Innovation Speed = (Moore’s Law*Metcalfe’s Law)/Patent Lawsuit Activity

Yesterday I was engaged in a conversation with TMC senior editor Peter Bernstein and we were discussing the pace of innovation and whether there is some formula which can explain how much more quickly things are happening today. Interestingly I also had a conversation today with TMC webmaster and author Robert Hashemian where we were going over Apple’s earnings and how fast mobile leadership has changed – from Motorola to Nokia to Motorola to Microsoft to RIM to Apple to Google. And all these massive marketshare swings took place more or less in the last decade.

Back to the discussion with Peter – my takeaway from the conversation (I feel he has a slightly different opinion which hopefully he will expound upon in the future) is that Moore’s Law and Metcalfe’s Law working together are accelerating innovation and lubricating new business models. Obviously email is just one tool which has benefitted from these laws – think about how you can now create and respond to virtually all your email from a smartphone now. Think of the productivity gains from this advance alone.

Then there are services like Facebook, Twitter and LinkedIn which all leverage both laws and as they grow in users they become more powerful and useful.

Then there are ecosystem plays which allow a developer with a good idea to become rich overnight. Think Apple App Store or using Facebook as a gaming platform.

To me these laws need some sort of multiplier because they amplify one another. In other words a quad-core smartphone in your pocket has the approximate computing horsepower of a supercomputer just over a decade earlier. And when they are cloud-connected to a 4G network or WiFi it makes pint-sized gadgets very very powerful. So the formula would look roughly like this:

Innovation Speed = (Moore’s Law*Metcalfe’s Law).

This isn’t really a formula – so let’s say the equal sign is defined as “roughly proportional to.”

But there is more to it – there are unions, government regulations and taxes which could add drag to business and innovation. Then again tax credits could act as accelerant. For the sake of brevity I will leave these and other related factors out of my analysis.

Patents however is an area worth delving into – after all Google more or less purchased Motorola Mobility because of its large patent pool. I realize the company says this isn’t the case and the other products in the organization are very important but I must respond by borrowing a line from Tom Hanks in “Big” – “I don’t get it.”

So back to my formula – there are patent lawsuits all over the world – many being initiated by Apple, Microsoft and Oracle. It is really tough to keep track of them all.

So my formula could be modified as follows:

Innovation Speed = (Moore’s Law*Metcalfe’s Law)/Patent Lawsuit Activity

You can see that I assert that Patent Lawsuit Activity is the denominator of the equation which means that given enough legal fighting the entire effect of Moore’s Law and Metcalfe’s Law can be wiped out. I do believe this to be the case but this wouldn’t necessarily happen in reality. The reason is businesses typically would rather settle by paying a royalty instead of fighting lawsuits to the death.

It is worth noting that in the case of patent trolls – roughly explained as entities which charge patent licensing fees and don’t currently sell related products, is interesting because quite often companies settle with them as opposed to going through the lawsuit exercise. And smart trolls try to price their fees in a way that keeps them out of court.

As a disclosure my company TMC has partnered in a patent lawsuit conference to be collocated on February 1st at ITEXPO East 2012 in Miami. It is called SUITS which stands for Synopsis under IP/Patents Telecom Sourcing Conference. It is a first-time event and we recently started to promote it. The agenda looks impressive and if your company plans on being successful it more than likely will have to face the prospect of a patent lawsuit. It is generally better to be prepared for these things before they happen and that is the point of the SUITS event – to bring you up to speed on the legal issues you must know as part of operating a tech or communications firm.

And I would love your feedback on my formula – does this make sense to you? If not, how would you modify it?

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