Who’s going apeshit for the iPhone?

I think the iPhone looks cool and is going to ultimately be a big factor in pushing mobile convergence forward. A survey released last Friday said there’s massive demand – that 19 million people are highly interested in purchasing the iPhone. Who? Why?

The same survey says people are willing to switch network providers in order to get one, which obviously they have to thanks to a marketing coup by AT&T. It’s pretty amazing how after wireless carriers invested so much in new infrastructure to provides enhanced and differentiated service capabilities they’re still so generic. I’ve been looking at new service and frankly the only compelling reason I can find to use one carrier versus the other is the free in-network calling. The pricing is all the same, and while there are some hardware differences these bake out pretty quickly. And then just become annoying. For instance, I can’t use my Sprint Treo on Verizon even though they’re both CDMA. This not only doesn’t make sense, but I also don’t think it’s the retention aid carriers think it is. I’m trying to trade Treos with someone, but if I can’t do it soon I’ll just let Verizon subsidize the purchase of a cool new phone till I can find a trading partner. Of course most devices wouldn’t even cause you to do that – you’d just toss the old one. Someone explain how people throwing away perfectly good phones is good for wireless carriers?

With the iPhone exclusive to AT&T for 5 years, it will be interesting to see what effect this has on the handset market. I know people won’t go throwing away their $500 iPhones, which bodes well for AT&T. I don’t know who these people are who are clamoring for one.

Patents protect innovation again!

Sarcasm off.

Now, I’m not an attorney and don’t even play one on TV, but the Vonage-Verizon verdict is one more example of how twisted the patent system has become. I won’t get into the merits of software patents which I think is a very worthy debate. I won’t even debate the merits of the particular patents in question in this case which as far as I can tell are pretty dubious; one appears to be for using a database to authenticate callers and billing information over IP; another for call controlling voicemail or call forwarding over IP. This harks back to the early days of the ‘Net and business process patents. Bar tabs have been around since the beginning of man, but online its’ one-click shopping and it’s protected via patent. Argggggh.

But as I said, I won’t debate that. What I will debate is time. The applications for patents listed above were filed in 1997 and 1999. They were granted in 2000 and 2002. A typical software product development cycle these days is 6 months, and often shorter. Unfettered, innovative companies can go from conception to critical mass to exit in under 36 months. Yet a patent stays in force for 20 years from filing. The concept of protecting any software or business process for 20 years in the modern world is, in a word, ludicrous. By definition, anything that could reasonably stand 20 years of protection in the world of software is something that is so abstract and broad that it should never receive protection in the first place.

As far as I can tell, nobody without a serious vested interest in patent trolling or protecting monopolies thinks the current system makes sense. The problem is there is an industry where it probably does, one in which there’s a far clearer case that innovation and the public good are served by patents: pharmaceuticals. Not that there isn’t trolling and abuse there. But the numbers I’ve seen suggest average cost to develop a new prescription drug is nearly a billion dollars, and the typical time between patent and selling the first pill is over 10 years. Given that cost and time structure, 20 years seems like a low number (that’s why patent extension was introduced).

So, even if you buy the concept of software and business process patents (as I said, a worthy debate in and of itself) the root problem here is one of time. The length of protection is what allows software and business process patents to transmogrify from shield to sword, and what stifles innovation rather than protects it. The combination of a protection period that far outlasts the innovation and typical return cycle, and the cost pf litigation, holds companies hostage to ludicrous claims and makes patent trolling far more profitable than actually bringing a technology to market.

So how about this? Keep the concept of software patents if you like, but lower the protection period drastically – say to 7 years. That will give an “inventor” more than ample time to figure out how to monetize his invention. And it will still allow a nice secondary market for patent trolls. They will just make a lot fewer frivolous claims, and allow settlements that are far more reasonable and don’t encourage extortion under the guise of the law.

A clash of ideologies

The stuff here at eTel gives me mixed emotions. On the one hand, I say welcome to the party. Aptela and a small handful of firms have been delivering “Phone 2.0″ with a “Web 2.0″ philosophy since before they coined the Web 2.0 buzzword. The old telco’s aren’t going to educate the market to the real benefits of __________ (what’s the right buzzphrase? Next Gen Communications? Phone 2.0? Phone 3.0? We need something better!). So the more people who come to the party, the better.

Then again, callback buttons as cool and new? Damn, we built one of those at Proxicom 10 years ago! But then I think of the old telco curmudgeons who told me how they tried to market unified communications in the early 90’s and nobody cared. Well duh! When about 10% of the world used email or cell phones, and you only got that email at work, and you got those messages via green screens, who the hell would need or care about unified messaging? Times change, and it’s not the concept but timing, execution and the usability. So, cool, easy to implement callback buttons? Rock on!

On the other hand, there is a serious clash of ideology here that will need to be reconciled and navigated for “Phone 2.0″ (I’ll use this for now) to be successful. Web 2.o is about open and accessible and widely released extended betas that morph into next generation betas. Phone 1.0 is about closed and and secure and beating things up in a lab for 6 months before they even get to beta and then 6 months more after that. We’re web guys too, and we used to scoff at the Phone 1.0 ways. Figured it was monopolistic thinking. Some of it is. But then we actually started selling the stuff. And once you have thousands of customers, you realize alot of that thinking is about reliability. We’d like to think that cell changed the equation and people will deal with a dropped or crappy sounding call here and there. Consumers do. Particularly when its cheap or free.

But I’m just not seeing it with businesses. The concept that goes hand in hand with Web 2.0 in the Valley is “consumerization” of businesses – that decision makers in Enterprises will start using consumer technology and then integrate it into their business environments. I buy that. But I don’t any evidence of relaxing demand for the pinnacle of Phone 1.0 fabulosity – 5 9’s. I wish it wasn’t the case. We have a product roadmap a mile long that we could roll out in 1/3 the time if businesses would put up cell-like availability, and the pace of change. But businesses used to Phone 1.0 won’t. So who wins the clash of ideologies.

The Comvolution

Back in 1995 we used to talk about the 5 C’s – Communication, Community and Commerce along with Collaboration and Content – as the keys of a web-centric world. I always figured what really mattered was the first 3 (collaboration is a product of community and communication, and content will always find its way to a new communications medium). Back then we thought there was a revolution underway, and in some ways there was, but in retrospect it was much more evolution that that. It’s more than 10 years later, and we’re still working on breaking down the barriers we thought would crumble years back. But hey, the bubble burst hit hard, and monopolies don’t die easily. But we’re getting closer. Close enough that I feel like I should re-join the dialog.