still acting like an asshole — those quoted passages had NOTHING to do with my rhetorical question. The only thing I learned from you “reading” wikipedia to me is that you’re a psychopath who will plagiarize without any shame or guilt.

    “Apple’s interest in enforcing its patent rights is particularly strong because it has presented a strong case on the merits.”

    (lots more stuff snipped)

    It’s completely irrelevant to the point I was making. THE COURT HAS NOT DECIDED IF SAMSUNG INFRINGED APPLE’S PATENT. IF THEY ALREADY HAD, (SOME OF) THE EVIDENCE WOULD NOT BE IN FRONT OF THE JURY RIGHT NOW. Is this really that difficult a concept?

  272. @Patrick: I do believe you are feeding a troll. Someone more interested in scoring points and getting under your skin than in a factual discussion shouldn’t be taken at face value.

  273. > Is this really that difficult a concept?

    What I’m finding difficult to understand is why you continue to hang your hopes on the jury finding something that several courts have not. This, especially, given the misbehavior of Samsung’s attorneys.

    I’m also at a loss for why you’re angry.

  274. @Lars:

    What I’m finding difficult to understand is why you continue to hang your hopes on the jury finding something that several courts have not.

    No, you’re changing the subject, away from your false assertion that courts have ruled that Samsung infringed, and away from your plagiarism. But in any case, at this point, Samsung damn well better be focused on getting the jury on their side — surely even you can see that that is their best hope at the moment. Well, that plus getting enough stuff in the record for an appeal.

    This, especially, given the misbehavior of Samsung’s attorneys.

    I am not privy to everything that is going on, but from the perspective of an outsider, it looks like the punishment for any slights has been way too harsh on the Samsung side and way too easy on the Apple side.

    I’m also at a loss for why you’re angry.

    I’m not angry. I put something in caps to see if that would aid in comprehension. And the jury’s still out on that, too.

  275. Patrick,

    What I said, “The US version of the same patent was ruled valid by United States Court of Appeals for the Federal Circuit back on May 14th. The Court also ruled that Samsung infringed it.”

    You’ll find the phrase “likely valid and infringed” all over the Appellate Court decision
    http://scholar.google.com/scholar_case?case=8926878352616614421&hl=en&as_sdt=2&as_vis=1&oi=scholarr

    And here is Judge Koh, reflecting on the Federal Court handing their decision back down:
    “because the record at this stage shows that the D’889 Patent is likely valid and infringed,”

    When (not if) the jury finds that Apple’s patents are valid and that Samsung has infringed, it will be shown (again) that Android is, indeed, a stolen product. Apple has already convinced the judges, what is the chance that Samsung will get the jury to vote for their argument?

    The larger factor here is that it appears that Apple will be successful in suffocating Android on tablets while it is still in the crib. Apple’s iPad is outselling Samsung’s tablet by 155 to 1. If tablets are the new ‘computer’ for the great majority of customers, wither the PC, and with it, linux?

  276. @Lars:

    If you’re going to be pedantic, do it consistently, and just agree that “likely” valid and infringed is not the same as “valid and infringed.”

    When (not if) the jury finds that Apple’s patents are valid and that Samsung has infringed,

    Still having a hard time separating opinion from fact, I see.

    it will be shown (again) that Android is, indeed, a stolen product.

    No it won’t. Much of the discussion centers around the design patents, which has nothing to do with Android. A lot of yesterday’s testimony was about the “bounce-back” feature which, it is true, is on lots of Android devices, but also on lots of web pages since about 2000.

    If you’re going to attempt to be pedantic, you should be really be more careful with statements like “when (not if)” and “stolen.”

    Apple has already convinced the judges, what is the chance that Samsung will get the jury to vote for their argument?

    Unlike you, I don’t presume to know their chances.

    The larger factor here is that it appears that Apple will be successful in suffocating Android on tablets while it is still in the crib.

    Not going to happen.

    Apple’s iPad is outselling Samsung’s tablet by 155 to 1.

    Right. Which makes them look like petty assholes.

    If tablets are the new ‘computer’ for the great majority of customers, wither the PC, and with it, linux?

    The chances of Apple “suffocating” Android on tablets is zero. Even if they managed to do it in the states (which isn’t going to happen given Posner’s attitude about Apple v. Motorola), the bulk of the market is in the rest of the world, where Apple’s chances are much slimmer.

