Aug 132013

It’s mid-August, which means ’tis the season for people to froth batshit speculation about the next iPhone – or depending on who you talk to – iPhones. AllThingsD, an outlet that usually has its shit together regarding Apple announcements, pegged the announcement date for the next iPhone at September 10. Jim Dalrymple of The Loop blessed it with a “Yep.” In the build-up leading to the event, pundits are trotting out the product missing from Apple’s offerings: the cheap off-contract iPhone. Because Apple is missing out on gazillions of sales or something.

It looks like Gruber is putting a star next to one of his recent posts on the topic, which is a good indication that his own words are going to outnumber the ones he sticks into a block quote. This post has JG hopping on the low-cost iPhone bandwagon, a device being referred to as the 5C:

If Apple does unveil an iPhone 5C, I expect them to concurrently abandon the iPhones 4 and 4S. Their three pricing tiers for the next year would be a new iPhone 5S at the high end, today’s iPhone 5 in the mid-range, and the new 5C at the low end. This way, all new iPhones would sport 16:9 aspect ratio displays, and all would have Lightning adapter ports. Adios both to 3:2 displays and the grody old 30-pin port.

The first part is rational: if Apple does release 2 iPhones simultaneously, it makes sense that they rein in the 2 stragglers and tighten the lineup. I don’t see why the 5C would be at the low end, however. If anything, I see the 5C being the middle tier and the 5 at the low end. Why? Well, I’ve never really moved on from my thinking on the topic since I wrote about it last year.

So why not the possibility of Apple releasing a “stripped down” version of the iPhone with – or about the same time as – the iPhone 5? No friggin’ way.

For this to be the case, there has to be failure on one of two axes that make successful Apple products: price and features. A”stripped down” version of the iPhone 5 is what? The iPhone 4? If that’s the case, there’s no way Apple offers it for below $300. Does it share the form factor of the iPhone 5 without some killer feature? It’d have to do without a shitload of killer features to bring the cost below $300, at which point it’d again reflect poorly on the brand.

So what has changed besides the consecutive number of days that people analyzing Apple are insisting that the company needs to make this cheaper phone? Gruber does make a point that a “stripped-down” version of the iPhone has existed for a while: the iPod Touch.

With the iPad, Apple charges quite a premium for cellular models — they cost $130 more than the corresponding Wi-Fi-only models. Apply that to today’s iPod Touch lineup and you’d get a 32 GB low-cost iPhone for $299 + $130 = $429. But there’s also that 16 GB Touch for just $229. Part of the cost savings on that device is that it doesn’t even have a rear-facing camera. And I’ve never believed that the $130 premium for cellular iPads is entirely related to component and assembly costs; I think Apple charges a premium for cellular iPads because they know many people are willing to pay that premium.

All told, I think Apple could build and sell an iPod Touch-caliber iPhone 5C for $399, possibly as low as $349.

If we’re being inclusive, there’s a bunch of other stuff that the 16GB iPod Touch doesn’t have besides the rear camera and a cellular chipset (a GPS chip, a multi-mic, an ear speaker, a magnetometer and a proximity sensor, to name a few), but I take his point. If we’re comparing the 2 devices from an “iSuppli” perspective, the iPod Touch’s components come much closer to ASP than the iPhone 5. But just because Apple can leave more money on the table for the sake of volume doesn’t mean they should. A better strategy – if Apple were indeed interested in addressing the low-cost market – would be to position the iPhone 5 on the bottom tier and have the “better” and “best” models be new. At the end of the day, the question that defies the notion that the lowest-cost iPhone should be a new one is: “How much less than a one year-old iPhone can a new iPhone be?”

I don’t think that question is one Apple’s ready to ask about the products in its highest-margin segment – and I don’t think it has to.

 Posted by at 11:23 pm
Aug 052013

On Saturday, it was widely reported that an impending ITC ban on some Apple products got a presidential stiff-arm. Of course the Samsung South Korean government, feeling the wicked sting one feels when the indefensible hovers just shy of possibility only to be revoked at the last minute by common sense, felt obliged to express their concern. The country’s anxiety is particularly acute because its corporate darlings are facing their own judgment on Friday for some ancient devices such as Galaxy S, Galaxy S II and Galaxy Tab 10.1. If you’ve read some of the reporting on South Korea’s reaction, you may think Samsung’s the patent used against Apple with the ITC in some way resembles the patents with which Apple is seeking an import ban against Samsung. Case in point: Min-Jeong Lee’s piece for the Wall Street Journal. Let’s see how the issue is presented, using excerpts from the article:

 The South Korean government’s statement suggests that the legal dispute between the two technology giants could escalate into a political issue depending on the outcome of the ITC’s decision.

