IBM Ecosystem: $1 billion Drives 40% Profit

"The new I.B.M. mainframe, according to the company, represents $1 billion in research and development spending over three years...sale of mainframe computers accounts for only about 4 percent of I.B.M.’s revenue these days. Yet the mainframe is a vital asset to I.B.M. because of all the business that flows from it. When all the mainframe-related software, services and storage are included, mainframe technology delivers about 25 percent of I.B.M.’s revenue and more than 40 percent of its profits"


This type of leverage is the key behind Apple and Google / Samsung success. It will be hard for their competitors to fight ( Apple vs. Samsung: Not Really an Apple Win ).

Ron Maltiel
www.maltiel.com




I.B.M. Mainframe Evolves to Serve the Digital World
http://www.nytimes.com/2012/08/28/technology/ibm-mainframe-evolves-to-serve-the-digital-world.html?_r=1
By STEVE LOHR August 28, 2012



I.B.M. is introducing on Tuesday a new line of mainframe computers, adding yet another chapter to a remarkable story of technological longevity and business strategy.

The new model, the zEnterprise EC12, has strengthened the traditional mainframe’s skill of reliably and securely handling vast volumes of transactions. That is why the mainframe is still the digital workhorse for banking and telecommunications networks — and why mainframes are selling briskly in the emerging economies of Asia and Africa.
The new models have added capabilities for computing chores that are growing rapidly, like analyzing torrents of data from the Web and corporate databases to predict consumer behavior and business risks. Name a trend in corporate computing — cloud computing, data center consolidation, flash-memory storage, so-called green computing — and I.B.M. executives point to tailored features in its mainframe that deliver the goods.
The death of the mainframe has been predicted many times over the years. But it has prevailed because it has been overhauled time and again. In the early 1990s, the personal computer revolution took off and I.B.M., wedded to its big-iron computers, was in deep trouble. To make the mainframe more competitive, its insides were retooled, using low-cost microprocessors as the computing engine.
Like any threatened species that survives, the mainframe evolved. It has been tweaked to master new programming languages, like Java, and new software operating systems, like Linux.
“The mainframe is the most flexible technology platform in computing,” said Rodney C. Adkins, I.B.M.’s senior vice president for systems and technology.
That flexibility is a byproduct of investment. The new I.B.M. mainframe, according to the company, represents $1 billion in research and development spending over three years.
I.B.M. has also invested beyond its corporate walls. Nearly a decade ago, fearing that its mainframe business would wither if retiring mainframe engineers were not replaced, I.B.M. went out to universities, advocating for mainframe courses and offering support. Today, more than 1,000 schools in 67 countries participate in I.B.M.’s academic initiative for mainframe education.
The sale of mainframe computers accounts for only about 4 percent of I.B.M.’s revenue these days. Yet the mainframe is a vital asset to I.B.M. because of all the business that flows from it. When all the mainframe-related software, services and storage are included, mainframe technology delivers about 25 percent of I.B.M.’s revenue and more than 40 percent of its profits, estimates A. M. Sacconaghi, an analyst at Sanford C. Bernstein.
The I.B.M. mainframe story offers a glimpse of why manufacturing can be crucial to an American company — and to the economy as a whole — even though high-end manufacturing does not employ large numbers of factory workers.

Over the last 15 years, I.B.M. has aggressively globalized its operations and work force, and pulled out of manufacturing businesses including personal computers and disk drives.
But I.B.M. held on to its core mainframe business, whose development is supported by thousands of engineers and scientists. Mainframe parts are produced in I.B.M. facilities in the United States, in Endicott, N.Y., and Fishkill, N.Y., and in Germany and elsewhere. The final assembly work is done in Poughkeepsie, N.Y., where I.B.M. opened a $30 million mainframe plant in 2010.
A mainframe costs more than $1 million, and higher-performance models with peripheral equipment often cost $10 million or more. Yet even young companies and emerging nations, analysts say, find the expense worth it for some tasks.
Comepay, for instance, is a fast-growing company that says it operates more than 10,000 self-service payment kiosks in Russia, where consumers pay for products and services ranging from Internet service and cellphones to electric bills. Comepay handles millions of transactions a day, and the volume is rising. The Russian company bought an I.B.M. mainframe in 2010.

“Mainframes are extremely reliable,” said Ruslan Stepanenko, chief information officer of Comepay. “It keeps working even when the transaction load is very high.”

Last year, the Senegal Ministry of Finance bought two I.B.M. mainframes to help monitor all the imports, exports and customs duties at the African country’s 30 border checkpoints.
Performance, security and reliability were the main reasons for selecting the mainframe, said Momar Fall, a manager and mainframe technical specialist in CFAO Technologies, an I.B.M. partner in Senegal. But another advantage in a developing nation, he said, is that the mainframes are constantly communicating over the Internet with a remote I.B.M. support center.

“So seven days a week, 24 hours a day, I.B.M. is looking after them,” Mr. Fall said.

Longtime mainframe customers say the technology has done a good job keeping up with the times. Last year, Primerica, a financial services company, purchased its 19th mainframe in 30 years.
David Wade, chief information officer, has worked for Primerica, based in Duluth, Ga., since its first mainframe arrived. With more than four million life insurance customers and more than two million investment-account clients, he said the company needs the reliable processing technology of the mainframe. “It works like nothing else,” Mr. Wade said.

Apple Seeks Injunction Against Old Samsung Phones

An indication that the Apple win in its trial against Samsung would not have a strong impact is the fact that the eight phones that Apple ask for injunction from the judge are older phones. Those phones are not being sold in the USA.

Additional issues with the jury decisions are in Apple vs. Samsung: Not Really an Apple Win .

