Archive for January, 2012

Kindle Fire, a business question

January 7, 2012

The Kindle Fire is a wi-fi only device which is first and foremost designed to consume content from Amazon. I wonder whether the business model would support Amazon offering free mobile connectivity (3G) with the Fire, as it did for the Kindle.

From the consumer’s point of view, the benefit is obvious, even if there is a charge or some data cap to access non-Amazon content (like browsing or using non-Amazon apps).

From the carrier’s point of view, this would solve a pricing problem (how to charge for connectivity and bandwidth), as they would get paid more or less proportionally to the bandwidth used.

Finally, for Amazon this would greatly increase the attractiveness of the Fire to consumers, simplify the consumer’s experience (no data contract, no monthly fee or data cap except for non-Amazon services), and help sell more of its content.

The question is whether this is financially doable. It seems to have worked for the Kindle. But e-books do fetch a higher price relative to bandwidth than do movies or music.

I ??? Patent Trolls

January 6, 2012

This may surprise you given all the recent animosity towards patent trolls, in particular in the tech and software fields. What I love about patent trolls is that they reveal the brittleness of the concept of “intellectual property”. The trolls’ abuses should make it obvious that any patenting is trolling. I hope this will bring people to realize that IP laws are illegitimate and should be repealed (both copyrights and patents, but I’ll focus on patents for now), and that there can be no right to own an idea or invention.

What is a patent troll? The most common usage relates to companies that hold and enforce patent portfolios for inventions they are not actively manufacturing. But it is also starting to be used more generally, when the patent is being used against competition, even when the invention is being developed (the patent war in the mobile technology, for instance), or when the patent covers a trivial or common idea.

 

The broader interpretation should strike you as extremely subjective. After all, the purpose of a patent is to grant its holder monopoly control over the invention. The holder may choose to license it to others, or not. If it is the holder’s property, why can’t they enforce their ownership unconditionally and universally? When is it “unduly aggressive or opportunistic”?

But even considering the narrower definition, it is difficult to see what exactly the troll is doing wrong. If ideas and inventions were truly property, it shouldn’t matter how the owner is using it. Is stealing a bicycle from the store less of a crime simply because the bicycle is apparently idle? Is the store owner a troll for holding the bicycle and demanding payment from those that want to use his bicycle (even if he’s not actively riding it)?

It shouldn’t even matter whether the holder actively pursues infringers. If stealing is wrong, the public at large would treat the infringers as criminals even if the patent owner didn’t notice the theft or isn’t pursing the criminal. Think of how you would react when witnessing a thief stealing a car (even if there are no cops chasing him). If patents were legitimate property, maybe the patent office or third parties should be allowed to pursue any infringer, regardless of the choice of the patent holder?

 

One thing is clear: IP laws are full of subjectivity (what is a distinct or novel invention? when does inspiration become copying?), arbitrariness (if you really own that idea, how come you only get to own it for 15 or 25 years? why are patents allowed in some fields but not others?) and manifest contradictions (simultaneously aiming for stricter enforcement and less enforcement/trolling).

As explained by Stephen Kinsella in Against Intellectual Property, the key to unraveling the mess is realizing that intellectual property cannot really be property as it is incompatible with actual property. The summarized reasoning is that ideas, unlike bicycles, are not rivalrous (my using your idea isn’t taking it away from you, as you still have it) and that enforcing patent laws necessarily involves violating property rights (why can’t I use my body, my brain and my property, materials and tools, to build a any mouse trap, including one similar to yours?).

 

Blind to those moral and philosophical considerations, some still pursue the illusion of a “better patent system” supposing that patents bring some greater social good, namely that they encourage innovation and increases.

But such empirical claims beg empirical validation. As detailed by Boldrin and Levine in Against Intellectual Monopoly, it turns out that IP laws do not promote innovation on net. The incentives brought about by the IP protection are outweighed by the disincentives of the patent minefield (often controlled by large incumbents and so-called patent trolls), the wasteful workarounds to step around the mines (invent substitutes instead of taking advantage of prior inventions), the reduced pressure to keep inventing to stay ahead, and the costly litigation (diverting massive resources away from valuable R&D).