The mobile world is witnessing an amazing feeding frenzy of patent litigation. Among other cases, Apple is hoping to slow the momentum of Google’s Android by pursuing infringement claims against HTC, Motorola and Samsung; Skyhook and Google are locked in a “location battle royale” regarding positioning technology; and patent troll Lodsys is going after both iOS and Android developers regarding a system for in-app purchases. So what’s the next big battlefield? The cloud will play a more important role in delivering mobile data, and the coming wave of patent claims surrounding it will fuel increased M&A activity as players arm themselves for battle in the market and in the courts.
Patents played a key role in HTC’s announcement this week that it will spend as much as $18.5 million to acquire Dashwire Inc., a Seattle-based startup that develops mobile cloud platforms. Erik Sherman of BNET details one of Dashwire’s more interesting patent applications here. The application addresses a system that receives content from a mobile handset for use on other platforms; such functionality is a crucial component of Apple’s iCloud and Microsoft’s Windows Phone 7.
The cloud is an emerging phenomenon that is sure to have an enormous impact across tech industries, changing the way we access and store enormous amounts of data. But it holds special promise for mobile phones, which serve as the gateway to our most important content. Content stored on a phone is easy to lose and difficult to transfer, though. So as we increasingly use our phones to access messages, listen to music and view photos and videos, the cloud is key.
It’s no wonder, then, that so many industry players want to provide storage services for mobile users. Verizon Wireless, for instance, has stopped charging customers for storing their contact information and now offers its Backup Assistant free. (AT&T continues to charge $2 a month for its Mobile Backup in yet another example of carrier myopia.) HTC likely plans to integrate Dashwire’s cloud technology with Sense, its popular user interface. And Facebook is enabling users to sync their contact information from the social network with Android and webOS. Those kinds of services will be even more valuable as they become more sophisticated.
I expect to see continued consolidation as the mobile cloud gets legs, and much of that activity will be driven by patents. Who are some of the potential pickups? Core Mobile Networks, which recently scored an investment from Citrix Systems, could be targeted for patent-pending technology that delivers cloud-based content with contextual relevance to mobile devices. Another potential acquisition is Blaast, a Finnish startup that seeks to leverage the cloud to bring smartphone-quality data services to feature phones, although that company has to reveal details of its technology. And Gemini Technologies holds three patents addressing cloud-based mobile data that could prove valuable as the space heats up. While those niche players could be acquired solely for their cloud technologies, cloud-related patents are a valuable component of larger libraries such as InterDigital’s portfolio — which is expected to fetch billions.
Enabling mobile consumers to access and use their most prized content through the cloud is one of the most valuable propositions in tech, and patents have become mobile’s most powerful weapons. For businesses in the space, then, it is crucial to identify weaknesses in their patent portfolios and acquire the necessary intellectual technology to defend themselves. Carriers have shown little initiative or innovation aside from providing basic storage services, and they are likely fumbling yet another opportunity to cash in on mobile data. HTC seems to be taking a page from the playbooks of Apple and Microsoft, which have long demonstrated their expertise in patents. We can expect to see increased consolidation of developers of mobile cloud technologies, and patents will drive a lot of that activity. And this indicates that the mobile cloud will also see much more action on the patent litigation front.