A video of  Apple Jury foreman perspective -  Here's How We Reached a Verdict

A list of the phones that Apple sought injunction against are in the article below. Another good summary of the likely future impact is at Apple's $1 Billion Win Over Samsung: Q&A

Ron Maltiel
http://www.maltiel.com/



Apple seeks injunction against sale of some Samsung smartphones
By Anne B. McDonaldMonday, August 27, 2012 2:44 PM
http://www.techhive.com/article/2000360/apple-seeks-injunction-against-sale-of-some-samsung-smartphones.html


Apple today filed a notice with the U.S. District Court of Northern California, seeking an injunction against the sale of eight specific Samsung products in the United States, all smartphones. The move comes on the heels of Apple's decisive win last week in the so-called "patent trial of the century."

Here's a list of the phones Apple singled out in its filing with the court Monday:
Galaxy S 4G
Galaxy S2 (AT&T)
Galaxy S2 (Skyrocket)
Galaxy S2 (T-Mobile)
Galaxy S2 Epic 4G
Galaxy S Showcase
Droid Charge
Galaxy Prevail

A quick check by TechHive shows that none of the phones listed—mostly older models—currently are available on any of the major U.S. mobile carriers.

The list of Samsung phones and which patents they allegedly infringe. A Silicon Valley jury ruled late last week that a series of ubiquitous smartphone and tablet features—such as the rounded rectangular form and how screens slide and bounce when touched—are proprietary Apple innovations.

The nine-person jury, which deliberated for less than three days, found the South Korean company had copied iPhone and iPad features and awarded Apple more than $1 billion in damages. Experts said the verdict could lead to a ban on sales of popular Samsung products—which process Apple appears to be starting with this filing-- and further cements Apple's dominance in the mobile device market.

[Related: Apple's $1 Billion Win Over Samsung: Q&A]

How this affects the consumer

If the court grants the injunction, which is still to be determined, it doesn't appear that it will affect Samsung very much. Most of the phones that Apple seeks to ban are no longer being sold by any of the major carriers. The Samsung Droid Charge, for instance, is nearly a year and a half old. A ban would, however, hurt anyone who currently owns one of these devices. For owners of any of these phones, it may be harder to get the phone fixed or replaced. Additionally, the carrier support for these phones (in terms of updates and bug fixes) may become even more limited.

Undecided

After a three-day period of deliberations, the jury in the landmark patent suit found that Samsung had infringed on Apple's patents in a number of cases, awarding Apple $1 billion in damages. Samsung has vowed to appeal, if Judge Lucy Koh doesn't throw out the verdict, according to CNN.
Legal experts at the well-known Groklaw blog have pointed out several inconsistencies in the jury's verdict that could put Apple's big win in doubt—including the fact that some of the evidence was apparently ignored by the panel, and subsequent interviews with jurors that suggest the judge's instructions on damages were not followed.

According to the Guardian, Judge Koh will make a final decision on the case within a few weeks.

Jon Gold of Network World contributed to this report.

Apple vs. Samsung: Not Really an Apple Win

While on the surface it looks that Apple won this round in court against Samsung. Apple did not really win.





1. The case is likely to go to appeal.
Comments from juror "because we had hard time believing there was no prior art, that there wasn't something out there before Apple. "In fact we skipped that one," Ilagan continued, "so we could go on faster. It was bogging us down."
"How can you determine whether the patents are invalid if you skip determining whether there was prior art? Determining if there was prior art is requisite to determining validity. The jury verdict is null and void."
(patnews@ns1.patenting-art.com)

2. Jury decisions regarding the design patents that Apple won were already designed around by Samsung, Google and the rest of android ecosystem. It will just temporally slow down android phone ecosytem.

3. Samsung did not lose in the tablet market, which is very important. This market is younger and tablet makers are trying to start a strong growth to counter iPad success.

4. A some what different prospective is in the article below has some good point about the momentum of  market acceptance of Apple and Samsung products.

Ron
www.maltiel.com




Microsoft and Nokia Win, Google Loses in the Samsung Apple Patent Case?
http://www.forbes.com/sites/timworstall/2012/08/26/links-26-aug-microsoft-and-nokia-win-google-loses-in-the-samsung-apple-patent-case/
Tim Worstall, Contributor , 8/26/2012

Move up Move down Apple is About to Reduce Google's Revenues Tim Worstall Contributor Google Makes More From iPhones Than it Does From Android Tim Worstall Contributor Windows Phone Could be Cheaper Than Google's Android Tim Worstall Contributor Google Blasts Past Apple: Android Now 50% of Market Tim Worstall Contributor


The verdict in the Apple Samsung patent case came a little too late on Friday, West Coast time, for the think piece people to really comb through who was likely to benefit from the verdict. Plenty of very good reporting of what had happened but that’s not really the purpose of the press these days. What has happened is one thing: what it means is where the value is added. Now that we’re 36 hours on from the verdict we’re seeing the ruminations on who has really won and lost.
A general feeling is that it might be Microsoft that has really won with the results of this case. Our own Ewan Spence makes the case:
“Apple walks away with a ruling that Samsung copied the iPhone. Samsung will appeal and look to have the decision mitigated as much as possible. And over in the corner, Microsoft and Nokia look at each other, nod their heads, and smile. This was a good court verdict for Windows Phone.
Half of Apple’s win was about hardware design, something that can be changed over time (indeed, largely is already on newer models). Half was on software features and that’s really Google‘s Android. So, the idea is that manufacturers will look more kindly on Microsoft’s Windows Phone as it is entirely clear of such problems. If that’s true then it will be Google which is the ultimate loser:
“The biggest loser in the case might not be Samsung, but Google, the company some analysts say Apple was targeting all along, as the New York Times points out. And Microsoft could end up being a collateral winner from all this. Bill Cox, senior marketing director for the Windows Phone, quipped on Twitter: “Windows Phone is looking gooooood right now.”
Google doesn’t actually charge for Android, but it is still part of its strategy to make money from mobile:
“Samsung’s Galaxy line of phones run on Android, and ISI Group analysts viewed the verdict as a blow to Android as much as Samsung.

