November 3, 2014 by ...
This is part one of a two-part post comparing innovation between Apple and China’s Xiaomi.
Everyone is talking about Xiaomi and they often do so in superlatives. The narrative from ‘FastCompany’ to Mark Zuckerberg, is touting Xiaomi’s innovation gene. According to them this Chinese tech start up is revolutionizing smartphones and more.
Apple, for one, disagreed. When confronted with allegations of cribbing designs from the ‘other Apple’, Xiaomi demurred. Lei Jun sobbed, Hugo Barra issued a veiled smack on the chops and Xiaomi’s President fought back. The Xiaomi Mi Fans, aka ‘fan boys’ even got into the act polluting the Chinese interweb with ‘love Lei Jun’ propaganda.
What all of this rhetoric had in common, was the desire to set the record straight. Instead of achieving this noble goal, they merely muddied the waters. Consequently, accusations flowed like Chinese rice wine at a KTV parlor. Unfortunately reaching a verdict was not achieved. As they were unable to do so, I will take over.
Xiaomi, ‘fast follower’ or ‘IP Thief’
The question is how to measure innovation. There are many ways to do so. One can look at process innovation, value creation and market disruption. In all of these it could be argued that Xiaomi is innovating, albeit it in a ‘Wal-Mart everyday low price’, kind of way. As I’ve shown previously, Xiaomi is not reinventing the wheel, as you can clearly see here.
How can we measure innovation?
By trusting our eyes it would appear that in terms of design, at least, Xiaomi is clearly unoriginal. But then again, Hugo Barra has claimed the same of Apple.
The only impartial way to answer this, it would seem, is to throw Xiaomi and Apple into the ‘octagon’ as it were, and duke it out.
pic from here
As both are inanimate objects, this may not be practical, however, so your humble author will resort to more practical measure- patents.
Patents in general
Many can disagree with using patents as a proxy for innovation. They can claim that powerful companies such as Apple mass-produce patents in order to box out innovation as much as to enable it. The logic goes that such companies are lawyered up and can afford to inundate patent offices with ideas which preclude competition.
The small guy is resource challenged and cannot compete. After all, patents cost money and in developed countries they are not cheap. There is the fee itself but that is not all. Intricate patents, such as innovation patents, require precise language. An engineer can handle this for the technical details, but American companies usually hire lawyers to cover all the legal verbiage. Once again, these firms probably have such lawyers on their payroll. Chinese firms, however, probably do not.
Be this as it may, we need an objective measure to see if Xiaomi is really innovative and patents it shall be.
Caveat, Chinese patents are really easy to obtain
Now that I’ve convinced you that patents are the way to go, I’ve got to issue a caveat… Chinese patents are easy to obtain. When I say easy, I mean really, really, really easy. I should know, I have a pair.
‘Why are Chinese patents simple to obtain?’ You ask.
What happened was that the Chinese government decided to move China away from merely being a manufacturing hub. They determined that innovation was the key and turned 1.4 billion people loose on the Chinese patent office. What ensued was an onslaught of semi-useless Chinese patents being issued. Quality, however, did not keep up with quantity. In fact, Chinese companies, researchers and even police found ways to game the system. This cop, for instance, wrote dozens of patents himself. He was double dipping of course. Not only did he receive money from the government for the patents but he also licensed their use to the city he looked after. Each street light that went up, for example, had to use his ‘patented’ technology. It was all a ruse, of course, but China’s patent numbers skyrocketed.
On to the intricacies of Chinese patents
China essentially has three different patent types, as described here (utility, innovation and design). The most common is the type that I have obtained, the utility patent. These are typically awarded to anyone who fills out the paperwork correctly. Once again, I should know I have done this before.
So easy is to obtain such patents that The Economist and members of the communist party have called them ‘junk’. I prefer the less loaded term ‘futility patents’. When looking at the data I present in the second part of this post, one must bear this in mind.
In fact, in order to get a minimal understanding of innovation, one would only look at invention patents in China. But then again there is a caveat. According to Anil Gupta, this even falls short of the mark. His research shows that triadic patents are the true test of creativity. Absent that data and Xiaomi, we will just do the best we can.
Battle of the patents, Xiaomi vs Apple
Xiaomi is a Chinese company with over 95% of its sales coming from the mainland. This being the case, one would assume that they are ‘patented up’ at the home front. One would suspect this to be especially be true, if they were truly masters of innovation. Conversely, Apple should have fewer patents as they sell less kit here in the mainland. But then again, Apple loves to patent things so their numbers in China would be large. One needs to have a point of reference, however, and from where I am sitting it is patents.
And my point is?
Based on hard cold facts, it looks like Xiaomi just got its ass kicked. According to the State Intellectual Property Office (SIPO) of China, Xiaomi does not measure up…
Stay tuned to find out the great Apple-Xiaomi patent divide…
End of Part 1