Apple v. Google v. Samsung IoT Smart Home Strategy Insights from Patents

Patents can provide insights regarding the state of the art of IoT (Internet of Things) innovation, and thus, a strategic move of a company for the IoT business leadership. To compare the business strategy of the three leading companies in the IoT Smart Home applications, Apple, Google and Samsung, patent information is exploited for the cross-competitor analysis.

According to Dr. Benjamin Gilad with the Academy of Competitive Intelligence, the goal of the cross-competitor analysis is to enable one to simplify predictions of competitors’ moves and countermoves when multiple competitors are involved. Through the cross-competitor analysis, one can understand that: Competitors’ behavior when there are several significant competitors; Paradigm shifts in industries undergoing rapid change or transition; Entry of new competitors into the competitive landscape; Future directions in strategic move among industry contenders. The strategic map is a tool used in the cross-competitor analysis for visualizing the competitive landscape: A chart for a strategic parameter No.1 (e.g. product/service portfolio, distribution channel etc.) vs. a strategic parameter No.2 (e.g. product/service price, quality, brand etc.); The map is static (for dynamics, one can use arrows).

To do the cross-competitor analysis for the IoT Smart Home exploiting patents, more than 300 US patent published applications of Apple, Google and Samsung that are related to the IoT Smart Home applications are reviewed. To obtain the strategic parameters for the IoT Smart Home, a system approach to the IoT patents is adopted. The disclosures of the IoT patent can be considered as a system that is consist of several subsystems: environmental context, IoT sensor, information, transfer mean and processing tool.

A.  Environmental context is the context of the surrounding object(s) sensed by the IoT sensor. Some examples are a person’s or vehicle’s location or movement, surround environments (lighting, weather)/situations, and works to be done.

B. IoT sensor is a stand-alone or embedded device that can sense/recognize its surrounding environments (including position/movement/identification) with networking capability. Some examples are RFID imbedded items, sensor embedded home appliances, wearable healthcare devices and vehicle control system.

C. Information is the context data obtained by the IoT sensor for specific purpose. For example, the context room temperature is measure to obtain the data for automatic room temperature control.

D. Transfer mean is the networking/communicating medium/infrastructure that can interconnect sensing devices and connect sensing devices to the internet. Some examples are 3G/4G/5G mobile networks, wireless connectivity (WiFi, Bluetooth, Zigbee, NFC etc.), internet/telephone connectivity and vehicle-to-vehicle (V2V) and vehicle-to-infrastructure (V2I) connectivity.

E. Processing tool is the back-end or embedded (IoT devices, wearable devices) IT systems/processors that can process the context information (e.g. cloud computing/big data analytics) and provide the value propositions exploiting the information. Some examples of the IoT value propositions are:

·        Automation: Providing various automation services for the customers’ job/task to be done (e.g. automatically order the detergent for a laundry machine)

·        Care: Caring for customers (e.g. monitor customers’ body status and provide various health care services; control customer’s home cooling and heating/lighting system for energy savings; home security system for safe and comfortable home environments )

·        Entertainment: Providing fun to customers (e.g. AV systems, virtual reality games)

The IoT patent system can include the system integration subsystem that integrate and manage the functionality of each subsystem as a whole.

Each disclosures of more than 50 key patents for the IoT Smart Home applications selected from the review are divided into the IoT patent subsystems, and then, counted the numbers of patents for each value propositions (automation, care, entertainment), context (position/movement, environment/situation, job/task, and tools (mobile/wearable devices, IoT specific devices, appliances).

Following figure shows the Activity Index vs. value propositions strategic map for Apple, Google, and Samsung. The size of the circle represents the total number of the patents for each value proposition. Activity Index is a measure of a company’s relative innovation activities in a specific innovation field: Activity Index = share of a specific innovation sub-class in a company/share of a company’s patent in total patents, where share of a specific innovation sub-class in a company = patents (innovation sub-class)/patents (a company) and share of a company’s patent in total patents = patents (a company)/patents (total company).

The map shows Google’s select and focus strategy for providing the care value proposition. The map shows that Apple is most active in the automation value proposition innovation compare to Samsung and Google, even if Apple’s number of patent applications is smaller than that of Google and Samsung.

Following figure shows the Activity Index vs. tools/context for the value propositions strategic map for Apple, Google, and Samsung. The size of the circle represents the total number of the patents for each tools/context.

The map shows that Apple is not active in the innovation of IoT specific devices/systems for providing the IoT Smart Home value propositions (indicates that Apple’s HomeKit Platform was developed by a third party?).

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Samsung IoT Strategy & Patent Exploitation

I. Samsung IoT Business Strategy

Recently, several S. Korea’s news media expressed their concerns regarding the future of Samsung IoT business. The concerns are based on KT (Korea Telecom)’s recent research report “Smart Home Trends & Implications.” The report doubted Samsung’s capability to drive successful Smart Home business, which is the key IoT (Internet of Things) business of Samsung. The report reasoned that, because Samsung has never been successful in the platform business, Samsung may lack in execution capability to become the winner in the IoT platform wars, and thus, in the emerging IoT market. Rather, the report expected that Apple and Google will lead the future Smart Home market because of their core confidence in platform based SW/IT integration.

