Media Wonk

Hold the iPhone - February 22, 2007

I wonder if the negotiations between Apple and Cisco over the iPhone trademark have been as terse and opaque as the statements they’ve issued.

On Jan. 31, the companies put out a joint statement that was all of one sentence.

“Apple and Cisco have agreed to extend the time for Apple to respond to the lawsuit to allow for discussions between the companies with the aim of reaching agreement on trademark rights and interoperability.”

Now comes word that the two sides have ended their legal dispute.

Perhaps giddy with excitement over the breakthrough, the two stretched their statement this time to a whopping four sentences, if you include the last one about “other terms” of the agreement being “confidential.”

Thanks, but I would have guessed that last part.

Somehow, though, I doubt the negotiators have been quite so laconic with each other. In fact, I suspect they still have quite a lot of ground to cover.

Under the terms of the deal that were not deemed confidential, both companies will be able to use the iPhone name—a bizarre solution that suggests nothing has really been settled.

Clearly, Apple needed to preclude any possibility that an injunction might disrupt its time table for rolling out its iPhone this summer, which meant it needed to get the legal dispute resolved.

The fact that Cisco also gets to use the name, however, means Apple does not have sole authority to determine who gets to use the name and how. That means Cisco maintains some leverage in the negotiations without having to follow through on costly litigation.

So where do the two sides go from here?

One possibility is that Cisco would like to make its iPhone more like Apple’s, and that the dual-use of the name iPhone hints at a future in which “iPhone” simply means “a device that is interoperable with iTunes” but could be sold by any vendor.

Another possibility, though, is that the “interoperability” the two companies have now pledged to continue discussing has to do with something else entirely.

As I’ve noted before, Cisco has at least as much reason to be scared of AppleTVas of Apple’s plans to use the name iPhone.

Cisco has spent over $7 billion over the last five years to acquire Linksys, Scientific-Atlanta and KISS Technology, in an effort to cobble together the pieces of a digital home network.

As a technology provider (as opposed to a consumer electronics company) Cisco is best served if the home network evolves based on open standards.

Apple, however, has never been a friend of open standards—Steve Jobs’ recent endorsement of DRM-free music notwithstanding.

Given Apple’s technical, design and marketing prowess, Apple’s AppleTV platform, if it were to be built on proprietary standards, could pose a major threat to Cisco’s vision for the digital living room.

If I were running Cisco, and had green-lighted $7 billion in acquisitions, I would be trying to use any leverage I could find to try to pry open AppleTV.

How many iPhones am I going to sell anyway?

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