If Android lose any ground in the mobile computing market, that would hurt Google, too. That’s because Google relies on Android to drive mobile traffic to its search engine and services to sell more advertising.
Google also charges for certain Google services to be incorporated but as we’ve noted before, Google’s revenue from iOS currently outstrips that from Android for these.

Yet Microsoft does face a problem:
“Some analysts are skeptical that Microsoft can produce a device that the mobile consumer will love.

“Microsoft has been the beneficiary of this whole fight as the other non-Android option,” said Ron Laurie, a Silicon Valley-based specialist in IP and investment banking and co-founder of Inflexion Point Strategy. “But safety (from lawsuits) by itself is not enough. You have to appeal to consumers.”

And so far the market has seen that consumers want phones and tablets that look like Apple’s devices, he added.
If it really is true that people like Android because the look and feel is like Apple’s iOS then producing something like Windows which has an entirely different look and feel might not do the trick.
And maybe Android has already been changed enough to make it safe from attack by Apple?

“Meanwhile, Pure Android, in its Jelly Bean iteration now significantly different in look and feel from TouchWiz, has so far escaped Apple’s iOS comparison wrath. That might make an untampered Android OS more appealing to manufacturers (and make Google more likely to speak out in their defense should Cupertino come calling).
That is, it was Samsung’s specific tweaks to Android to make it more like iOS which infringed Apple’s patents, rather than Android itself?
Of course, it’s always open to people to try and license Apple’s patents. But why should Apple do so?
“And we shouldn’t take for granted that Apple *wants* to license its design patents. It isn’t like they need the money; they are already sitting on $1B in cash. Right now its priority is to grow its platform, not its revenues. And there are no FRAND (Fair, Reasonable, and Non-Discriminatory) requirements for design patents.
Given that Nokia is just about ready to go with models running the new Microsoft Windows, perhaps they’ll be the big marketplace winners?
“When Nokia decided to go with Microsoft instead of Android, many considered the move foolish. With Android now dealt a major legal blow by Apple, the move looks like genius. The company does not have to worry about Apple coming after it with as many patent claims and can clearly show that its products are radically different. With uncertainty over the evolution (or even support) of Samsung products in the marketplace (while the case will surely go to appeal, further wins for Apple could force Samsung to pull its products from the American market), carriers will pay more attention to products that are not running on the Android platform and the biggest player in that market is now Nokia.
Yet it’s entirely possible that not a great deal will actually change. Recall, again, what Apple actually won on. Three patents relating to hardware design and these are not, at least as far as anyone has proven in court as yet, being violated by the new Samsung models. The other three were software patents. And those, well, it’s not all that certain that these are an insuperable barrier. As above, the latest build of Android may or may not violate them. Further, it’s not all that difficult:
“Others said the effect will be limited.
UCLA law professor Douglas Lichtman said the fixes could be as simple as offering software upgrades. For example, one of the decisions in the case was that Samsung infringed Apple’s patent concerning screen icons.
“Icons sitting in perfect rounded squares, for instance, will be replaced by icons sitting in smooth circles,” Lichtman said, “or icons sitting directly on a uniform black background. No big deal.”

It’s all too early to tell of course. And prediction is very difficult, especially about the future. But opinions seem to range from Samsung having to cough up for past misdemeanors and tweaking the hardware design (something they’ve, arguably, already done on newer models) and similarly tweaking the version of Android they use to Android itself being entirely crippled and Microsoft’s Windows being about to take the mobile world by storm. On that last I’m not entirely sure that Nokia will be the big winner though: Samsung itself has a range of phones running Windows……

Flash Memory Sales Surpass DRAM

Combined NOR and NAND flash Flash memory together already surpassed DRAM sales. See from the article below NAND and DRAM market size -

"the size of the markets is now relatively similar (about $26 billion to $28 billion for NAND, and about $28 billion to $30 billion for DRAM)"

While the NOR market size is not growing as fast as NAND market it is still big enough to make the combined flash market bigger than DRAM market.

More on NOR market in a previous comments Flash NOR Memory Revival and in my May 2007 article on Long Term Trends in the NOR and NAND Markets

Ron
http://www.maltiel.com/flash-news.html

When will NAND sales surpass DRAM?

http://www.eetimes.com/electronics-blogs/semi-conscious/4394242/When-will-NAND-sales-surpass-DRAM-

Dylan McGrath , 8/16/2012 9:08 PM EDT

Mobility—smartphones and media tablets—is the driving force in electronics today. PC sales, meanwhile, are sluggish, with a forecast growth rate of only about 5 percent, according to International Data Corp.

Despite that, sales of DRAM—the main memory in PCs—remain greater that those of NAND, and are likely to stay that way for at least the next couple of years, according to market researchers. IC Insights, which expects total flash memory sales to eclipse DRAM sales for the first time this year, expects NAND to overtake DRAM sales in 2014. IHS iSuppli, however, forecasts that DRAM will remain in the lead through at least 2016.

Mike Splinter, chairman and CEO of chip equipment vendor Applied Materials Inc., was asked during a conference call following Applied's quarterly report Wednesday (Aug. 15) when he expected the NAND market to overtake the DRAM market.

"I think that's really totally dependent on solid-state drives," Splinter said. He had noted earlier in the call that adoption of SSDs is not happening as quickly as forecast.