  277. If this study is at all accurate, it would appear that at least Amazon must be kicking some serious tablet ass:

    http://magid.com/node/233

    And Samsung is doing better in some other countries than here:

    http://mybroadband.co.za/news/gadgets/47084-ipad-versus-android-tablets-surprising-stats-for-sa.html

    Apparently Apple is still king of the market share hill globally:

    http://techcrunch.com/2012/07/25/24-9m-tablets-sold-in-q2-with-apples-share-of-that-now-over-68-says-strategy-analytics/

    And doing really well in market share in China, where if you can afford a tablet, you can presumably afford the most expensive tablet:

    http://www.slashgear.com/apple-nets-72-of-chinese-tablet-market-during-q2-2012-08242261/

    It will be interesting to see how that market shapes up when it gets bigger than a couple of million units a quarter.

  278. “I’m not aware that the basic claim (Apple swiped industrial design ideas from a Sony design study) has actually been falsified”

    One can easily press “page-up” and read what the basic claims actually were in your post:

    “This isn’t speculation – an Apple employee copied Sony’s design”

    “…what Apple is really good at is ripping off other peoples’ ideas and stealing the credit for them with slick marketing. This, right here, is the proof.”

  279. > Unlike you, I don’t presume to know their chances.

    Unlike you, I know what the court means when it declares the case, “likely”.

  280. But, Lars, do you not know what the court means when it writes “because the record at this stage shows …”

  281. @SPQR> But, Lars, do you not know what the court means when it writes “because the record at this stage shows …”

    I think the meaning is clear, don’t you?

    This Court is persuaded by Judge O’Malley’s concurrence that the public interest favors an injunction here “because the record at this stage shows that the D’889 Patent is likely valid and infringed, and there are no other relevant concerns, the public interest is best served by granting a preliminary injunction.” Apple, [...] As a patent holder, Apple has a valid right to exclude others from practicing Apple’s invention. In order to protect that right, and promote the “encouragement of investment-based risk,” the public interest weighs in favor of Apple.

    Android appears to be a poor business. Motorola is cutting one in five jobs, world-wide (two in five at the VP level).

    The article also states that Googlerola is working on advertising that is “simple and emotional”. Reminds me of another company.

  282. @Winter
    > By 1995, Intel had developed NSP software which promised to “endow Intel

    It says MS forced Intel to stop developing NSP. How did they do that? What type of force was used? People use the word force ever so loosely. If my boyfriend says to me, sleep with me or I’ll dump you, some people consider that forceful. Me? not so much. He can go fuck himself.

    > Who said anything about anti-trust. This was all basic corporate crimes, espionage, copyright and patent infringement, and repeatedly flaunting court orders.

    Not sure about espionage, again people are pretty sloppy about what that means. But do you think I see any justice in fining people for copyright and patent infringement? How about flouting unjust court orders?

    (BTW, I know you meant flouting court orders, but it made me LOL to think about flaunting court orders.)

  283. @Jessica> It says MS forced Intel to stop developing NSP. How did they do that? What type of force was used?

    Those who don’t know history are doomed to repeat it.

    Gates allegedly threatened to terminate Windows support for Intel’s new microprocessors (which were introducing MMX (yesterday’s SSE) unless they were able to “get alignment” between Intel and MS on Intel’s internet and communications software programs. This “alignment” involved allowing Microsoft to dictate the APIs used.

    http://partners.nytimes.com/library/tech/98/11/biztech/articles/16soft.html

    http://en.wikipedia.org/wiki/Steven_McGeady#Microsoft_trials

    http://cyber.law.harvard.edu/msdoj/trial.html#transcripts

    http://cyber.law.harvard.edu/msdoj/transcript/summaries2.html

    @Jessica> “If my boyfriend says to me, sleep with me or I’ll dump you, some people consider that forceful.”

    The situation was a lot more, “stop sleeping with that other person, or I’ll stop sleeping with you.” Which illustrates perfectly why your metaphor doesn’t make any sense in this context. Perhaps it was more, “sleep with me, or I’ll kill your children.” IDK.

  284. @Jessica
    “but it made me LOL to think about flaunting court orders.”

    Sound and symbol, never the two shall meet in English.

    @Jessica
    “Espionage”

    Signing an NDA or “collaborate” in a joint venture, turn around and market their R&D as your own (Stack, Sendo, Go). I once heard a story from someone who knew the field, that MS had invited a famous developer for a job interview. They asked him all kinds of things about his work and how he would solve problems. Then they did not hire him, but he had solved a R&D problem for them. Which they then used in their product.

