From the category archives:


iPhone strategy? Build a product ecosystem.

by Andrew Watson on 14 July 2009

With the release of the iPhone 3GS, it’s got me thinking more about Apple and IP again, especially as my neighbour down the hall at ipVA towers just acquired a new iPhone and I helped him get it set up. As you’ve no doubt figured out, I’m a big Apple and iPhone fan, which is why I often use Apple as an example when discussing IP / business strategies. This article awhile back from InfoWorld “Why BlackBerry still beats iPhone for business users” sums up the iPhone strategy nicely:

The reason the iPhone has been a success is as much about it being part of a computing environment and ecosystem as it is the phone itself. There are things that make the iPhone so difficult to compete with.

IP plays a significant role in putting together and protecting Apple’s role within the iPhone product ecosystem. Consider:

  • The iPhone requires users download and install iTunes – Apple’s copyrighted software – to manage the device;
  • iTunes has its own store and numerous content deals (based on copyright) that allow for iPhone users to access the movies, TV shows, and music in the store on the device;
  • Users are restricted by carrier unless they pay full price for the device and unlock it to work with other systems;
  • New apps (unless your phone is “jailbroken”) come via the iTunes store, and Apple controls what goes into the store through its agreements with developers;
  • Technological measures make it hard for you to unlock or jailbreak your phone to get apps from other than the iTunes store. These technological measures not only are digital locks that can be difficult as a practical matter to go around, but can also be protected through civil and criminal law; and
  • Certain features only (AFAIK) work only with other Apple products, such as the “locate my phone” feature which can tell you where your phone is if lost or stolen but requires you to have a MobileMe account.

Apple exudes a sort of paternalism over their ecosystem as well – as in they say things like “we make sure bad apps that do bad things with your data don’t get through”. It reminds me a bit of AOL in the early days – it had no spam problem because all communication on AOL was between AOL users. AOL policed their walled garden well, but eventually had to open it up to the rest of the world and engage in the same kind of anti-spam tactics as everyone else. Building this kind of ecosystem seems pretty linked to providing some other kind of advantage to the user as well (rather than just locking them in), which in the iPhone case is sold as security, reliability, and better integration with other products.

I wonder if in the face of other OS systems such as Android, how long the full iPhone ecosystem can last. But certainly they’ve made a very formidable ring fence around the iPhone by building such a robust ecosystem.


DMCA and Apple’s iPhone – IP strategy

by Andrew Watson on 19 February 2009

Apple uses DRM within its iPhone to help control the iPhone developer application community.  Apple uses the terms in its SDK to limit how and what gets developed for the iPhone. It then controls what programs make it into the Application Store via iTunes via an application process. All this amounts to protection involving contract (SDK, app store submission), copyright, (software code), and DRM. The iPhone DRM means that if users want to run apps that aren’t sanctioned via Apple’s process, they will likely have to Jailbreak their iPhones.

In two earlier posts I noted about the use of DRM/TPMs – Digital Rights Management / Technical Protection Measures – as part of the controls around DVDs and with a clear example from the games sector around the differences in using these strategies in a B2B versus a B2C context.

The twist with the iPhone is that in the United States there is a rulemaking procedure to allow for the Library of Congress to make exemptions to anti-circumvention law (the DMCA for DRM/TPMs) every three years. The 2006 review introduced an exemption to allow mobile phone users to connect to any mobile phone carrier (unlocking your mobile).

While this exemption would work solely to switch carriers, it’s limited to that purpose and doesn’t fit with all the additional application features in smartphones. It’s 2009 and time for another review of the exemptions, and the EFF has submitted for an exemption to allow users to jailbreak their iPhones. Ars Technica covers the dispute in “Apple, MPAA, RIAA attack DRM circumvention requests“, with commentary from Fred von Lohmann:

“Sure, GM might tell us that, for our own safety, all servicing should be done by an authorized GM dealer using only genuine GM parts. Toyota might say that swapping your engine could reduce the reliability of your car. And Mazda could say that those who throw a supercharger on their Miatas frequently exceed the legal speed limit.

“But we’d never accept this corporate paternalism as a justification for welding every car hood shut and imposing legal liability on car buffs tinkering in their garages. After all, the culture of tinkering (or hacking, if you prefer) is an important part of our innovation economy.”

The broader public policy impact is always an important part when thinking about rules such as these and the relationship between IP law as a tool for public policy (and in thinking about some of the drivers behind open source and open innovation). But like Holmes (no, not that Holmes) we must consider the actual rights available as someone examing how to protect their product or service in the marketplace.

In terms of IP strategy, commercial strategy, and DRM, Apple has had to consider:

  • The hack-counterhack back and forth with those circumventing the iPhone DRM (the “jailbreakers”) and updating the iPhone firmware to prevent jailbreak;
  • Consumer reaction to App store choice. Essentially how well do the allowed applications meet consumer demand and whether there are more desirable Apps only available via jailbroken iPhone. If consumers are demanding “forbidden” programs and can’t have them, that leads to anger and frustration at Apple’s DRM. This seems to me to be of primary concern to the power users / alpha geeks out there, but these are an important userbase;
  • Consumer reaction to Apple’s arguments in the DMCA exception process, which has placed them in a similar position to the MPAA and RIAA and so might lead to a negative reaction among a segment of their user base;
  • The DMCA procedure itself and how that impacts the long term outlook for using DRM as part of their strategy to protect their product (such as realising the potential time limits built into that approach);
  • How if losing the DMCA exception review (thus circumvention would be allowed) impacts both the iPhone and other Apple products (the “slippery slope” argument that MPAA/RIAA make on allowing any circumvention).

Of course globally, Apple may be able to pursue a DRM strategy in other markets without fear of a review procedure such as the one in place in the US, though obviously the US is a major market for Apple.

What do you think?

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Spore: DRM and commercial strategy

October 17, 2008

Just because you can legally and technically lock something down doesn’t mean you should. Earlier this week I wrote about DRM in the context of RealDVD and using it as a hook to provide other restrictions. The ongoing saga over Spore‘s DRM is an example of where maxmizing restrictions on users through DRM can backfire […]

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Beyond IPRs: strategy around DRM

October 14, 2008

I just finished reading the analysis by EFF‘s Fred von Lohman of the RealDVD case, Why Hollywood Hates RealDVD, and it highlights pretty well other strategies beyond using intellectual property laws directly to try to protect a position, specifically around DRM. The case involves software that creates a back up copy of a DVD onto […]

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