"We've been quite disappointed that tablets and smartphones haven't accelerated the use of flash capacity," Splinter said. He added that Applied's hope now is that SSDs will take off with the introduction of ultrabooks—the thin, low power notebook PC concept being driven by Intel Corp.

Splinter noted that the size of the markets is now relatively the similar (about $26 billion to $28 billion for NAND, and about $28 billion to $30 billion for DRAM). Despite analysts' forecasts, Splinter suggested that a surge of NAND buying could cause it to overtake DRAM as quickly as next year.

Is such a surge in the cards? According to Splinter, that's up to SSDs.

Samsung,a Top IC Foundry in 2012

The article below documents the fast rise of Samsung as a foundary. It success is due smart phone demand.

Samsung produce half of the total worldwide smartphone shipments. It probably process similar portion of flash NAND, DRAM , and other  semiconductor chips used in these cell phones.

"Samsung and Apple represented almost half of the total worldwide smartphone shipments (168 million) in the second quarter, IC Insights observed. As a result, Samsung is enjoying a tremendous amount of synergy by supplying application processors to the largest (i.e., itself) and second-largest (i.e., Apple) suppliers in the world of smartphones"

Future growth for foundries would not be easy as the article below see "the leading-edge IC foundry business is going to be very competitive between the four major advanced technology suppliers - TSMC, Globalfoundries, Samsung and UMC. With the continued success of the fabless companies as well as the strong movement by many IDMs like TI, Renesas and STMicro to the fab-lite business model, IC Insights expects the IC foundries to witness very strong demand for their services over the next few years."

It is going to be tough to keep up with the cost of new fabs soaring. It will limit the number of foundries in the future. See earlier blogs; TSMC: Single-Customer (Apple? Qualcomm?) Fabs Make Sense , the cost issues were discussed in several earlier blogs starting in the March blog Moore's Law End? (Next semiconductors gen. cost $10 billion).

Ron





Apple the driving force behind Samsung foundry business, says IC Insights

http://www.digitimes.com/news/a20120821PR202.html?mod=2
Press release; Jessie Shen, DIGITIMES [Tuesday 21 August 2012]

IC Insights has published its ranking of the forecast 2012 top 12 IC foundries (pure-play and IDM). TSMC, by far, is expected to remain the leading foundry. TSMC's 2012 sales are forecast to be almost 4x that of second-ranked Globalfoundries, which in turn is expected to have more than 2x the sales of the fifth-ranked foundry SMIC. Samsung is expected to be the largest of only three IDM foundries in the 2012 ranking with almost 8x the sales of IBM, the second-largest IDM foundry.
In total, the top 12 foundries are expected to represent 89% of the total foundry sales (IDM and pure-play) in 2012, according to IC Insights. This share is eight points higher than the 81% figure the top 12 represented in 2009 (before Samsung dramatically ramped up production for Apple). With the barriers to entry (e.g., fab costs, access to leading edge technology, etc.) into the foundry business being so high and rising, IC Insights expects this "top 12" market share figure to steadily rise in the future.

For the second year in a row, Samsung is expected to be ranked as the fourth largest IC foundry. However, IC Insights believes that the company will challenge UMC for the number three spot in the ranking in 2013. Samsung has the ability (i.e., leading-edge capacity and a huge capital spending budget) and desire to become a major force in the IC foundry business. It is estimated that the company's capacity dedicated to its IC foundry business reached 130,000 300mm wafers per month in mid-2012. Using an average revenue per wafer figure of US$2,500, Samsung currently has the potential to produce annual IC foundry sales of about US$3.9 billion, IC Insights indicated.
In the second quarter of 2012, Samsung was by far the largest supplier of smartphones in the world, shipping an estimated 54 million handsets with Apple coming in second after selling about 26 million iPhones. Thus, in total, Samsung and Apple represented almost half of the total worldwide smartphone shipments (168 million) in the second quarter, IC Insights observed. As a result, Samsung is enjoying a tremendous amount of synergy by supplying application processors to the largest (i.e., itself) and second-largest (i.e., Apple) suppliers in the world of smartphones, IC Insights pointed out.
After surging by 82% in 2011, Samsung's IC foundry sales are forecast to jump by another 54% in 2012, which would make it the fastest growing top-12 IC foundry last year and this year, IC Insights said. Moreover, Apple's 2012 share of Samsung's total foundry sales is expected to be 85%. However, as Apple begins to engage other foundries (e.g., TSMC) to produce its custom processors, Samsung will need to make up for these lost sales by signing up additional large-scale customers, IC Insights suggested.
While Apple and Samsung are currently embroiled in a dramatic courtroom battle concerning various lawsuits and counter-lawsuits regarding system level patents, Apple is still very reliant on Samsung for advanced IC processor production for its iPad tablets, iPhone handsets, and iPod portable media players. It should be noted that TSMC was working at over 100% utilization in mid-2012 and essentially had no ability to allocate large amounts of leading-edge IC production capacity to Apple, IC Insights said.
One important factor that is oftentimes overlooked with regards to the Samsung/Apple IC supply relationship is the large amount of memory, both DRAM and flash, that Apple buys from Samsung, the largest IC memory manufacturer in the world. Since Apple is such a big memory customer, Samsung is able to "bundle" its IC offerings to Apple and deliver a cost-effective high-volume supply of leading-edge flash memory, DRAM, and processors to the company. It should be noted that, as of mid-2012, no other foundry in the world could come close to matching Samsung's total IC supply capabilities. Thus, while Apple and Samsung battle it out in the courtroom over system level issues, at the chip level, Apple must continue to endure its "marriage of convenience" with Samsung, IC Insights indicated.
There is no doubt that Apple is looking to diversify away from being so reliant on its major system level competitor (Samsung) for the production of its advanced ICs. However, IC Insights believes this transition is likely destined to happen over a few years rather than a few quarters.
Overall, IC Insights believes that the leading-edge IC foundry business is going to be very competitive between the four major advanced technology suppliers - TSMC, Globalfoundries, Samsung and UMC. With the continued success of the fabless companies as well as the strong movement by many IDMs like TI, Renesas and STMicro to the fab-lite business model, IC Insights expects the IC foundries to witness very strong demand for their services over the next few years.

