Patent wielding competitors lusting over the huge success of Apple's iPod digital music player should put down their litigation swords and figure out what gives the product its X-factor in the first place. Core77, a site for industrial design fanatics, has a great analysis of Apple's design strategy by James Conley, a Clinical Professor at both the Kellogg School of Management and the McCormick School of Engineering at Northwestern University.
Conley argues that at the heart of Apple's competitive advantage are not patents or technology, but rather the idea of 'value transference' and clever use of trademarks. Value transference, he defines as "the premeditated use of multiple intellectual property regimes at specific points across the product lifecycle, in order to realize sustainable differentiation." In Apple's case, that differentiation boils down to the simple and consistent user interface that the Apple customer perceives as truly unique. In fact, more than 6 months ago, says Conley, Apple quietly filed a US trademark registration for the two-dimensional shape of the iPod front, made up of the round click wheel and the square display screen (see image at end of post). Every generation since inception of the iPod, except the Shuffle, embodies those elements which are Apple's exclusive source identifier, says Conley. Sounds simple enough, but here is the significance:
To be clear, Apple's trademark, if successfully registered, will not give them the kind of functional invention or ornamental exclusivity that one gets with of a patent (design or utility). It will, however, give them certain rights that will allow them to control who can use or leverage the unique display screen and Click Wheel visual attribute combination of this valuable market innovation. With such a registration, they facilitate the move of this popular icon and increasingly-pervasive cognitive touch point of the music experience into many markets as claimed. Worried about secondary meaning? Apple's market share is approaching 80%. They are the market; there is no competition.
How value transference is realized:
Additionally, the trademarked icon is the symbol that represents the user experience innovations achieved through integration of their suppliers' technologies. The resulting performance differentiation now aggregates in the ubiquitous mark. The value of the patented designs and inventive technologies is transferred to the mark, and hence value transference is realized.
And why the trademark registration is so special:
Such a registration would cement Apple's monopoly on the associated design. Unlike the design and utility patents, the trademark registration could last indefinitely if properly used. This represents sustainability of the business model variety and, as such, secures the real competitive advantage of Apple's iPod.