IP is the Wealth of the Shift Age

Note A version of this column recently appeared in the Shift Age Newsletter Please feel free to sign up for a free subscriptionIn the Agricultural Age those who owned the land created wealth In the Industrial Age those who created and controlled production created wealth In the Information Age those who created technology and brought it to market created wealth In the Shift Age those who create or own Intellectual Property will create wealthNine times I have spoken of this and have had a CEO or business owner tell me they had recently sold their company for more money than they had ever thought possible based on multiples of revenue or profit The reason was that the strategic buyer had a clear perception of the ability to scale up the seller39s IP and paid for that opportunityIP now represents more than 80 of the market cap of the SampampP 500 in the United States People are finally understanding that corporate wealth amp8211 and revenue amp8211 is increasingly based on what Intellectual Property the company ownsOne of the recent examples of this is the MicrosoftAOL transaction Microsoft paid AOL more that 1 billion US for 800 patents or 13 million per patent Microsoft wanted the patents as they related to the Internet and most important to smartphones and mobile operating systems AOL moving toward a more pure contentintensive business monetized this incredibly valuable collection of IP assets from its earlier iteration to fund its new direction Both sides wonWhat is interesting is to look at the motivation of Microsoft Microsoft became a giant on the power of a near monopoly of PCbased software The Internet transformation put the company back on its heels lessening its dominance with increasingly Webcentric businesses and individuals Now that the world has is and will continue to rapidly move toward mobile devices and platforms Microsoft again finds itself playing catchupIf one thinks about the businesses and revenue streams of the mobile business Microsoft is behind in all the traditional categories The carriers own the revenue stream of access Google and Apple dominate the operating systems apps and software platforms of the smartphone business Apple Samsung MotorolaGoogle HTC and others lead in the device business Microsoft doesn39t make phones and has a singledigit share of the OS market in mobile So essentially the company is not a factor in any of these standard revenue streams of mobile That is why its purchase of AOL39s patents on the heels of other patent deals in the last couple of years is so brilliantSmartphones utilize dozens of patents for the device and for the OS It is one of if not the most crosslicensed technology businesses relative to patents It is also one of the most legally contentious areas of patents Microsoft with its huge and expensive purchase of AOL39s patents on top of all its other recent patent purchases has essentially created a huge revenue stream of licensing revenue in the mobile arena The company is rapidly moving to the position of being paid for almost every smartphone39s technology or OS Using its huge amount of available cash Microsoft has effectively created a new revenue stream from a business in which it has not been successful let alone dominantMicrosoft doesn39t have carrier device or OS revenue but it now is creating a huge stream of IP revenue amp8211 a patentprotected source of revenue not at risk due to the perpetually and rapidly changing mobile marketplace No costs of production no costs of marketing no costs of software development amp8211 just a huge investment into patents A quintessential Information Age company is developing Shift Age revenue BrilliantWelcome to the Shift AgeDavid Houle is a futurist strategist and speaker He has always been slightly ahead of the curve Houle spent more than 20 years in media and entertainment Most recently David is a featured contributor to Oprahcom Check is out here wwwoprahcomdavidhoule David can be contacted at DavidDavidHoulecomRead all Davidamp8217s MediaBizBloggers commentaries at Evolution ShiftCheck us out on Facebook at MediaBizBloggerscomFollow our Twitter updates MediaBizBloggerThe opinions and points of view expressed in this commentary are exclusively the views of the author and do not necessarily represent the views of MediaBizBloggerscom management or associated bloggers MediaBizBloggers is an open thought leadership platform and readers may share their comments and opinions in response to all commentaries

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IP is the Wealth of the Shift Age

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