IBM Acquires Texas Memory (SSD Vendor)

It is interesting that IBM buy an hardware company. It further highlights the rising importance of flash memory solid state drives (SSD) as part of data storage system, cloud infrastructures, and the need for more and better storage in-house. Gaining in house knowledge would help IBM in thier consulting and services projects.
Ron




More about IBM buying a 30 years old vendor of SSD
IBM selects 'mature' flash option, buys Texas Memory Systems


"TMS has been around since 1978 but remains relatively small with 100 employees. It started with memory systems for seismic processing for the oil and gas industry. TMS was among the first solid-state storage vendors, shipping its first NAND flash system – the RamSan-500 – in 2007."

and
IBM to Buy Solid-State Storage Supplier TMS

"TMS, in fact, has been selling IT transformation for years. An early player in the Flash-based storage market, the 34-year-old company sells rackmount systems and PCIe cards under its RamSan brand. The purpose of these solutions is to improve the performance of IT systems, using less power and smaller form factors.
Performance and throughput are getting more important than ever, thanks to big-data, cloud infrastructures, and the need for more and better storage in-house -- at lower-than-ever prices.

TMS makes its own solid-state storage modules with its own controllers and designs. It claims patented RAID technologies -- an important feature, given that early solid-state storage systems were sometimes accused of being less durable than hard-disk drives."



IBM Solidifies SSD Strategy With Texas Memory Acquisition

In what could be one of the most important acquisitions of the year, IBM today announced plans to acquire Texas Memory Systems. While the details will be presented later on today, we think this is an excellent move on the part of IBM. Texas Memory brings a deep technical bench and excellent leadership that will allow IBM to differentiate itself from other large storage vendors.

As we described in our article "  IBM Storage Makes Its SSD Case "  this purchase significantly strengthens IBM's SSD Strategy. As the Texas Memory products are integrated into the IBM portfolio it puts IBM on par, if not ahead of EMC for completeness of flash offering.

Now the race will be to see who can address the integration of all of these flash domains (server, network, storage) as well as automate these domains. Doing so is a key requirement in eliminating performance sprawl as we describe in our latest chalktalk

Apple vs. Samsung Cost: $700 million to defend iPhone patents

" Legal fees will cost Apple Inc. $700 million to defend its iPhone patents against Samsung"


Ron



Apple-Samsung fight can scare all inventors


Published: Monday, August 13, 2012 at 1:00 a.m.
http://www.heraldtribune.com/article/20120813/COLUMNIST/120819894/-1/news?p=2&tc=pg

Legal fees will cost Apple Inc. $700 million to defend its iPhone patents against Samsung, according to a National Public Radio report on July 30. Even if you lop off a couple of zeros, it still costs big bucks for small-business owners to defend their inventions.



The Neustel Law Offices in North Dakota estimates "it is not uncommon for even simple patent-infringement lawsuits to end up costing a company $2 to $5 million." Its website says, "The attorneys' fees alone can put many small businesses out of business."



But few inventors focus on the cost of defending their patents against infringers. Instead, they discover needs in the marketplace and dream up products to fill them.



That is what Sarasota-based inventor Mark Schreiber did. "We make and sell the Aqua Comb, which I invented and designed," he says. The product cleans pool and spa filters. He makes a second version for washing horses, pigs, cows and dogs. Schreiber and his family own Mi-Way Inc.



"One thing one must do when inventing a product is explore other uses for the invention so as to open up the number of markets," he says. He offers third version for beauticians.



Schreiber says that he filed three provisional patent applications, which can cost as little as $125 each. Filing the PPAs sets the filing dates, even though the U.S. Patent and Trademark Office has not yet approved the patents. The final documents then must be filed and perfected within 12 months for the patents to be approved and published by U.S. Patent and Trademark Office.



"I found the USPTO website and patent office staff extremely helpful," Schreiber says. "They encouraged and aided me in filing my patent without the use of a lawyer."

Greg Hunt, a patent lawyer with Jenkins, Wilson, Taylor & Hunt in Durham, N.C., says, "Provisional patent applications are a way to save upfront costs."




But because there are statutory requirements to be met, "we do not recommend filing provisional patent applications without review by an attorney or patent agent."



After filing your PPA inexpensively, you have a 12-month sprint to learn if your product is marketable before spending approximately $8,000 to $10,000 in legal fees to file the final documentation.



Schreiber built a prototype of his product and decided to use distributors as the most expedient sales and marketing vehicle. So he is demonstrating his products at the trade shows distributors attend.



"I decided that I wanted to sell to distributors, so I limited my marketing to trade shows that would put me in contact with distributors both nationally and internationally," he says.



"We subscribe to trade magazines to glean industry news and mine distributor contact information," Schreiber says. He also uses Internet search engines to learn about organizations that sponsor trade shows attended by distributors.



Thomas Register, Manufacturing Extension Partnership and Manufacturers' Agents National Association are online examples at thomasregister.com, mep.nist.gov and manaonline.org.



But when Schreiber's marketing efforts become successful, there will likely be copycats. As a result, he may spend millions of dollars to defend against patent infringers -- albeit less than what Apple is spending in its infringement suit against Samsung.



Jerry Chautin is a local volunteer business counselor with Manasota SCORE, Counselors to America's Small Business. Send business questions and stories to him at jkchautin@aol.com and follow him on Twitter.com/JerryChautin.