    @Jessica
    “Force”

    That is what you have when you have a monopoly and others need your licenses to make a living.

    As in, you stop selling/preloading products of our competitor or we increase the license costs of Windows with twice your margin. Or, in cases like Citrix, your take one of us in your board or we make your product stop working with the next release of Windows.

  285. @Jessica
    “How about flouting unjust court orders?”

    Dura lex, sed lex

    Especially for a company that likes to threaten and sue others for IP and license infringement.

    Anyhow, if you want to trade with people, you should obey their laws. If you do not want to obey the law, do not go there. This was not some humanitarian program aimed at freeing the oppressed. This is a commercial operation that did everything, legal or not, to wipe out any competition.

  286. Gartner just released their quarterly global smartphone numbers:

    http://www.gartner.com/it/page.jsp?id=2120015

    I continue to be impressed with how well Samsung (as opposed to, say, LG or Nokia or Mot) is managing the dumbphone to smartphone conversion process. (Of course, some here are sure to say that’s only because they did a much better job of stealing Apple’s stuff.)

  287. @Winter
    > Dura lex, sed lex

    Come on dude, we already have Dutch and English going on, you really wanna introduce a third language? I’m an American, we don’t do languages.

    > If you do not want to obey the law, do not go there.

    Substitute the word “requirement” for law, and exactly the same could be said of the situation at Intel, no?

    Microsoft has no obligation to make Intel’s business work. They do have an obligation to maximize shareholder profits. You go in and solve a problem in a context free of a need for recompense (such as an interview) you can’t expect recompense.

  288. Come on dude, we already have Dutch and English going on, you really wanna introduce a third language? I’m an American, we don’t do languages.

    The cognitive benefits of bilingualism or multilingualism are well-known. Even if you are not well-versed in Latin, a bit of Googling would reveal that the expression means “the law is tough, but it is the law”.

    Microsoft has no obligation to make Intel’s business work.

    Microsoft does have an obligation to not use its monopoly power to interfere with Intel’s business.

  289. @Jessica
    We were talking about MS abusing monopoly power to limit hardware developement. And this is prove of such misbehavior.

    That this behavior was recorded as part of criminal proceedings just shows that it is seen as detrimental to economic development.

  290. From Readwrite web “The Number …”

    According to research firm IDC, Android devices made up a whopping 68.1% of all smartphone shipments in Q2 2012. That calculates to 104.8 million of the 154 million smartphones that left manufacturers plants in the quarter. By comparison, Apple shipped 26 million iPhones in the quarter, good for 16.9% of the market. Together, iOS and Android made up 85% of all smartphones shipped.

    IDC notes that Samsung was responsible for 44% of all Android devices shipped….The unrelenting flood of Android devices is one reason that Apple has turned to its legal department for help. Apple knows that it cannot match the Android ecosystem in sales and shipments, but hopes to force Android manufacturers into settlements over patents and design issues that will lead to time-consuming redesigns and functionality changes. Any time that an Android device is taken off the market or delayed to retail shelves because of an Apple patent victory, it leaves open a window for Apple to sell a consumer an iPhone.

  291. Judge Koh tosses three Samsung phones out of the case as alleged infringers because they are not sold in the US … paring down Apple’s damages some more.

  292. >Any time that an Android device is taken off the market or delayed to retail shelves because of an Apple patent victory, it leaves open a window for Apple to sell a consumer an iPhone.

    But this isn’t a winning strategy. It’s only a delaying one.

  293. @esr:

    > But this isn’t a winning strategy. It’s only a delaying one.

    A dickheaded one as well. Apple’s lawyers are acting dickheaded in court, too, and so far seemingly getting away with it. But despite Apple’s apparent home court advantage, I have more faith in the ability of a Silicon Valley jury to get it right than an East Texas one. We’ll see in a couple of weeks whether or not my faith is misplaced. (Samsung needs but a single juror who is completely convinced that what they did was kosher; Apple needs all of them to agree that what Samsung did was bad and to further agree on damages.)

  294. @Jessica> Microsoft has no obligation to make Intel’s business work. They do have an obligation to maximize shareholder profits.

    So assume Microsoft releases a new version of Windows that will only boot on UEFI boot loaders which have Microsoft keys inside. Keys which prevent alternative operating systems from being loaded.

    Perhaps linux is large enough that PC OEMs will make non-UEFI bootloaders for “the rest of us”, but possibly not.

    Given your comments, I assume you’re OK with Microsoft’s actions?

    What if Apple did the same thing? (Only MacOS X would run on Macs.)

