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Trials and Tribulations for Apple, Origami, HP and Gateway

Three bits of news got me thinking about personal computers last week. The first was the “surprise” announcement from Apple that it was getting into speakers and, yawn, building an Intel-based Mac Mini. The second was Hewlett-Packard’s (NYSE: HPQ) settlement with Gateway (NYSE: GTW), and the third was the “secret” Microsoft Origami project, which most got wrong in initial reports.

Apple’s Yawner ‘Surprise’

What if Apple held one of its famous, secret-revealing press conferences and no one came? That’s what happened for the most part last week after the company announced its new Mac Mini and iPod speaker set. I am among those who believe that Apple has a clue when it comes to the digital home, but what I saw last week gave me pause.

It was a slow week, granted, but come on, making a big deal about announcing the Intel Mini and a speaker was just lame. Apple really should have announced its new Mini when it announced its other Intel-based products last month.

Next time Apple makes a “big” announcement will it be that the company is making its logo 3 millimeters larger? Or will it announce the Apple ballpoint pen?

There are two problems with stealth marketing, something Apple has, historically, been expert at. First, you have to be sure that you deliver on the promises you make. Second, the situation can quickly spin out of control.

Apple suffered in both areas last week. This latest announcement didn’t live up to even the most conservative view of what people would expect from a company like this, and before it happened, speculation around the announcement grew out of control. As a result, many were deeply disappointed with what was actually tame, unexciting news.

A lot of computing industry players are trying to emulate Apple right now, so it is good to remember that there are positives and negatives to the company’s low-dollar marketing approach. Even an expert like Apple can clearly lay an egg.

Origami: Microsoft’s Stealth Product

Speaking of stealth, Microsoft lit a massive fire under the market last week when the company put up its Origami Project Web site. Immediately there was a feeding frenzy among folks trying to find out exactly what this thing was. Eventually someone ran across a telltale video, but no one really knows whether the video has anything to do with the real product (thus the “mystery”).

However, until this video surfaced, folks were speculating that Origami was the rumored Microsoft iPod killer. Given Microsoft’s approach with all this is similar to what Apple typically does, I think the company is attempting to bring to market a product that could become as exciting as an iPod. However, I doubt that this offering, whatever it is, will be an iPod killer.

Something along the lines of the original Mac is probably closer to what this product is. If you were to clean-slate a Mac-like product today that also anticipated the future, considering all the technical advancements we have made since the 1980s, wouldn’t it be a small mobile device?

Or could it be an iPod killer? A few weeks ago I wrote about possible displacements for the iPod and replacements for the BlackBerry. I’ll be darned if the product I was talking about doesn’t look a lot like the product featured in the mystery video. With communications, a deep accessories line and an affordable price, this thing could be really powerful, particularly if it’s customizable and has solid wireless networking capabilities.

Imagine leaving your laptop at home and using a device like this, coupled with secondary products like the Slingbox, to watch television content streamed or through TiVo To-Go anyplace you travel. I could also envision running my TomTom navigation software on it so I wouldn’t have to pay for Hertz’ Always-Lost navigation system. The nice thing about an integrated product like this is that it lets users navigate, listen to tunes, and send or respond to e-mail while watching a video. In other words, it lets users multi-task.

The fun for me with all of this is in imagining what this product could actually be — it could become something truly amazing. As Apple has done so many times in the past, let’s see if Microsoft can step up to the plate and swing for the fences this time.

HP and Gateway (Sort of) Bury the Hatchet

Litigation may be considered California’s state sport, so it isn’t too surprising to see two firms located here go at it in court. This recent spat goes back to the early days of eMachines and Compaq when Compaq, faced with a rapidly growing eMachines, successfully used the courts to slow eMachine’s growth. Unfortunately, Compaq should have been more focused on its own internal problems, which ultimately cost the firm its independence.

eMachines did end up paying a rather large royalty to HP after that company acquired Compaq, but HP was having revenue problems and then-CEO Carly Fiorina felt the need to get aggressive. Typically the PC firms don’t sue each other because the result, as we learned in the 90s, is a rat’s nest of litigation where only the attorneys get rich. Fiorina clearly understood little of this. As a result, when Gateway, which was not paying HP a royalty, acquired eMachines, HP moved to sweeten the deal for itself.

HP likely felt that if it was able to get eMachines to pay royalties, it would be able to get Gateway to pay at a similar rate. HP cancelled its agreement with eMachines and attempted to renegotiate with Gateway. However, unlike eMachines in the ’90s, Gateway was relatively well funded and the company had patents of its own, so, it said “no.”

With intellectual property exposures on both sides this quickly degraded into an attorney’s fantasyland of fees and so, finally the two companies have settled. Essentially Gateway ended up paying a lesser sum than it would have had the original agreement never been cancelled by HP, and HP recovered little more than its attorneys’ fees.

While these two firms were suing each other, Dell continued to advance, Acer became more of a real threat, and both Gateway and HP missed opportunities to take advantage of the transitional period that resulted when Lenovo acquired IBM’s PC division. In addition, Intel got dragged into court and actually came to Gateway’s defense — never a good thing, and the case is likely to anger Microsoft at some point as well.

Similarly, as you may recall, NTP went after Research In Motion as a result of RIM getting aggressive on IP. It’s easy to see why most of the firms in this space are using their IP portfolios defensively these days. However, the danger of drawing in a third party that is well prepared, or, of finding out — catastrophically — that IP you thought you owned is actually owned by the folks you are suing is simply too great.

We’ve learned a lot over the last 24 months about IP litigation. One important lesson: only the attorneys seem to benefit. Maybe it is best to just stay out of it.


Rob Enderle, a TechNewsWorld columnist, is the Principal Analyst for the Enderle Group, a consultancy that focuses on personal technology products and trends.


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