Sunday, October 9, 2011

Take a bow, Steve!

Steven P. Jobs, the founder of Apple Computers and one of the most popular entrepreneurs in history died on October 5, 2011.

By now this is old news. The obituaries have been posted, eulogies showered. After all, he was a darling to many. Consumers loved the products he delivered. Connoisseurs appreciated the beauty, simplicity, utility and technical details in them. Stock brokers loved the money they made from trading Apple's stocks. Retailers, content producers, application developers, telecom companies and component manufactures benefited from their relationships with Apple. Politicians - especially American politicians - loved him for keeping the American economy and pride going by delivering innovative products that the markets world over craved for, even in the face of the recession. Even rival companies benefited from the economic activity his products helped create.

He was labelled variously as visionary, inventor, innovator, communicator, salesperson and a beautiful mind. His business methodology became subject of study at management schools. His stage shows turned the technology world into frenzy. His product announcements were eagerly looked forward to, widely reported and greeted with fanatical cheers. His demeanour, simplicity, the control he exercised over the creation and usage of his products, his abrasive behaviour towards his employees, the iron curtain around his private life, his close relationship with fellow tech entrepreneurs, the aggressive defence of his firm's intellectual property - all defined the character of the man that stood so high in the public eye. He was essentially the public face of Apple, the company, so much so that often his name and the company's name were used interchangeably.

If we look closely, Steve Jobs did not invent anything new. Portable music (MP3) players existed long before iPod came along. Smartphones existed since the days of Nokia communicator (1996). Microsoft tablet PCs were commercially available eight years before iPad was released. When we mention File sharing the first name that comes to mind is Napster, not quite iTunes. Even his glittering product launch spectacles were not original - Oracle's chief Larry Ellison was the first to do such stage shows (in the tech world it is called the "Larry Ellison show" even when he is not involved). Despite all these, Apple (and Steve) became the greatest success at delivering these products and services individually and as part of a digital ecosystem.

There are two factors at the core of this success - product design and control.

All Apple products, without exception are beautifully designed. Small form-factor, stunning appearance, intuitive user interface and beautiful packaging made its products highly desirable. A few years ago, a colleague of mine described the vivid expressions of her son when he was gifted an iPod for his birthday. It came in exquisite packaging as if it were jewellery. He opened it with wide eyes and on seeing the gleaming red gadget inside, crooned "Oh, my baby, my baby". Of course, the excitement came at a price to match. That is another peculiarity with Apple's products - they are never cheap. It is probably that high price point, combined with the appearance and packaging that made Apple products a much-coveted gift during the holiday seasons over the years. After all, who wants a cheap Walmart toy for a gift! Beauty and uniqueness were always Apple's USP.

Apple very soon realised that it is just as important to have content for their devices. Enter iTunes. In the past decade nothing has revolutionised the recording industry quite like the iTunes (if we briefly ignore the illegal pranks of Napster, Kazaa and all). Consumers could purchase single tracks legally from the iTunes store instead of having to purchase entire albums - most of which had a track or two that people wanted to hear a second time. The amazing price point of a dollar per track made it an incredible value proposition. Quite a few of the artists saw great opportunity in this transition - now they could market their own music directly to the customer without having to go through the recording industry's middlemen and pompous publicists. The result? Almost all of the music retailers in North America went out of business. Apples business model inspired companies like Netflix and Hulu to start legal video streaming services at a price anyone could afford. Whatever life was left of the disk vendors and video rental companies, was sucked by the recession of 2008.

With enormous market success came enormous power and Steve was nonchalant in using that power. In the following years and with the release of each product we saw the overbearing patriarch in him. Initially he was not too keen on producing a phone or a PDA or a tablet. It was understandable. In North America, the phone carriers owned the cell phone customers. Almost all cellphones were bought through the carriers - the customers got discounted phones in return for long-term contracts. The phone manufacturers were at the mercy of the carriers. With the success of his products, Jobs could speak on level terms with the carriers - in fact he would get the carriers to sell his phone on his own terms. The iPhone was launched exclusively through just one carrier in each country. He refused to allow his product to be treated as an accessory to carry the carriers signals. For him (and eventually his customers) the iPhone was the star - the carrier was just one of the service providers and accessory suppliers. To this date one will never find the carrier's logo on an iPhone case. Eventually he let up on the exclusivity of carriers but by then it was clear to everyone, who owned the iPhone customer.