  295. > Apple knows that it cannot match the Android ecosystem in sales and shipments, but hopes to force Android manufacturers into settlements over patents and design issues that will lead to time-consuming redesigns and functionality changes.

    Apple wants to leverage the R&D it did bringing the iPhone and iPad to market. It doesn’t want clones, even if they run an alternative OS.

    It was OK when Stallman single-handedly duplicated (from scratch) every feature that Symbolics put into the lisp machines they made, and handed same to LMI. It’s not OK when Google duplicates all the nice touches of iOS, and hands them to the Android OEMs. This is because software patents were quite new in the days of Symbolics, LMI, and the AI Lab at MIT. Symbolics didn’t patent what they did (which was based on work done at MIT, but I digress.)

    (If you don’t detect duplicity and sarcasm in the above, I suggest you re-read it until you do.)

    Free Software (and thus Open Source) are built on a foundation of ability to copy (and ‘improve’, though it is not always the case that improvement is gained). This is why the Free Software and Open Source people object so loudly to the proceedings of Apple .v

    Unfortunately, software patents are still a reality. Until they are not, Apple has a case. The only thing that will stop Apple would be its employees and/or customers leaving in large number.

  296. But this isn’t a winning strategy. It’s only a delaying one.

    You seem to think that this is about Apple being butthurt over possibly losing the market-share numbers game and filing frivolous patent lawsuits to delay or prevent Android market share growth.

    Who exactly do you think you’re talking about here? Microsoft? :)

    As Lars said, software patents are a reality in this country, and barring an act of revolutionary jurisprudence — or a similarly revolutionary act of Congress — most of the features of a touch-screen smartphone are Apple’s protected IP, stolen by Google for Android. Jobs said as much on his deathbed, and Apple will fight to its last dollar to protect that IP. It isn’t fair for companies like Samsung to profit enormously as they have off the years of R&D that Apple has done getting the iPhone ready for launch, having done nothing themselves. That is what is at issue in this trial. And it is a trial that Apple will win. Any outcome where Apple does not emerge the victor will be a travesty of IP law, and of the underlying principles on which that law is based.

  297. “(If you don’t detect duplicity and sarcasm in the above, I suggest you re-read it until you do.)”

    Uh, no. I gave up on the second pass.

    “Unfortunately, software patents are still a reality. Until they are not, Apple has a case.

    I don’t think you entirely understand which patents are at issue in Apple vs. Samsung.

  298. Jeff Read writes: “It isn’t fair for companies like Samsung to profit enormously as they have off the years of R&D that Apple has done getting the iPhone ready for launch, having done nothing themselves.”
    The chances of the above being an accurate description of the history once the evidence is in is low.

  299. most of the features of a touch-screen smartphone are Apple’s protected IP, stolen by Google for Android. Jobs said as much on his deathbed,

    I don’t know if this is a troll but most of the features of a touch-screen smartphone, like most of the features of all other cell phones were invented by NTTco, Nokia. Motorola, Sony/Ericsson and last but certainly not least Samsung. Apple invented some cool stuff, is laying claim to far more than they invested but even if every word they claim is true still likely didn’t do as much as Samsung in inventing the technology which is truly vital for the iPhone rather than just kinda cool.

    Samsung has misbehaved at trial. Samsung did copy some thing and Apple deserves a reasonable check. There is no travesty here.

  300. @spqr> I don’t think you entirely understand which patents are at issue in Apple vs. Samsung.

    Interesting.

    Apple filed suit against Samsung alleging infringement of Apple’s U.S. Design Patent Nos. D593,087 (“the D’087 patent”), D618,677 (“the D’677 patent”), D504,889 (“the D’889 patent”), U.S. Patent 7,864,163 (the ‘163 Patent”), U.S. Patent No. 7,469,381 (“the ’381 patent”), and U.S. Patent No 7,844,915 (“the 915 patent”) and the D578,983 registered trade dress.

    Apple’s iPhone embodies the design in the D’087 patent and D’677 patent, The iPad embodies the design in the D’889 patent. Both iPhone and iPad embody several software features known as “bounce-back” (a feature of the ‘381 patent), “double tap to zoom” (a feature of the ‘163 patent), and “pinch to zoom” (a feature of the ‘915 patent).

    Please explain where I have erred.

