Apple and Patents

The internet has been abuzz on Apple’s recent patent war. My stance on this has always been that as a public listed company, Apple owes a fiduciary duty to maximise returns to its stakeholder and wielding the patent sword is just one of the many tools powerful companies have at their employ. Don’t blame the player, blame the (broken) game.

We can debate the merits and flaws of the existing patent system but that’s well covered. Perhaps, a more interesting question to ask is why has Apple taken such an provocative stance when it could have chosen to adopt a defensive posture instead?

When you have a company that’s built around a product visionary, and when many people are dependent on this person, the stakes are incredibly high. I imagine, as part of a ‘risk reduction strategy’, that the C-Suite executives have been planning for a scenario where Steve Jobs might no longer be with the company, be it for natural causes or not. Deepening the moats through patent protection is a good method to stall while they scramble to find the next Steve Jobs. Paul Graham said that he spoke to someone ‘high level’ at Apple and asked if there’s any more ground breaking products in the pipeline — the answer was: noI suspect that a side result of this is that Apple will start using it’s massive cash reserve and go on an acquisition spree to try and find the next product visionary.

Faced with such a predicament, the most rationale decision management can make is to protect the company’s interests at all cost and milk the cow for all it’s worth while they can. Apple has at most 2 -3 cycles of products ahead of them that have been in planning for many years now. After which I imagine, they are going to plateau and their growth numbers are going to decline. They are going to be cruising at a steady state, reaping the harvest sown by Steve Jobs. So bring on the patent wars, Apple has a fort to defend.

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