Battle with Palm Will Turn Apple into Microsoft


A few years back, Microsoft went after Linux with threats of litigation that never materialized. From my vantage point, rather than eliminating Linux, the tactic lit a fire under the platform. For awhile, it was a rallying cry for developers and IT professionals who came largely to the defense of Linux; Microsoft hit a wall made up of its own customers. This customer base was made up of professionals, though, and there didn't seem to be much real impact at all on the desktop or personal technology.


Apple, however, enjoys a unique position. Unlike Microsoft, it husbands its image very well and manipulates the media very effectively. As a result, it can get away with massively anti-competitive actions. Part of this is because it isn't considered a monopoly, even though it effectively is in the MP3 player space. This too demonstrates that rules that may apply to others don't tend to apply to Apple.


Let's chat about how Apple, which clearly is acting like it thinks it has a competitive exposure, is playing the Microsoft IP card to FUD Palm.


Apple Playing Microsoft


Recently, Apple started going after Palm, suggesting that its arguably iPhone-beating phone was infringing on a massive 358-page mother of all Apple patents. Both companies are chasing developers. The WebOS platform, which Apple is partially targeting, is based on Linux. Palm's developer tools are much less proprietary and Palm is much less restrictive than Apple. In many ways, much like Linux was against Windows, the Palm Pre and its OS are the anti-iPhone; better in some things that the Apple device does well and 180 degrees from other practices that folks don't like.


Apple is using the 358-page patent to surround the Palm Pre with risk. Unlike IT buyers, though, phone buyers don't buy in advance. And carriers, particularly Sprint, are unlikely to be moved by this threat. In addition, Palm already has received $100 million in funding, which should be enough to get the product to market and handle any legal fees from Apple. So, at the moment, all Apple's efforts seem to be doing is causing folks to write about this, as-yet-non-existent phone. More than anything else, the result is probably more folks holding off on buying iPhones while they wait to see what kind of product has Apple so frightened.


A Reason for Apple to Be Scared


Neither the Palm Pre nor the WebOS that makes it work are in market yet, though both are more real than the iPhone was during the same time during its launch year. This means that when the Palm Pre hits, it will be closer to where the iPhone is now in terms of maturity. The only clear sustaining advantages on Apple's side are iTunes and the massive number of applications in Apple's application store. Neither of those two things is critical in the minds of the new buyer, though, because most haven't tried them on a phone yet. But both should do a reasonable job of keeping existing iPhone users from initially migrating.


Phone buyers are very fickle. Many who first migrated to the iPhone were not Apple fans. They were just folks who like to have the newest and coolest phone. This class of buyer may gravitate to the Palm Pre. We could see lines around Sprint stores when the product launches. Sprint, currently the least liked of the cell phone service providers, is clearly the Palm Pre's shortcoming.

Driving Palm are an inordinate number of ex-Apple folks who were key to Apple's success. They were either forced out, used as scapegoats, or watched Steve Jobs take credit for their accomplishments. This combination of capability and a deep anger probably can drive Palm to execute at a higher level than it otherwise would. Google feels strongly that Microsoft should be put out of business but it is more academic for that company. To many at Palm, this is personal. While that could also lead to mistakes, it will certainly drive incredibly long hours and a visceral desire to rub Apple's face in a much better product.


In short, Palm wants a war. Litigation is not only expected; Palm kind of looks forward to it.


Finally, Apple's 358-page patent will be nasty to defend; Palm was actually in the phone market before Apple and was working on devices like the iPod Touch that didn't come to market (huge back story here). Apple probably doesn't know about that. And, as I've mentioned, Palm is awash with ex-Apple executives who know where Apple's bodies are buried. That should make discovery much more interesting for Apple than Palm, with the word "interesting" not necessarily being a good thing.


Wrapping Up


Threats by a larger company against a smaller one tend not to go well. In an environment that is deeply personal as this one is, and to consumers who may actually relish the fight (as opposed to IT, which generally avoids fights like the plague), this could actually have the opposite effect of what Apple intends. Steve Jobs, who is at the core of the Apple image and is the true expert on assuring that the company can do things other firms don't get away with, is out on a medical leave. Tim Cook is probably the Bizarro-Steve Jobs, in terms of skills and capability. On this last, Cook is everything Jobs isn't, which means, as a team, they are ideal. But neither has the skill set to do the other's job. This effort against Palm is more in Jobs' expertise area than it is Cook's.


I'm not saying Palm will win, only that it is coming in stronger than any company in a similar circumstance that I've ever seen. And Apple is the weakest it has been in a decade with regard to execution and image, due to Jobs' illness. I am saying this will be worth watching because it will provide insight into what might have happened had Microsoft done more than issue threats, why it is better not to do massive patents, and why the patent process in the U.S. is incredibly broken. Oh, and how the new U.S. administration, which has an open source affinity, handles patent issues. For a lot of us, this will be better than the Super Bowl.