Try this for a prediction. According to Forbes.com Apple will hit $1650 per share by 2015 and be worth over $1.6trillion.
I’ve had this theory for a while, bringing this back to IP, that Apple’s patent fights of 2011-12 and the panic buying of MMI by Google are about one thing–the price for community access. Apple, in my theory, is building the World’s largest community and hasn’t even started monetising it yet. But its major difference over say Facebook or Google is that it is a deeply personal and intensely pleasurable thing to be part of the Apple community. A community that doesn’t compromise on substance or style. A community users want to be part of and which could pervade all parts of a user’s life.
Ask me for my payment details and to process all my payments through Apple-done, ask me to use Apple as my search provider-done. To be my social network provider-done. In fact, ask just about anything and the answer is yes of course.
And why? Because there is no compromise and Apple is trusted by an increasingly large community. Who know that Apple makes things feel good and makes them simple and stylish. Trust. As simple as that.
My theory expands into imagining what keeps Larry Page and Mark Zuckerberg awake at night. Answer. Apple competing in their core markets. Search 3.0 and Social Media 2.0.
And what should but probably doesn’t keep various banking giants awake at night. Answer, Apple competing in their core retail banking markets. I don’t think the banks will even see it coming.
There’s a deep IP angle to this.
We reported a couple of weeks ago that activist investors were pressing AOL hard to monetise their patent portfolio. The Board has apparently responded by appointing Evercore Partners to explore ways to do so.
We’ve said for a long while now that patent monetisation is passing through a phase, an epoch where monetisation is viewed through a one-D lens of “I’ll wave a big litigation stick at several large companies, particularly those later but more successful market entrants and that will demonstrate the value of my IP” or variations on that theme like “getting someone else to buy my stick and waving it at several large companies, particularly…..etc etc”.
I was taught a basic lesson in economics by an investment banker some while ago and it goes like this. If you can see a benefit then also try to work out where the cost is, it may not be obvious. And it particularly may not be obvious in an intangibles world where the impact may not be easy to see. Let’s explore that theory and wonder where the AOL cost could be.
According to our intangibles model, the benefit will be found by AOL in some short term disruptive revenues. Expect AOL to find some patents that Facebook, Twitter or a host of other web-based success stories are infringing and to take licensing revenues from them. The revenues may even be turned into a capital sum by selling off all or part of the portfolio and taking a license back. All pretty mundane and frankly unimaginative. And very short term. The sort of plan that could only really be invented by a legal mind.
And the cost? In our minds both Yahoo! and AOL will feel the cost in their corporate reputation. In fact Yahoo! could also feel it in its own pocket in net payments out if Facebook has done its job well in what it has bought from IBM. AOL too could feel the wrath of a newly patent confident and stocked up Facebook if it decides to wave its stick in that direction.
Short term revenues 1, corporate reputations nil, or in fact more likely minus a lot. Not a good outcome. Perception wise neither benefit. They would, we think, be better trying to work out how to better out-innovate and reinvent themselves. Think different. Facebook is not a popular social network with many of its users as it scrambles to monetise its base. Is there not a better way, focussed on giving a better consumer experience, than dragging a reputaion through the IP mud?
Food for thought AOL board?