“The ITC will likely take a more careful view in the Samsung case in light of the Obama veto,” said a patent lawyer, who declined to be named.

Should the ITC decide to ban the Galaxy products subject to the decision Friday, legal experts say Samsung may opt to lobby for a similar veto.

Lawyers said Samsung has a range of options. The company can try to overturn previous decisions by the ITC relating to patent infringement that were in favor of Apple. Samsung in July filed an appeal to the federal court in the U.S., in a bid to reverse rulings by the ITC that said Apple doesn’t infringe Samsung’s patents.

Some analysts said odds are low for the dispute to result in an ultimate ban of Samsung products in the U.S., particularly given the possibility that it may disrupt the trade relationship between the U.S. and South Korea.

“If the presidential veto appears to be used to give advantage to Apple over Samsung, this would be a dangerous precedent that could upset the current good trade relations between the U.S. and South Korea,” Mark Newman, an analyst with Sanford C. Bernstein said.

“The White House has presented this as being about consumer choice…if it really is about consumer choice, then it would have to do the same for Samsung as it did for Apple,” Mark Summerfield, a patent attorney for Watermark based in Australia said.

There is a suggestion that there may be a difference between Samsung’s skeet-shot patent and Apple’s. It’s hilariously (and I have to assume unintentionally) couched in a statement from South Korea’s Ministry of Trade, Industry & Energy about the impending ITC ruling on Samsung: “We hope to see a fair and reasonable decision on the matter.”

Samsung’s patent was subject to FRAND standards; Apple’s are not. It’s understandable that the South Korean government, which is basically synonymous with Samsung, is spinning this with a tit-for-tat tone, but who the fuck are these quoted idiots who completely ignore the fundamental differences between FRAND and non-FRAND patents?

Interestingly, Mark Newman, according to this Bloomberg clip is “among the top-ranked analysts” of Samsung – probably because he worked for the company for 6 years. Certainly no reason to play stupid there.

Mark Summerfield works for Watermark, which provides “Intellectual Asset Management” for companies. Although they don’t say which ones by name (lest Summerfield be summarily dismissed as an authority worthy of a quote to the Wall Street Journal), there is a cagey entry on Watermark’s site describing one of their clients: “The Major Corporation:”

Watermark has worked closely over a period of years with a major corporation whose technology has been taken up worldwide. We have worked with them to develop a worldwide patenting strategy identifying future market opportunities, scoping and understanding competitor activity, establishing freedom to operate, mapping out future directions and identifying potential licensees. Their international success has been driven by dedicated management of their intellectual assets.

It’s probably not Samsung, but who cares? For companies engaged in “Intellectual Asset Management” like Intellectual Ventures…err…Watermark, one patent is as good as another. They bill by the hour. For context, let’s see how the Australian court system feels about Samsung’s FRAND abuse. From Florian Mueller’s FOSS Patents site:

Let’s go to another continent. Australia, too, is a neutral jurisdiction. Justice Annabelle Bennett called Samsung’s assertions of 3G-essential patents “ridiculous” because this should only be about the terms of a FRAND license.

Contrary to the confusion on display by her clown-shoed, patent ambulance-chasing fellow countryman, it seems like at least one judge in Australia knows what a standard-essential patent is.

And what about the conductor of this symphony of one-sidedness? How is it possible that the Wall Street Journal’s Min-Jeong Lee can construct a story without a single mention of its most material fact? If you search his name on the WSJ’s site, 13 of the top 20 results contain “Samsung” in the title. Lee is apparently the resident Sammy hack.

So there you have it: how to make a story absolutely one-dimensional, brought to you by the Wall Street Journal written by a Samsung corp-hack and backed by a former Samsung employee and a Nathan Myhrvold wanna-be. Wall Street Journal readers aren’t typically stupid, but man does that rag think they are.

 Posted by at 11:31 pm
Aug 032013

In June the USITC, in its infinite wisdom, declared an import ban on some older model iPhones and iPads based on a Samsung Standard-Essential Patent (SEP). I recommended that the people representing us in the government set the ITC straight about which country’s intellectual property they protect. It turns out the same people who brought us the Apple v. Samsung debacle, the Apple tax avoidance debacle and the Apple ebook price-fixing debacle are capable of doing something right. The Obama administration announced that the ban has been overturned, the first veto of an ITC action since the Reagan administration. Samsung can still pursue their claims through the courts, but judging by their history of success on that front, they may just want to pocket the legal fees instead.

I’m sure Apple would rather have its California jury ruling actually result in Samsung being penalized for egregiously knocking it off – or have been vindicated of the ebook charges levied against it – but I guess with how fucktarded our government is, it shouldn’t look a gift horse in the mouth.

 Posted by at 11:43 pm
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