Smartphone Patent (IP) Wars Solutions

At Stanford 12th annual Intellectual Property (IP) Scholars Conference one of the papers studied two historical cases of patent wars (see below).

Some highlights from the conference are summarized in gigaom blog such as "Supreme Court and unlimited copyrighted".... impact of "the Court of Appeals for the Federal Circuit (the patent court) and the United States Patent and Trademark Office, have an outsize influence on the country’s innovation policies."

It would be interesting to find out how other cases of patent wars, such as the radio development in the 1930s were resolved.
Ron





http://gigaom.com/2012/08/12/patent-trolls-and-horse-powered-boats-8-highlights-from-stanfords-ip-conference/
"The smartphone patent mess: the past is the key to the future
The sight of Apple and Samsung using hundreds of thousands of patents to sue each other all over the world is enough to induce despair about the patent system. But Professor Colleen Chien of Santa Clara puts this in perspective by studying two previous patent epidemics — one over farmers’ tools in the 1880′s and another over railroad technology around the turn of the century. In both cases, interest groups built the requisite pressure over a period of 15-30 years to reform the system. To address the current problem, Chien says history shows that narrow laws will fare better than broad bills aimed at reforming the entire patent system."

Intel: Tremendous Growth of Clouds' Servers

In an interview with Bloomberg (interview) Diane Bryant, Intel VP states; "Cloud growth is tied to people accessing the Internet.

For every 600 smart phones, every 120 tablets there is a server behind it.

Intel architecture runs 90% share of all the servers in the world.  There is an accelerating demand for big cloud data servers, not just for Google and Facebook data servers, but even from companies in emerging markets in China such as Baidu, Tencent...."


Intel benefited from the server growths already in 2011. Its sales grew 24% in 2011.


See earlier April posts

Top 25 2011 Semiconductor Sales Ranking
"IC Insights' report of the top 25 semiconductor companies (see below) states that Intel grew 24% in 2011 due to the purchase of Infineon's wireless segment. It is likely that the growth of databases and cloud servers (20% of sales, 3x PC segment growth) also added to Intel's growth"  

Also in an Intel, AMD, or ARM Servers?
"The article...about low-power servers doesn't mention Intel's large growth in database servers. Intel had more than $10 billion in revenues from ICs sold into data centers, including servers, storage products, and networking"  

Semiconductor Ranking: Foundries Soar, Japanese Crash

The article below shows that the best growth is in "three pure-play foundries in the top 20 ranking... these foundries logged a 20% increase in 2Q12/1Q12 sales."

If we look at the cost of future technologies, it will be hard for the smaller foundries to continue on their own. See earlier blogs; TSMC: Single-Customer (Apple? Qualcomm?) Fabs Make Sense , the cost issues were discussed in several earlier blogs starting in the March blog Moore's Law End? (Next semiconductors gen. cost $10 billion)


The article below also mentions that "the combined sales of the four Japanese companies in the top 20 ranking (Toshiba, Renesas, Sony, and Fujitsu) dropped 16% in 2Q12 as compared to 1Q12".  Additional signs of  Japanese fabs deteriorating position is the March blog Are Japan's Fabs stuck above 28nm Process Technology?.

Ron




Foundries Soar While Most Japanese Companies Crash in 2Q12 Ranking

http://www.design-reuse.com/news/29899/1h12-top-semiconductor-suppliers.html


GlobalFoundries jumps five spots and now ranks 16th in the first half 2012 ranking.

August 02, 2012 -- A ranking of the 1H12 top semiconductor suppliers will be included as part of IC Insights' upcoming August Update to The McClean Report. As shown in Figure 1, there are three pure-play foundries in the top 20 ranking. In total, these foundries logged a 20% increase in 2Q12/1Q12 sales. In fact, TSMC’s capacity utilization rate in 2Q12 was 102% (exceeding 100% because of the way the company defines its utilization rate). With the continued success of the fabless companies as well as the strong movement by many IDMs (Integrated Device Manufacturers like TI, Renesas, ST, etc.) to the fab-lite business model, IC Insights expects the IC foundries to witness very strong demand for their services over the next few years.

Figure 1

GlobalFoundries’ 2Q12 sales jumped by 18%, which helped move the company past UMC to become the second-largest foundry in the world. Currently, GlobalFoundries is ranked as the 16th largest semiconductor supplier worldwide and IC Insights believes the company has a good chance of surpassing Fujitsu in full-year 2012 sales to move into 15th place.
In contrast to the excellent performance of the foundries, the combined sales of the four Japanese companies in the top 20 ranking (Toshiba, Renesas, Sony, and Fujitsu) dropped 16% in 2Q12 as compared to 1Q12, with Sony being the only Japanese company to register quarterly growth. However, things may not be as bad as they appear for some of the Japanese companies as Renesas is currently expecting a 3Q12/2Q12 semiconductor sales increase of 24% and Toshiba has not yet changed its relatively aggressive full-year fiscal 2013 (ending March of 2013) guidance, which suggests it may be expecting a strong rebound in sales later this year.
Ninth-ranked Micron is now set to acquire bankrupt Elpida, another struggling Japanese company that is currently ranked 24th in the world. If this occurs, Micron would likely add between $2.5 and $3.0 billion in revenue to its annual sales, which could move the company up one or two positions in the ranking. This acquisition would also end Japanese company involvement in the DRAM market, a market they once dominated in the 1980s and 1990s.
Figure 2 illustrates that there was a wide range of 2Q12/1Q12 growth rates among the top 20 semiconductor suppliers. In total, the top 20 semiconductor suppliers showed a 3% increase in 2Q12 sales as compared to 1Q12. This figure is three points less than the total 2Q12 worldwide semiconductor industry growth rate of 6%. In fact, when excluding the top three foundries—TSMC, GlobalFoundries, and UMC, the combined sales of the remaining 17 companies in the top-20 ranking logged a sales increase of only 1% in 2Q12.