The launch of the iPhone was a landmark for Apple - it was from that point that the company started exercising enormous control over the design, manufacture, delivery and usage of their products and over the relationship with its partners. The company vehemently chased down those responsible for product leaks at the design, manufacturing and delivery stage. Customers were not allowed to change anything on their devices - not even their phones' batteries. All cables, docks and connectors had to come from Apple or its authorised suppliers. Parts manufacturers, assemblers and their employees were not allowed to disclose information about their supplies to Apple - they were all bound by very stringent non-disclosure agreements. In some cases, Apple was seen to do pre-emptive sourcing of components (placing enormous orders with exclusive parts manufacturers so that competitors would not be able to get them). When "Jailbreaking" became commonplace to work around restrictions imposed on devices, Apple would attempt to "patch" them back to original state or void the warranty. Even Apple's operating system "Mac OS X", which is sold as independent software, is not allowed to be installed on hardware of your choice - it had to be installed on Apple's hardware only. When a US-based company named "Psystar Corporation" attempted to market a custom-built computer which had legally-purchased Mac OS X preinstalled, Apple sued them for violating the Digital Millennium Copyright Act and won. Most recently, Apple entered into a series of legal disputes with Samsung - which ironically is one of Apple's major component providers- for violating their patents. They even went to the extent of getting courts to block the sale of some Samsung products (smartphones and tablets) in various parts of the world.

To label Steve Jobs as an arrogant paranoid control freak would be far from truth. In fact, the best description of his personality and its evolution, came from the man himself. In his commencement address at California's Stanford university in 2005, he uncharacteristically talked at length about himself - his evolution in life and even about his death. I strongly suggest that you read and watch his speech yourself, for, it is impossible and unbecoming to summarize or annotate it. That one speech reveals his thought process, his excellent communication skills, his attitude to life and work and most importantly his principles. His overarching dictatorship of the Apple empire was perhaps prompted by his expulsion from the company he founded. His frantic efforts to bring out first-in-class products was perhaps fired by the knowledge of his terminal illness. He was a practising Buddhist - which, in my opinion, is the only philosophy that a completely logical person can get along with. His minimalist appearance was in sharp contrast to the glittering extravagance of his products. He shared a very cordial relationship with Eric Schmidt of Google and Mark Zuckerberg of Facebook (in fact Mark described him as his mentor). He was a devoted family man. He was also an intensely private person - Wall Street often alleged that he was disrespectful to thousands of investors who had a stake in Apple, by not adequately and quickly reporting his medical condition (which had a bearing on Apple's stock prices).

The most important thing to remember about him is that he changed the digital world for ever. Even those who have never used a single product from Apple or never been involved anywhere in their supply chain, benefited from Apple's creations. Recently, I received an upgraded Blackberry from my employer. It came with a full touch interface and no hardware keyboard - just like the iPhone. The display is crisp, the browser is fast and it came with a lot of applications. This Blackberry would have been unthinkable even three years ago. The enormous success of Apple at such high price points ensured continuous orders for parts suppliers, which in turn led to further innovations and lower prices for the electronic components used by all device manufacturers. There wouldn't have been a beautiful, powerful and feature rich Android operating system found in some of the popular smartphones of today, but for the pioneering work by Apple. Even Blackberry evolved from a Government servant's dull communication device to a desirable consumer product. My Ubuntu Linux desktop's "Unity" interface would be able to trace its pixel ancestry to Mac OS X. Windows 7 and the upcoming Windows 8 put more focus on the user experience primarily because of the challenge thrown by the Apple's Operating System. Social networking sites like Twitter and Facebook are credited with revolutionizing our social life, but they are just web sites - they would not have had the ability to galvanize popular movements in Egypt, Syria and Libya but for the mobility of the internet pioneered by Apple.

Apart from the lessons that we all learned from his Stanford speech, Steve Jobs' life teaches a few more. The ingredients for your success can be found all around you. Your success lies in the value that you create out of them. The popular iPhone's components are sourced from manufacturers all over the world. The total cost of those components (minus the operating system, of course) is just a third of the retail price of the device. Even including the retail cost of the operating system, it can safely be assumed that Apple makes 40 to 50 percent profit on each device it sells. Another lesson learnt is that even with all the features and conveniences that comes with technology, human elements like beauty, exclusivity, simplicity, ease of use and relationship with everyday lives matter. Last, but not least - Scientists may bring about the important innovations that make our lives better. But it will always be an artist's effort that will be the most loved by the world. Love matters, in the market.

