Friday, January 15, 2010

Len Lauer’s brave bet on open innovation

Well, everyone was telling the truth when Len Lauer stepped down as COO of Qualcomm last month to become CEO of a “non-competing” company.

He’s surfaced as the CEO of Memjet, an inkjet printer company also based in San Diego. Don Clark of the Wall Street Journal has the story.

Like Qualcomm, Memjet likes to patent things, in this case behind its lead technologist Kia Silverbrook, formerly CTO of Canon.

Something about this just doesn’t make sense. While I’m a big advocate of open innovation, Memjet is trying to crack a very vertically integrated industry.

I actually worked in inkjet printers for more than a decade — sitting there in my Oceanside software company, supervising (and sometimes actually writing) software for a wide range of color printers, including (for a time) most of HP’s inkjets.

The problem I see with Len’s career move is the part about Memjet licensing its inkjet heads to others to make the actual printers. HP, Canon and Epson have a cozy patent cartel, cross licensing and making their own printers and disposable cartridges. I don’t see any of them licensing technology, no matter how cool it is. (Attempting to invent patents — or suing for a cross-license ala Broadcom — around seems much more likely).

So maybe some of the 3rd tier players — Brother, Samsung — might be interested. Maybe even the 2nd tier players such as Lexmark and Xerox. But how are you going to get market share with these players — no matter how cool your technology — given their distribution and brand recognition are so far behind the Big Three?

Even if you did, get some of them, would the royalties ($1 per printer? $5 for a printer and a lifetime of cartridges?) be enough to pay back “hundreds and hundreds of millions” of VC investment?

Yes, I certainly see the analogy to Qualcomm’s QCT chip business, but Qualcomm got into the chip business when no one knew how to make CDMA chips and few merchant chip vendors existed for handsets (Motorola, Nokia, Ericsson, Matsushita made their own.)

Maybe I’m missing something, but to me printers are a 20-year-old mature industry, without a lot of opportunity for entry.

So my hat’s off to Len, a braver man than I. We’ll see in a few years whether he’s a smart man too.

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