I have been writing and speaking that IP is the wealth of the Shift Age for the last six years. And over the last six years, this reality has become ever more apparent. Recent headlines make this crystal clear.
In the Agricultural Age, those who owned the land created wealth. In the Industrial Age, those who created and controlled production created wealth. In the Information Age, those who created technology and brought it to market created wealth. In the Shift Age, those who create or own Intellectual Property will create wealth.
Nine times I have spoken of this and have had a CEO or business owner tell me they had recently sold their company for more money than they had ever thought possible based on multiples of revenue or profit. The reason was that the strategic buyer had a clear perception of the ability to scale up the seller’s IP and paid for that opportunity.
IP now represents more than 80% of the market cap of the S&P 500 in the United States. People are finally understanding that corporate wealth – and revenue – is increasingly based on what Intellectual Property the company owns.
The most recent example of this is the Microsoft-AOL transaction. Microsoft paid AOL more that $1 billion U.S. for 800 patents, or $1.3 million per patent. Microsoft wanted the patents as they related to the Internet and most important, to smartphones and mobile operating systems. AOL, moving toward a more pure content-intensive business, monetized this incredibly valuable collection of IP assets from its earlier iteration to fund its new direction. Both sides won.
What is interesting is to look at the motivation of Microsoft. Microsoft became a giant on the power of a near monopoly of PC-based software. The Internet transformation put the company back on its heels, lessening its dominance with increasingly Web-centric businesses and individuals. Now that the world has, is and will continue to rapidly move toward mobile devices and platforms, Microsoft again finds itself playing catch-up.
If one thinks about the businesses and revenue streams of the mobile business, Microsoft is behind in all the traditional categories. The carriers own the revenue stream of access. Google and Apple dominate the operating systems, apps and software platforms of the smartphone business. Apple, Samsung, Motorola/Google, HTC and others lead in the device business. Microsoft doesn’t make phones and has a single-digit share of the OS market in mobile. So, essentially, the company is not a factor in any of these standard revenue streams of mobile. That is why its purchase of AOL’s patents, on the heels of other patent deals in the last couple of years, is so brilliant.
Smartphones utilize dozens of patents for the device and for the OS. It is one of, if not the most, cross-licensed technology businesses relative to patents. It is also one of the most legally contentious areas of patents. Microsoft, with its huge and expensive purchase of AOL’s patents, on top of all its other recent patent purchases, has essentially created a huge revenue stream of licensing revenue in the mobile arena. The company is rapidly moving to the position of being paid for almost every smartphone’s technology or OS. Using its huge amount of available cash, Microsoft has effectively created a new revenue stream from a business in which it has not been successful, let alone dominant.
Microsoft doesn’t have carrier, device, or OS revenue, but it now is creating a huge stream of IP revenue – a patent-protected source of revenue not at risk due to the perpetually and rapidly changing mobile marketplace. No costs of production, no costs of marketing, no costs of software development – just a huge investment into patents. A quintessential Information Age company is developing Shift Age revenue. Brilliant!
Welcome to the Shift Age!
I am frequently asked about what technology I carry and use. This is due in large part because I am a futurist and to many people technology and the future are close to synonymous. That of course is not wholly true, but certainly understandable as it is technology that seems to trigger the changes in our lives.
In addition I often have conversations with people who, like me, travel a lot about what technology works best on the road. So here is what I use, like, travel with and therefore heartily recommend as action speaks louder than words. Of course the list below is the current iteration that is different than last year’s or probably next years due to the speed of innovation.
I am making the transition back to Mac after 15 years of PC use. I will probably use both going forward for a while. That said, I am in love with my new MacBook Air with an 11” screen. It literally is intoxicating to open it up and use. It is simply the most beautiful and fastest laptop I have ever used. Why the smallest screen Apple sells? Simple. I write a lot so I can always carry this laptop wherever I go as it only weighs several more ounces that the new iPad, but has a great keyboard, 256 gigs of fast flash memory and a fabulous screen. Anything bigger is not necessary to travel with. Love at every touch.
I travel with the iPod Classic with 120 gigs of storage. I travel a lot, write a lot and work a lot on the road and at home. I therefore have a huge variety of music, 90 gigs of it that I carry with me. This, along with the following two items, allows me to create my personal audio environment wherever I go.
Noise Reduction Earphones
For years I have traveled with Bose noise reduction headphones. I love them and use them at home. The problem I have always had is that they are simply so big that they take up precious space in my briefcase. Fortunately I was introduced to the Westone Series 4 In-Ear Monitors. They fit into the ear and are not much larger that a standard pair of cell phone earpieces. Westone is the company that makes all those ear buds worn by rock stars and other musicians when performing on stage. Simply put they provide great sound, great noise reduction and fit into a hard carrying case smaller than a pack of cigarettes. They are simply the best for great sound and great noise reduction on the road.
When I check into a hotel and the room doesn’t have an iPod docking station [I am continually amazed how many hotels still have basic alarm radios for music] and I am tired of wearing my Westones, I pull out my WOWee base amplifying speaker. Plug this into my iPod, mount the sticky gel backed WOWee on a wood surface – or better yet a glass surface - and I have sound for the room with a solid base. This great speaker solves the problem of tinny sound from small portable speakers.
My primary phone is the iPhone 4 and secondary phone is the Android Motorola Atrix . Since I have not had a land line in years and also travel a lot I need a back up cell phone. I also need to experience both the Apple and Google ecosystems as they are and will be the dominant smart phone platforms in the foreseeable future. I am habituated to the iPhone, but have found the Atrix to be faster across the board. I will upgrade to the next version of the iPhone, when Siri is in her new improved iteration.
I carry the Amazon Kindle Fire. I have been a huge fan of Amazon for 15 years and have therefore been a Kindle user since 2008. The Kindle Fire has a gorgeous screen, the whispersync technology so that I can read on both the Fire and, with the Kindle app, on my iPhone and of course, since I am an Amazon Prime customer I get a lot of free video streaming. I do not have an iPad and have never really desired one as I already had the iPhone , the iPod and Kindle when it came out. I do read a lot and the Kindle family of readers are great for travel as I can take all the books I need or want every trip. I do suggest to people that their app phone should be stocked with books as you always have your phone with you so when waiting in line or a late lunch date you can settle in for a 5-10 minute read.
So that is the technology that keeps this futurist productive and happy on the road.
As a futurist, I am frequently asked as to what forecasts I have made in years past. This is certainly a fair question. I do make lots of forecasts about larger trends and forces of the Shift Age that are directional in nature. Many people want specific forecasts that I have made. On a regular basis I post these here on my web site. Please feel free to take a look.
Some of these forecasts are for times in the future, but many are for times past. I try not to make forecasts in areas I do not have a sense of trend or direction. People ask me about the forecasts I have made that were wrong. The only significant one was saying that the U.S. residential real estate market would bottom out by the summer of 2010. Except in some selected markets I clearly got that one wrong. What I can say, and will explore in length in a future newsletter is that I think that the almost century long thinking around home ownership has been broken to some degree by the 2007-2011 recession. I think we are moving from an ownership to a rental society across the board in the United States.