Innovation, Patents, iPhone 5, Samsung and why Apple might never be the same

A lot has been said on the Apple vs Samsung patents battle. One of the most interesting articles I’ve read on the topic is FT’s Sebastian Mallaby “American law is patent nonsense”. Let’s get out of the courtrooms, let’s forget about judges and juries for a moment and let’s talk innovation and how to maintain product superiority.

In his “Competitive Advantage”, Michael Porter says that firms that succeed in differentiation strategy often have, amongst other internal strengths, highly skilled and creative product development teams and a corporate reputation for quality and innovation. Sounds like Apple, doesn’t it? Indeed, Apple’s success (iPhone 5 sales might boost US GPD 0.25-0.50%, impressive!) has been a great example of differentiation strategy, and it has in my opinion been built on two main factors.

The first has been the ability to keep a healthy tension between engineering feasibility and user experience, and always favouring the latter. Touch-screens were not Apple’s idea, nor did they have exclusive access to the technology. However the courage of designing and manufacturing the first touch-screen smartphone was Apple’s exclusivity and it’s in their DNA. I can imagine the executive meetings at other phone manufacturers’ headquarters going like “the technology is not ready, let’s stick with what we know” (I still remember  my own fights with engineering, when they were saying that Skype could never be successful as “VoIP without Quality of Service is not possible”…today Skype has 254 million active users/month, without Quality of Service). Clearly this has required incredibly smart engineering at Apple, with the passion and tenacity to solve the most challenging technical quests rather than fighting product management. Just think of the Retina display: the quest was to create the highest resolution display ever on a mobile device (Retina pixel density goes up to 326 pixels-per-inch; by comparison, professional photos are printed at 200-300 PPI, and the human retina has a resolution of 457 PPI at 12 inches / 305 mm from the eye). Existing display technology couldn’t cope with such resolution, as each pixel is made of red, green and blue sub-pixels receiving electric signals and illuminating differently to create colours. If you squeeze too many pixels in an inch, electric signals can get cross, and you lose definition. In the Retina display, pixels and electric signals are on two different planes, one on top of the other, an incredible piece of engineering, an innovation that is comparable to the Trinitron technology on which Sony built their superior quality CRT TV’s business. Now, in order to maintain differentiation you need to keep innovating your product line, and you need you to do it at such a speed that when competitors reach your current state of play, you’re ready to surprise them with your next innovation. How much innovation has gone into iPhone, iPad and iOS since their first debut? I would argue that, beside the incremental innovations in processor speed, better camera and better display, we haven’t seen  much of disruptive innovation. And the same could be said for MacOSX: how much has the Mac operating system  really evolved since its first release on March 24 2001? One could say that there’s not much that can be bettered in these products, but this is Apple, and when we ran out of improvement ideas, Apple used to surprise us with something we didn’t know we wanted…badly. Michael Porter, yes he again, warns that “the risks associated with a differentiation strategy include imitation by competitors and changes in customer tastes”. After all, iPad’s Retina displays are manufactured by Samsung, so it won’t take long for it to be Apple exclusivity (court battles aside).

The second factor, changes in customer tastes, is the second pillar on which Apple has built its fortune: the customers’ sentiment towards Apple. Apple has so far represented our right brain, our creative side. Remember the “1984” campaign, or the “Think different” / “Here’s to the crazy ones” one? Apple was positioning itself “against the system”, and for Apple fans the Apple logo has always been a status symbol (I’m one of them, listening to music on my iPhone while I write this blog from my MacBook Pro and FaceTime with my family back home). It was part of the culture, part of Apple’s DNA: Steve Jobs used to say “Why join the navy if you can be a pirate?”. By spending resources in fighting the courtrooms, who is the navy and who are the pirates? Just watch the Samsung Galaxy S2 advert, and judge by yourself who’s the pirate now. Afterall, it was Steve Jobs who said (watch the interview) “Picasso had a saying: Good artists copy, great artists steal. And we’ve been shameless about stealing great ideas.”. Samsung might just be doing the very same, and they might be better than Apple in the art of “stealing”.

Wouldn’t Apple fans welcome more astonishing and superior products and less courtrooms hearings? Maybe tomorrow, when the iPhone 5 will be launched, they will consider whether their next iPhone will be a Samsung…and whether it’s time to sell those Apple shares.


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