Figure 2

As shown, Toshiba ranked as the worst performing top-20 company in 2Q12, registering a steep 26% 2Q12/1Q12 sales decline. This drop was due almost entirely to the poor performance of its memory segment (primarily NAND flash), which saw a dramatic 40% 2Q12/1Q12 sales collapse (a decline of about $800 million). As has been recently reported, the company plans to cut its NAND flash production by 30% in response to this situation. In contrast to its memory sales, Toshiba’s 2Q12/1Q12 logic IC sales were down only 9% and its O-S-D (optoelectronics, sensors, and discretes) sales were flat. It is interesting to note that SanDisk, Toshiba’s NAND flash memory partner, encountered a much more moderate 2Q12/1Q12 sales decline of 14%.


After reviewing the top 20 companies’ 3Q12 outlooks, it appears that the top 20 semiconductor suppliers, in total, are likely to show a 5% increase in sales in 3Q12 as compared with 2Q12. While this level of growth is not very exciting, it is only one point below the past 30-year average third quarter total semiconductor market increase of 6%.

Several major product introductions are set to occur in 4Q12 that could potentially bring additional momentum to the semiconductor market at the end of this year. The release of Apple’s newest version of its iPhone (iPhone 5) is expected no later than October. Moreover, Microsoft’s Windows 8 operating system is the first major upgrade to its OS in several years and is scheduled to be released in 4Q12. Also, Intel reports that numerous new ultra-thin but powerful Ultrabook computers will debut in 4Q12, some priced as low as $699. In total, IC Insights expects a 4Q12/3Q12 semiconductor sales increase of 2% and a full-year 2012 semiconductor market increase of 3%.

Samsung, Hynix, Micron DRAM Monopoly?

Micron acquisition of Elpida will have some digestion pains. However the decreasing number of DRAM manufacturers to just 3 dominating manufacturers will have a strong long term affect on prices, availability and power of the three vendors.

From the article below-
"1. Samsung  400,000 wafer starts per month (40.8% share)
2. Micron’s buyout of Elpida to boost its DRAM production volume...370,000 wafer starts per month (24.8% share)
3. Hynix Semiconductor ...300,000 wafer starts per month...(24.2% share)"

The article below discuss the likely digestion pains of Micron integrating Elpida “Micron’s previous acquisitions in years past of specialty memory makers Numonyx and Inotera presented unanticipated surprises, and in some ways Micron is still digesting those purchases.

Adding Elpida to the mix is unlikely to hasten the rest of the complicated integration process that Micron still needs to do with its earlier buyouts.”


Ron







Risks Come with Rewards in Micron’s Purchase of Elpida

http://www.isuppli.com/Memory-and-Storage/News/Pages/Risks-Come-with-Rewards-in-Microns-Purchase-of-Elpida.aspx?utm_source=iSi&utm_medium=SN&utm_campaign=/?utm_source=iSi&utm_medium=SN&utm_campaign=MEMORY_RA
July 23, 2012 ,  Mike Howard

Micron Technology Inc.’s recent purchase of bankrupt Japanese entity Elpida Memory Inc. is a bold move not without risk, even though Micron will emerge from the acquisition considerably larger with more than double its original manufacturing capacity for dynamic random access memory (DRAM), according to an IHS iSuppli DRAM Market Brief from information and analysis provider IHS (NYSE: IHS).

U.S.-based Micron’s buyout of Elpida on July 2 is expected to boost the Idaho firm’s DRAM production volume to approximately 370,000 wafer starts per month over the long term, up a notable 131 percent from 160,000 wafer starts prior to the purchase. The new-found capacity by the only U.S. memory manufacturer allows it to leapfrog perennial second-placed Hynix Semiconductor of South Korea, which now will become the third-ranked player in the global DRAM industry, with about 300,000 wafer starts per month.
Both Hynix and Micron will continue to trail DRAM market leader Samsung Electronics, also of

South Korea, which leads with 400,000 wafer starts per month, as shown in the figure below. Based on first quarter rankings, the Micron acquisition will boost its standing to 24.8 percent share of the DRAM space, behind Samsung’s 40.8 percent portion but ahead of Hynix’s 24.2 percent share of market.

“Several key components make the Micron-Elpida deal appear to be a smart move, but integration could prove challenging or even messy if details are not worked out carefully enough,” said Mike Howard, senior principal analyst for DRAM & memory at IHS. “Micron’s previous acquisitions in years past of specialty memory makers Numonyx and Inotera presented unanticipated surprises, and in some ways Micron is still digesting those purchases. Adding Elpida to the mix is unlikely to hasten the rest of the complicated integration process that Micron still needs to do with its earlier buyouts.”
Moreover, the transfer of technology entailed by the deal with Elpida—a competitor on roughly the same scale as Micron—may prove costly and time consuming.
“All this means that while Micron has put a tremendous amount of work into the acquisition, the real work lies ahead, IHS believes,” Howard added.
Micron Structures Acquisition Transaction Shrewdly

Among the intriguing facets of the Elpida deal are the purchase price of the transaction, the way payments will be made and how the payments will be funded.

In terms of the price, the total purchase cost of Elpida to Micron is $2.5 billion, of which $750.0 million is to be paid in cash. The cash portion of the payment is intended for Elpida assets and will be due at the close of the deal, expected sometime in 2013. The cash payment won’t necessarily reduce the cash balance of Micron, as it will gain access to all of Elpida’s cash and current assets on the bankrupt company’s balance sheet. Elpida at the end of December 2011 had approximately $1.4 billion in assets.
The other part of the purchase price is the remaining balance of $1.75 billion. This part of the payment, which does not start until December 2014 and will continue to 2019, is paid out in interest-free installments—a terrific boon to Micron, considering that interest payments could have easily approached 5 percent.