You have lived a complete life Sir. Thank you for changing our lives for the better. Take a bow, Steve!

Friday, May 20, 2011

Engineer, Teacher and Lawyer

Among our professors, Prof. Tom was quite unlike others. He was very well built, handsome, young, well dressed, well spoken, full of life, carried a brilliant smile and.....was European! In the campus, we were all special because of him - we were the privileged ones from a developing nation who had a visiting professor from a reputed European university showing the ropes.

Our first introduction to Prof. Tom (not his real name) was at the beginning our second semester-he would teach us Engineering Drawing. He came across as an extremely friendly but an equally strict and disciplined teacher during class hours. He would close the doors of the classroom precisely ten minutes after the scheduled start of the class (anyone who came later would have the misfortune of missing his lecture altogether and losing the attendance), his assignments were always due on time, his classroom drills were tuned to perfection, he kept the students engaged and on their toes and he never compromised. But outside the class, he would be just another man - you could invite him over to the hostel for a meal (and we used to call him over whenever our hostel mess had Biriyani for dinner - which he seemed to enjoy immensely), he would not mind coming in for any "officially sanctioned" booze parties and would never shy away from discussing girls (though he always kept it dignified compared to the teenagers that we were).

He sure had a special place in my heart and so, many years later, I was curious how he was doing. Europe had undergone profound changes by then - the old communist totalitarian regimes had collapsed and the near monolithic (economically, if not politically) European Union had come into being. Skilled labourers and well educated professionals could now move without barriers within the union, including ones from erstwhile communist nations. This created a glut of human resources within rich Europe and huge commercial opportunities within the poor ones. I was, therefore, interested to know how he positioned himself during this period of economic churn - whether he benefited from it, stayed pat or lost out.

So I sat down in front of my computer on one of those lazy afternoons and typed his name into the heavenly Google search box. At the time, only a few results were returned and only one of them had a perfect match for his first and last names. It turned out to be the web site of one of the law firms and I was pretty much about to disregard it before I decided to casually click his name from among the list of lawyers. I was simply astounded to see his picture and his job description - he had by then become a "patent attorney"!

That surely boggled my mind. If you look at a survey of the most respected professions in any country, the teacher would be rated among the highest and an engineer wouldn't be much further behind. So, if I were to extrapolate, an engineering teacher would surely be a very highly respected person. By comparison a lawyer (that too an "intellectual property lawyer") would be one of the lowest in the totem pole - possibly only a little less disliked than a politician. Why on earth would he chose to be a lawyer in his middle age? Of course I can understand the privilege and money that comes with it, but what is it about engineering that he found so dispensable that he would spend time and money to re-qualify as a lawyer?

I decided to ask. I sent him an email in his law firm's email address. He responded promptly and warmly. He explained how the European Union had affected the prospects of universities that were in close proximity to each other and why he decided to get into an alternate career. He had to go through a tough European Qualifying Exam in which only 10% passed at the first attempt. He seemed happy with his new profession and he ended his note by saying that his firm handles "everything to do with Intellectual Property - including licensing, litigation and prosecution".

Ominous, isn't it!

In subsequent emails he explained how he goes about enforcing his clients' intellectual property rights in the big bad world out there. In addition to going through every patent filing that ever was, he would often go to trade and tech expos. The main intention of going there, obviously, is to make sure that none of exhibits are potentially using, wholly or partly, any of his clients' intellectual property. If one has the faintest idea about what kind of silly things can be patented and how broad the interpretations can be, one would realise how years worth of hard work and innovation can be destroyed with a single strike of an attorney's pen.

The one thing that separates humans from other living beings on earth is the ability to accumulate knowledge and by extension the ability to share and improve upon each other's ideas. It is this unique ability that has enabled them to travel right up to the top of the food chain despite their obvious physical and sensory limitations. We would not have had societies, governments, religions, inventions and the infinitely networked modern conveniences without our ability to create and share ideas. So who, in their infinite wisdom, decided that it is appropriate to colonise ideas, which is essentially what the administration of "intellectual property" about?