  301. @Jeff Reed> It isn’t fair for companies like Samsung to profit enormously as they have off the years of R&D that Apple …

    Jeff,

    This not about “fair”. It is about Apple’s patents. Apple’s patents, at this stage presumed valid by the courts, give them a right to exclude others from practicing the inventions disclosed by the patents. Apple may choose to allow others to practice the inventions via license, but does not need to do so, unless they are standards-essential patents, in which case the patents have to be licensed on a Fair, Reasonable, And Non-Discriminatory (FRAND) basis.

    Since Apple’s asserted patents are not SEP, Apple can choose to bar Samsung, HTC, Motoogle and others from practicing the inventions disclosed.

    Since many (if not all) of the asserted Motorola and Samsung patents ARE SEP, these companies MUST offer licenses to these patents under FRAND rules.

  302. “A patent shall be presumed valid. Each claim of a patent (whether in independent, dependent, or multiple dependent form) shall be presumed valid independently of the validity of other claims; dependent or multiple dependent claims shall be presumed valid even though dependent upon an invalid claim. Notwithstanding the preceding sentence, if a claim to a composition of matter is held invalid and that claim was the basis of a determination of nonobviousness under section 103(b)(1), the process shall no longer be considered nonobvious solely on the basis of section 103(b)(1). The burden of establishing invalidity of a patent or any claim thereof shall rest on the party asserting such invalidity.” [link]

  303. @lars
    Valid and enforceble US patents have been granted to US companies covering “inventions” described in the Indian Vedas (Neem tree patent) and on rice varieties cultivated in the Punjab for centuries (basmati rice).

    The US patent system is not broken, it is fraudulent and criminal.

  304. The US patent system is not broken, it is fraudulent and criminal.

    Dura lex, sed lex.

    Though I can understand Europeans having more faith in the law than Americans; in Europe the law works pretty well for everybody. In America, how well it works for you is roughly proportional to your income.

  305. @Jeff Read
    Indeed, it is the law. Occassionally I hear about companies that refuse to do business in the USA for that reason. The law is tlted too heavily against foreigners.

  306. This not about “fair”. It is about Apple’s patents.

    I’m talking about why Apple got the patents, without which Samsung would indeed be free to copy/steal Apple’s inventions and designs.

  307. > Europe the law works pretty well for everybody.

    Heh. Speaks the man who’s never lived there.

  308. >I think a non-european company has a fair chance in Germany

    Or where you live. In Italy or France, not so much. (I’ve lived in Italy.) No, I was thinking more of the way that “equality under the law” becomes a fiction where individuals are concerned. In the U.S., having money for high-powered lawyers makes you hard to touch; in Europe (especially in the parts that don’t speak Germanic languages) high social status or a degree from the right school buys even more immunity. Cases mysteriously get lost in the bureaucracy on their way to court; even more often, the wronged party never pursues because they know the fix will be in.

  309. >Perhaps linux is large enough that PC OEMs will make non-UEFI bootloaders for “the
    >rest of us”, but possibly not.
    >Given your comments, I assume you’re OK with Microsoft’s actions?
    >What if Apple did the same thing? (Only MacOS X would run on Macs.)

    I really don’t get this line of thinking. Why should Microsoft, Apple or any other company be required by force of law to ensure that their products work for or with their competitors or anyone else? It seems to me all of these efforts to force closed entities open would only prolong their continued existence and drain on resources and talent. Let Microsoft sell boot locked pcs let apple do the same. If esr and the rest of the open source advocates are right they’ll die or adapt as the consumers demand and switch to open systems.

  310. >If esr and the rest of the open source advocates are right they’ll die or adapt as the consumers demand and switch to open systems.

    *Yawn.* We’ve seen this scam before. Last time it was called Palladium. Remember Palladium?

    ***crickets chirp***

    What will do in “Secure Boot” is the same thing that scuppered Palladium in 2003-2004 – point-blank refusal from Fortune 500 customers. If you’re a sysdamin for one of these, running a 100-unit-or-up server farm or fielding 500 mobile devices, it’s a given that you’re rolling your own software images. Thus, you won’t tolerate these “trusted computing” schemes; they’re a huge pain in the ass with no benefit at all to you.

    And, because you are the buyer all the white-box vendors are chasing, the white box vendors are not going to disable unsecured boot in their hardware. That would be like yelling “HEY! I’M TIRED OF MAKING MONEY, PLEASE TAKE THE HIGHEST-MARGIN PORTION OF MY BUSINESS!” So, like, what it means is that Microsoft will lock down its own name-brand hardware against third-party operating systems, drive out of business any other hardware vendors stupid enough to follow suit, and everyone else will just ignore this idiotic rehash of an idea that was brain-dead to begin with. Many megabucks of NRE and biz-dev budgeting later, Microsoft will have nothing to show for it but red ink.

