A Rapidly Growing Technology
Making data available anytime, anywhere, has become big business and there are a lot of overlapping technologies and services behind this data-on-demand evolution, a key one of which is cloud storage. By looking at the patent landscape and factors that help determine the strength of patent portfolios, a clearer picture emerges of who the key influencers are. Knowing this can help inform company strategies; not just for cloud storage services, but across the entire range of cloud technologies that they tie into.
Growth of Cloud IP
Filing activity for cloud-related patents in general has grown quickly since 2000. There is a noticeable increase between 2008 and 2012 fueled by a growing adoption of cloud services. This growth in adoption created a demand for improved cloud storage technology essential to enabling many cloud services. What appears to be a drop in 2013 in Figure 1 in fact suggests continued growth, as many filings made in that year have yet to be published.
Figure 1 - Cloud related patent filings since 2000, including key cloud storage events
The amount of data stored in the cloud is now over one exabyte (i.e. over a billion gigabytes), with more than 50% of large enterprises using cloud services as integral part of their infrastructure
. Cloud storage is also increasing in popularity with consumers with services such as Amazon’s Cloud Player and Apple’s iTunes Match moving music collections to online storage. This has led to an increasing number of companies, and hence related patents, to emerge as a result of the key technologies required to supply the underlying cloud infrastructure now in place.
Consumer Cloud Storage Providers
To understand the current IP situation for the cloud storage market it is helpful to look closely at the patents held by a sample of consumer-focused cloud storage providers (chosen from a list of the most popular services and representing a range of company sizes). Given the large number of competitors in this market, it is likely that the strength of a company’s patent portfolio will prove important in determining who goes on to long-term success in this area. Figure 2 shows how the companies compare against each other in terms of patent filings.
Figure 2 – Consumer cloud storage provider filing comparison
Prior to 2012, intellectual property in this area among these companies was dominated by Microsoft, who had a significant level of patents filed. Since then, Google has moved to match Microsoft’s filing rate, with Amazon and Apple gaining ground. Even smaller, but more dedicated, services such as Box and Dropbox hold a much improved share of the modern IP, with around a 3% share of patent families filed by the selected companies, a figure similar to that of Amazon’s position only a few years previous.
A strong portfolio can prove valuable in several ways, not only does it display the strength of a company’s technology and provide confidence to investors in the future development of the business, this strength can help to defend against infringement litigation or act as a means of generating licensing income. There are a many ways to measure the strength of a cloud-related patent portfolio. The number of citations a patent has and the jurisdictional coverage the patent has are two simple factors that help indicate a portfolio’s influence.
The level of citations for a patent indicates how many other inventors are using it as a reference in their technology. Among the sample of cloud storage services, Microsoft’s large portfolio is very well cited, but Amazon’s patents are cited at a higher rate, suggesting their service is based on market leading, innovative technology. This can be seen in Amazon Web Services, a cloud platform that dominates the market and is relied upon by organisations such as Netflix, Adobe and NASA.
Figure 3 – Cloud storage citation strength - Bubble size is proportional to number of patents held
An important factor to consider when determining a portfolio’s influence includes where the related services are being offered compared to the jurisdictional coverage of the patents. By its very nature, cloud storage is accessible worldwide, yet the data centres have to be physically located somewhere
. Those locations need to align with the jurisdictions in which the patents are filed to ensure the technology is protected, but also need to coincide with jurisdictions in which patent rights are enforceable. A distribution of cloud patent filings is shown in Figure 4.
Figure 4 – Geographic breakdown of cloud patent filings
Cloud related filings in Asia, led by China and Japan, recently surpassed the US who until 2012 led the market in patent filings. This surge in filings from Asia strongly suggests that companies without an Asian patent strategy may find themselves left behind if the market continues to develop as this trend suggests.
Cloud storage stretches far beyond just consumer focused services; enterprise service providers (e.g. Salesforce, Rackspace), content delivery networks (e.g. Akamai, Limelight), and companies with long histories of research in distributed and cloud computing (e.g. IBM, Intel) have all contributed to innovation in this area. Not only this, but cloud storage is just one application of the underlying technologies and by its very nature is closely linked to other spheres such as data security, network technology and service provision.
Within the consumer cloud storage market, an area in which IP was previously dominated by Microsoft, the most popular providers such as Google, Apple, Amazon, Box and Dropbox are now also establishing strong patent portfolios. The diversity of storage services available means many other smaller companies with relevant filings could also play an important part in shaping the cloud storage landscape.
Following a period of significant growth in patent filings in cloud computing, cloud systems now look set to play a central role in the provision of information technology services for the foreseeable future. The growth of filings in Asia also suggests that innovation from Chinese companies could prove vital in the cloud’s development. Add to this ongoing conflict between US and Chinese governments over data security and secrecy issues and we may be seeing the beginning of cloud services segmented by region.
Any company, large or small, looking to develop cloud technology needs to understand how all of the relevant intellectual property affects them and their company’s strategy in order to be competitive in what looks to be an increasingly complex landscape.