Therein, lies the point. Men always had the propensity to colonise, ever since they started living in social groups. Man's uncanny ability to communicate, co-operate and congregate did not exactly teach him to co-exist and share knowledge for the benefit of each other. Instead it enabled a manipulative few to colonise resources, assert dominance over people and engineer the behaviour of societies for many generations. Formation of nations (ruled by dictators, of course), creation of feudal societies, the class/caste system, slavery, wars and imperial conquests are all historical testaments to the propensity of the human elite to colonize. Even religions and social order were designed in a way that would perpetuate the existence of elitism as a right. The origins of intellectual property rights can also be traced to this manipulative behaviour.

During the latter half of the twentieth century, the elite probably realised that physical colonisation land also came with risks and responsibilities associated with having to manage people living in the territory. Then came the brilliant idea of the "free market economy" wherein it was possible to colonise markets and be bothered only about "consumers" without having to be bothered about the welfare of the people living in the market territory or its environmental well-being. Political systems were re-crafted in a way that would retain the control of market by the elite, give an outward impression that the "electorate" is responsible for the fortunes and misfortunes of people, and the executive would have sufficient might to suppress dissent outside the framework of "the law". Initially, this market colonisation meant that the producers of industrial goods had an infinite advantage over those who could not produce goods for the marketplace. With the advent of manufacturing sweatshops across Asia and Latin America, the notion of idea as a property became a simpler and more potent colonisation tool - in that anyone who has skill and the means to produce, has to first pay a tribute to the person who "owns the idea".

Commodification of knowledge inevitably resulted in patent raiders attempting to corral readily available “undefended” traditional knowledge and non-commercialised inventions. Attempts to patent turmeric and Basmati rice elucidate the dark side of patent administration and the intentions of transnational corporations. Just as ominous are the efforts to usurp the intellectual wealth contained in traditional Chinese and Indian herbal medicine. Obviously it is much easier to colonise unregistered readily available knowledge than having to go through a process of spending and hard work to invent or discover new ones. Similarly intriguing are the efforts by the so called “patent holding companies” who themselves are simply incapable of any scientific innovation but amass huge quantities of trivial non-commercialised ideas or inventions in hope of leeching money out of someone who eventually creates a commercial value for them. It is almost useless these days to conduct research outside the realms of huge multinational corporations. Unless you are willing to sift through reams of intellectual property filings, you will find that your own years of hard work was wholly or partly already registered in someone else's name in such vague and stretchable terms that you can be inferred to have committed an infringement.

I am not saying that there should be no commercialisation of knowledge. I realise that scientific research today is much different from the one from the days of Newton. There is a lot of spending involved in terms of equipment, real estate and resources to set up a research facility and in spite of that, the researchers hit up on a commercially successful project only once in a while. Drug manufacturers are well known to lose their market value heavily, the moment they fail to get an approval for a new drug from the government - so much of their well being is tied to the intellectual property that they are allowed to keep. There needs to be a different system to fairly compensate and support legitimate research establishments and researchers, when their projects are successful and when they fail. The current intellectual property regime seems to benefit the legal wranglers rather than genuine innovators- it is by no means a genuine way to compensate and reward the efforts of the beautiful minds of the world.

Okay, enough ranting.

I do not see the intellectual property regime continuing to be enforceable the way it is. The main reason, as I mentioned before, is that humans, by nature, shared and improved upon each others' ideas – and such cooperation has been the bedrock of our evolution as a civilisation. Secondly, it takes a draconian police state - almost as brutal as one that is needed to sustain a dictatorship - to enforce it. I cannot see the dictators themselves being interested in enforcing intellectual property rights of foreign entities, and the third world democracies of various hues are even less likely to be interested or able to do so. Unless China, India, former Soviet states and Latin America wholeheartedly implement the intellectual property rules set by the US and the European Union, I believe that the current practise of colonising knowledge will crumble under its own inner conflict. There are already noises about China trying to “steal technology” from the developed nations, India manufacturing “generic versions of patented drugs” and Russia being the hotbed of piracy.

I do not think that the elite's attempts to rule by proxy will end there. There will always be the “middle class” intellectuals available for hire who would come up with a new instruments of exploitation and colonisation. Nor do I think that the intellectual property regime will collapse in Prof. Tom's professional lifetime - how long ever he chooses that to be. I wish him well. His profession - not so much.