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Brier Dudley's blog

Brier Dudley offers a critical look at technology and business issues affecting the Northwest.

February 12, 2007 at 11:01 AM

Jobs column annotation, by Mr. Pea Brain

Feedback on the Steve Jobs column has been interesting. Here’s an example:

“I wish we could replace you with someone more like Steve. Your an idiot with a head too big for your pea of a brain. Your writing is full of poor opinions based on gossip. 90% of what is written on

these subjects by the media contains very little material facts.

Their aim is get attention (PERIOD).”

For those who care deeply about this issue and want to learn more, here are some links to additional material. I see a cavalier attitude toward authority here, but everyone’s welcome to his or her opinion.

On trademark protection, Apple repeatedly called Cisco’s claims to the iPhone trademark “silly.” That was after Jobs announced the iPhone, knowing that he hadn’t secured the trademark, prompting Cisco to engage the court system.

I didn’t have space to go into this, but it’s not the first time Jobs has been casual about intellectual property. Apple shareholders probably didn’t think it was silly that the company had to pay $100 million to Creative after using the Singapore company’s interface design on the iPod.

Apple invoked accounting standards to charge for an upgrade. The Wall Street Journal followed up with a story quoting the former chief accountant of the SEC and a member of the Financial Accounting Standards Board, which is the authority on standards.

Here’s a quote from the story:

GAAP doesn’t require you to charge squat,” says Lynn Turner, managing director of research at Glass Lewis & Co. and a former chief accountant of the Securities and Exchange Commission. “You charge whatever you want. GAAP doesn’t even remotely address whether or not you charge for a significant functionality change. GAAP establishes what the proper accounting is, based on what you did or didn’t charge for it.”

Separately I asked FASB for an opinion. It wouldn’t comment on a specific company but its communication director, Gerard Carney, said “I can tell you that, to be certain, GAAP does not require companies to charge customers. Further GAAP does not tell companies how to run their business. GAAP requires you to report transactions to users of financial statements.”

Regarding the securities regulators, here’s the John Markoff story where Jobs says “everything is fine.” Here is the Wall Street Journal story that appeared two days later, asserting that the case was still being actively investigated. Here’s an earlier story on the options investigation.

Whether or not Jobs is personally implicated, he’s at the center of this and, as chief executive, bears responsibility for the culture and behavior of his company.

Apple’s European legal troubles haven’t received a lot of coverage in the U.S. but Jobs’ Feb. 6 letter (“Thoughts on Music“) is raising their profile.

I don’t think the column needs amplification, and I didn’t want it to be read as an Apple vs. Microsoft thing. But today I learned about another way that Jobs was probably repurposing his European legal work.

The letter also skewers Microsoft, which made a big announcement today about its new DRM technology. He surely knew the announcement was coming, and it’s a long tradition in the tech industry to upstage competitors.

Mobile devices are one of the big battlefields for DRM, now that phones are becoming more like iPods. I’m sure even Jobs would agree that Microsoft’s DRM also has more capabilities than Apple’s FairPlay. Today Microsoft extended its lead there with a new mobile DRM suite called PlayReady that it announced at the 3GSM conference.

Microsoft’s statement said PlayRead “supports a broad spectrum of business models, such as subscription, rental, pay-per-view, preview and super-distribution, for many digital content types — music, video, games, ring tones and images. It also goes beyond Windows Media audio and video (WMA.WMV) and also supports audio/video formats like AAC/AAC+/HE-AAC, and H.264.”

Already Microsoft’s DRM enables companies like Yahoo! and Napster to offer subscription music services, where consumers pay a monthly fee for unlimited access to their music catalogs. Microsoft also licenses its DRM to other companies, an approach that Jobs rejected in the letter.

I don’t like either companies’ DRM system. They’re both designed more for content owners than consumers. Their battle also sheds more light on Jobs’ letter: Microsoft is getting creamed in digital music, where its biggest toehold is DRM. What did Jobs call for last week? Getting rid of DRM.

The column also said that Jobs was positioning himself as an instigator with the letter. Here’s the latest on record companies working on their own toward DRM-free music sales, and an overview story from a music industry conference last month.

Comments | More in | Topics: Apple, Digital media

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