    Rememember when I suggested Microsoft replace Steve Ballmer with an orangutan? “Secure UEFI” was one of the blunders I was thinking about. Microsoft couldn’t pull off this shit even when its market power was increasing; now, when it’s losing its grip, the attempt is just low comedy.

  311. Interesting article about Chinese smartphone market:

    http://finance.yahoo.com/news/cheap-cheerful-chinese-phones-outsmart-211947725.html

    Several interesting points. The most amusing was this one:

    Apple’s iPhone sales in China, its second-largest market, stumbled in April-June on inventory adjustments with the launch of the iPhone 4S. That extra inventory meant resellers didn’t need to buy as many iPhones during the quarter…

    That’s for all the fanbois out there who are convinced that there is no difference between shipped and sold for Apple. You know who you are.

  312. >*Yawn.* We’ve seen this scam before. Last time it was called Palladium.
    > Remember Palladium?

    I’m not saying I expect it to work. I’m questioning the mindset that says we should use the force of law to prevent companies from doing things like this.

  313. >I’m questioning the mindset that says we should use the force of law to prevent companies from doing things like this.

    Not a proposition you’ll find me defending. Free markets sort out this kind of crap better and faster than governments can.

  314. @esr
    In the long run, free markets will sort it out. As I will very likely be dead by then (or it does not matter anymore), I prefer a short term solution that helps me while it matters.

  315. tmoney: I’m questioning the mindset that says we should use the force of law to prevent companies from doing things like this.

    esr: Not a proposition you’ll find me defending. Free markets sort out this kind of crap better and faster than governments can.

    me: Unfortunately, the playing field was already tilted. As usual, the solution to government intervention is…. more government intervention. The government never figures out how to apply a light touch or no touch. Instead, it counters a tilt caused by its heavy touch (patents or copyright or stupid employee agreements) with another heavy touch somewhere else. No wonder the playing field is so warped.

    I like the way that Judge Posner is backing away from that on patents, but until we can get the rest of the judiciary to follow, a certain amount of warpage might be better than a full tilt towards the benefit of the incumbents.

  316. What will do in “Secure Boot” is the same thing that scuppered Palladium in 2003-2004 – point-blank refusal from Fortune 500 customers. If you’re a sysdamin for one of these, running a 100-unit-or-up server farm or fielding 500 mobile devices, it’s a given that you’re rolling your own software images. Thus, you won’t tolerate these “trusted computing” schemes; they’re a huge pain in the ass with no benefit at all to you.

    If Fortune 500 customers really need boot-unlocked computers, then boot-unlocked computers will be available — to Fortune 500 customers.

    Anyway, Secure Boot doesn’t preclude you from rolling your own software images: Secure Boot requires only a signed bootloader. The bootloader will require a signed kernel, but — unlike Linux — there’s only ever one or two possible kernel images for any extant version of Windows because it’s proprietary software. The ability for sysadmins at Yoyodyne Corp. to build hard disk images loaded with Windows and all the software — and only the software — a Yoyodyne Corp. employee will need will not be compromised. So even if Yoyodyne absolutely, positively needs a boot-unlocked server farm, Microsoft will probably successfully sell them on the security advantages of boot-locked desktops.

    As for fielding mobile devices, if they be tablets they will be iPads; and if they be phones they will likely be iPhones or BlackBerrys. iOS is a growing platform in the corporate enterprise (because CEOs love their shiny Apple kit like most other price-unconscious consumers). No one is rolling custom software images for these Apple devices. What they’re doing is signing up for Apple’s enterprise development program, becoming a CA for iOS apps developed in-house, and setting up their own internal “app stores” that work on company-issued iPads. I expect Microsoft to do the same for Windows RT tablets.

  317. @Jeff Read
    All device drivers have to be signed. Actually everything that touches hardware must be signed.

  318. Jeff Reed> If Fortune 500 customers really need boot-unlocked computers, then boot-unlocked computers will be available — to Fortune 500 customers.

    The DIY crowd will still be able to build their own, but things like the notebook and tablet market will start to close off. Android, Android Uber Alles!

  319. “According to one document, Samsung even had a number of reports from Best Buy stating that customers were returning Samsung’s Galaxy tablets because when they bought them, they thought they were getting iPads.”

    Only in America could this level of stupidity occur…….much like the court battle.

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