Lastly, of keen interest to DRAM market watchers and prognosticators is that the deal also calls for the payments to come from the free cash flow of a restructured Elpida, which will now turn into a Micron subsidiary. If Elpida is not cash-flow positive in its new role as Micron offspring, then no payments will have to be made by the parent company. By structuring the deal this way, Micron has insulated itself from any drastic downturns in the DRAM market or from being upended by larger macroeconomic events beyond its control.
In a separate but related deal, Micron also purchased Taiwanese maker Powerchip Semiconductor’s minority interest in Rexchip Electronics, in which Elpida had majority two-thirds share. The deal for $330 million gives Micron an overwhelming 89 percent ownership share of Rexchip, which has a cost competitive, leading-edge manufacturing plant in Taiwan. The Rexchip facility formed a very attractive component of the entire Elpida deal, and Micron’s concurrent purchase of both Elpida and Rexchip gives the U.S. memory maker an even stronger edge in the tightly held DRAM space.

Apple vs.Samsung Case: Can Design Patents Win

"The potential for huge damages awards is one reason for the new focus. Design patents have a unique remedy: Whereas infringement of a utility patent allows a patentee to recoup only those profits associated with the patented feature—not the entire profit from the sale of the infringed product—infringement of a design patent allows the patentee to recoup the total profit without apportionment.


The provision has largely been a sleeper for 125 years"

Ron




Apple-Samsung Case Shows How Far U.S. Design Patents Have Come

http://www.law.com/jsp/cc/PubArticleCC.jsp?id=1202565565740&AppleSamsung_Case_Shows_How_Far_US_Design_Patents_Have_Come
Lisa Shuchman
Corporate Counsel  August 01, 2012



The high-stakes battle between Apple Inc. and Samsung Electronics Ltd. that began this week in federal court highlights a significant change that has taken place in the world of intellectual property law since the 1980s and 1990s: the steep rise in importance of the design patent.



Back in 1988, Apple sued Microsoft Corporation, alleging the company had infringed its copyright on the “look and feel” of the Apple Macintosh’s graphical user interface. That suit, which Apple ultimately lost, was a copyright case in which Apple had to show to the court that Microsoft had actually copied the design and appearance of Apple’s computer. In 1994, the U.S. Court of Appeals for the Ninth Circuit ruled that under copyright law, “Apple cannot get patent-like protection for the idea of a graphical user interface.”



Fast forward to Apple’s current lawsuit against Samsung and the focus is once again on design. But this time, Apple is alleging patent infringement—not copyright. And while some of the case deals with utility patents—those that focus on how something works—much of it revolves around design patents, which center on how something looks. In fact, Judge Lucy Koh, who is presiding in the case, noted in an earlier ruling: “It is the design patents that are at the core of this preliminary injunction motion.”



“With this case, design rights have taken center stage in the world of patent law,” said Christopher Carani, a partner at McAndrews, Held & Malloy.



In the 80s and early 90s, patents weren’t as much of a focus in technology as they are today, according to Ron Epstein, chief executive officer of Epicenter IP Group. “But patents today play a more important role in protecting innovation,” he said.



Design patents in particular are playing a more important role. In 1994, for example, 11,000 design patents were issued in the United States, according to the U.S. Patent and Trademark Office’s database. In 2011, the USPTO issued almost double that number: 21,356.



Big technology companies such as Apple and Samsung have caught on to the importance of design patents. In 2001, for example, Apple was issued 10 design patents and Samsung was issued eight. In 2011, Apple was issue 123 and Samsung was issued 333. And in 2012, projections show that Apple is on track to be issued about 160 design patents, and Samsung (which makes many more products than Apple), about 500.



“Until recently, utility patents received most of the attention,” Carani said. “This case is causing corporations to take a second, hard look at design patent rights—not only to secure them for themselves but also to make sure they are not infringing design patent rights of others.”



The potential for huge damages awards is one reason for the new focus. Design patents have a unique remedy: Whereas infringement of a utility patent allows a patentee to recoup only those profits associated with the patented feature—not the entire profit from the sale of the infringed product—infringement of a design patent allows the patentee to recoup the total profit without apportionment.



“The provision has largely been a sleeper for 125 years,” said Carani, noting that this “no apportionment” language was inserted into the Patent Act in 1887 in response to an 1886 U.S. Supreme Court case regarding infringement of a design patent on a carpet design. “Now it has surfaced in a big way—to the tune of $2 billion.”



Indeed, $2 billion of the $2.5 billion damages award Apple is seeking come from its design patents; the other $500 million is attributable to Apple’s utility patents. “If Apple prevails, it could yield the largest U.S. patent infringement award of all time,” Carani said. The largest amount awarded to date for patent infringement is $1.67 billion, in a 2011 Eastern District of Texas case in which Abbott Laboratories Inc. was found to have infringed patents owned by Centocor Ortho Biotech Inc. (The verdict was later reversed on appeal.)



Samsung can do little about appealing such a large damage award if it loses the case, Carani said, because the design patent damages provision is codified in the statute. If Apple wins, however, Samsung, could benefit in another way. “If Apple prevails, Samsung may be in a position to assert its own huge design patents portfolio,” Carani said.



Until this case, design patents and their potential power rarely had a chance to rise to such prominence, notes Carani. But if Apple wins, he predicts more attention will be paid. “Companies will recognize that design patent rights can have teeth,” he said.