In response to the concerns, Asiatoday, a S. Korean newspaper, expressed a different view about the Samsung’s future of IoT business.  Quoting personal discussion with Samsung executives, Asiatoday said that Samsung has never derived the IoT as a main business up to now because the lack of business reality of the IoT market. Rather, Samsung is at the stage of preparing IoT business by focusing on R&D and business ecosystem development. Asiatoday also mentioned that the “Fast Follower Strategy” that Samsung has several success track records will also work in the emerging IoT/Smart Home market because of its HW integration capability across chips, devices, networks and appliances, which are the key business resources for offering new values to customers.

Actually, Samsung has just started to derive the IoT business by providing the open IoT platforms and intensifying relationship with the IoT business ecosystem collaborators. Samsung released the IoT platform “Artic,” an open platform comprised of hardware modules, software, networking and cloud services, in May.  Samsung also recently introduced a Web based platform, IoT.js, to provide interoperable service platform. SmartThings, acquired by Samsung last year, announced the SmartThings Open Cloud, a cloud service. Samsung is fostering its collaboration relationship with innovative IoT start-ups through the Samsung Strategy and Innovation Center in Silicon Valley.

In addition to the efforts to have a leadership in the IoT business ecosystem, Samsung also need to make efforts to form the IoT customer ecosystem. The “First Mover” advantage and the business ecosystem integration capabilities are not the only key success factors that made Apple as the winner in the smartphone market. Keep innovating to offer values to customers and always satisfy customers’ expectations, and thus, to form the Apple fan club and enthusiasts, is the most important success factor. Therefore, to become the winner in the emerging IoT market, Samsung also need to do its best to offer new values to customers and form the Samsung customer communities for customers’ satisfaction and meeting the expectations by orchestrating its IoT business architecture. Following figure illustrates Samsung’s IoT business architecture to orchestrate.

II. Patent Exploitation for Samsung IoT Business Strategy

Samsung is the 2nd largest patent holder in the US (4,952 issued patents in 2014) and the 1st largest patent holder in Europe (2,541 issued patents in 2014). Thus, patents can be a very important business resource to exploit for developing the Samsung IoT business leadership. For example, Samsung patents can be exploited for the development of the disruptive IoT products/services by opening patents to the business ecosystem collaborators in diverse industries (the “Open IP Innovation”). By letting the collaborators develop the disruptive IoT products/services exploiting Samsung patents, Samsung can keep focusing on the current mainstream market in addition to effectively prepare the emerging IoT market created by the disruptive IoT innovation.

Recently, Samsung opened its 38,000 patents in various fields including telecommunication, semiconductor and display to S. Korean SMEs and venture companies as the part of the creative economy innovation center project. Total of 3,000 patents will be provided for free. Samsung will send its patent experts to the center to help exploiting its patents by the selected members of the center. Samsung will need to extend the Open IP Innovation program to its global IoT ecosystem collaborators for developing the disruptive IoT products/services.

A smart and practical method to exploit patents for the development of the disruptive IoT products/services through the Open IP Innovation is to apply the new product/service development methodology in the “Blue Ocean Strategy” (the “Blue Ocean Patent Strategy”). The basic principle in the Blue Ocean Patent Strategy is to exploit patents to achieve the value innovation by using the patented technologies to create new values, and thus, to provide new products/services. The exploitation of existing patented technologies not only allows the low cost IoT product/service development but also provides the protection against competitors’ infringement.

For details regarding the IoT business ecosystem, business models, platforms, disruptive innovation and related patent strategy, please consult the following articles.

IoT Ecosystem & Patent Strategy:  https://www.linkedin.com/pulse/iot-ecosystem-patent-strategy-alex-g-lee-ph-d-j-d-clp?trk=pulse_spock-articles

IoT Disruptive Innovation & Patent Exploitation:  https://www.linkedin.com/pulse/iot-disruptive-innovation-patent-exploitation-lee-ph-d-j-d-clp?trk=pulse_spock-articles

IoT Business Models & Patent Eligibility:  https://www.linkedin.com/pulse/iot-business-models-patent-eligibility-alex-g-lee-ph-d-j-d-clp?trk=pulse_spock-articles

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Samsung’s US patent acquisition firm has new shareholders

According to Seoul Economic Daily in S. Korea, Samsung Display’s wholly owned US patent acquisition company, IKT (Intellectual Keystone Technology LLC), recently sold total of 72% of its shares to several companies including some subsides of Samsung Group and foreign firms. Industry experts expressed that the efforts of inviting various investors indicate Samsung’s intention of full-scale development of global patent business company.

Samsung formed IKT in Washington DC on May of 2013 with the initial investment of $25 M for the 100 % share of IKT.  IKT’s main role is to acquire high quality patents for Samsung’s strategic patent management. As the first task, IKT closed a deal with Seiko-Epson in Japan for a small number of patents related to LCD equipments. Samsung is going to acquire patents aggressively to protect itself from competitors’ challenge through patent lawsuit. Samsung also expressed its intention of investment to start-ups that hold patent portfolios which are necessary to its global business leadership.

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