Toyota: peace, not war

Here's a guest post from Nigel Swycher (founder and CEO of AISTEMOS) and a keen observer of the patent scene.  Writes Nigel:

Toyota: peace, not war 

Is it just me, or are patents now a mainstream business issue?

Last week’s announcement by Toyota is a perfect illustration of the trend.  They have proudly announced that more than 5,600 fuel cell and related patents are available for royalty-free use.  There is no absence of detail: 1,970 patents related to fuel cell stacks, 290 are associated with high-pressure hydrogen tanks, 3,350 cover fuel cell software and 70 govern production and supply.

This is fascinating stuff, and it is the same genre as Tesla's open sourcing of its battery patents.

The commercial backdrop of both of these announcements is exactly the same.  How do you persuade industry to enhance new technology?  Both Toyota and Tesla know that there is no future for hydrogen or battery powered cars unless there are (a) lots of cars and (b) requiring refilling stations.

This is familiar territory and heralds the development of new standards.  These standards will either be free (such as Bluetooth and W3C) or royalty-bearing (the FRAND licensing associated with ETSI mobile standards).  In the context, Toyota may not have had much choice.  If battery technology is to be available royalty-free, could hydrogen fuel cell technology really be royalty-bearing? 

What is just as interesting as Toyota’s announcement was that it was made in its flagship CES 2015  presentation. Looking through other CES announcements highlights the technology theme.  There are almost as many announcements from Google, Nvidia and Qualcomm as from Audi and VW (focusing on self-drive and gesture-controlled vehicles).

'Phones on wheels' ... 

For the automotive sector, the way the way forward is clear.  Cars are now pure technology play.  As one analyst reported, cars are transforming into "phones on wheels". There are many other sectors that are following suit. Samsung’s focus at CES was on the internet of things and sweeping statements that, in the next two years, 90% of their devices will be part of their “internet of things strategy”. The future looks highly similar for banks where online and mobile is changing everything. 

If technology is really taking over all aspects of our lives, it is no surprise that the intellectual property issues and tensions that have dominated the horizon for mobile phones and tablets (the so-called patent wars) will soon spread into other sectors that have to this point not had to concern themselves with patents. 

Times are certainly changing and any company that does not have an IP strategy as part of its business strategy is going to be significantly disadvantaged. 

No reader of this blog is likely to argue with the proposition that a business shorn of IP policy will be disadvantaged. However, there is plenty of room for discussion as to whether Toyota's decision is the correct one and, if it is, whether its impact has been diminished by the sudden drop in oil prices.  Comments?

Footnote: there's a handy and accessible Aistemos Cipher snapshot of the fuel cell patent landscape that you can peruse here.

The Saga of Automobile Brands--Then and Now

There are few subjects in branding more interesting that the changing nature of brand identity within an industry over time. Few industries have a sufficient historical half-life to allow one to step back and contemplate how the message conveyed by the brand has developed and how it has been transformed. Of those few industries that do fall within this category, none spans a broader swath of time and contains within it a more engrossing branding saga than the auto industry.

I was reminded of this in listening recently to a radio interview with Paul Ingrassia, the Pulitzer-prize winning journalist from the Wall Street Journal. The occasion was the annual North American Auto Show, held each year in January in balmy Detroit, in which the leaders of the (troubled) auto industry gather together to exhibit new models and technology, and to exchange pearls of wisdom with the assembled press corps.

More particularly, Ingrassia was interviewed in conjunction with his new book, Crash Course: the American Automobile Industry's Road from Glory to Disaster, published on Jan. 5, 2010. What was particularly interesting for me was Ingrassia's comments on the changing nature of the message conveyed by the dominant auto brand. Ingrassia described four different branding periods.

First, there was Henry Ford nearly a century ago, offering the legendary Model T in a single color for the emerging American middle class. The emphasis of the Ford brand seems to have been about manufacturing efficiency and product availability.

Second was the radical reformulation of the auto industry orchestrated by Alfred Sloan of GM during the period from the 1920s to the 1950s. The brand became the paramount focus, whereby Sloan carefully cultivated a hierarchy of brands, from most modest to most luxurious, designed to mirror a customer's increasing affluence and success. The message was clear--you are what you drive, the various brands carefully calibrated to convey the branding message to the public, while at the same time turning one's vehicle at any given point in time to an emotive love-fest between man/woman and the machine.

Third, there was the ascendancy of the Japanese car industry in the 1980s, most notably Toyota and Datsun/Nissan. Brands were rationalized from the hierarchy of the GM days to a small number of brands, all tied together by manufacturing prowess and a customer perception of quality superior to that of their U.S. competitors. One loved his Toyota because it was the perfect combination of styling, price and quality. By concentrating this coherent and consistent message in a very small number of brands, the Japanese car manufacturers were able to prevail over the more scattered message of the plethora of GM (and equivalent) brands.

Fourth, we have the rise of the Korean car industry and in particular Hyundai, which Ingrassia describes as the current star of the auto industry. In comparison to Toyota's documented manufacturing difficulties over the last 6 months or so, Hyundai has been able to convince the public that its brand stands for value, quality and reliability, without the frills, but perfectly attuned to the expectations of the consumer against the backdrop of the global recession. People may have a love affair with their Hyundai, but it seems to be a romance of convenience rather than passion.

There you have it. It will be interesting to interview Ingrassia in another decade and to hear whether the current dominant brand will then be coming from India or China and, if so, what is the message conveyed by that brand.