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Value-Driven Innovation Management - A closer look at the Top players

by Carsten Guderian & Nabu Xavier, on May 13, 2020 9:21:47 AM

A Blog Series on Technology Intelligence

This is the second post in our recently introduced blog series on technology intelligence, where we concentrate on technology-focused competitive intelligence sources, derived from patent analytics. We discuss how scientifically developed patent quality indicators can be used to accurately evaluate innovation efforts and compare innovators in a field from a qualitative perspective. In the previous post, we looked at the technology field of “smart homes” to form a bird’s eye view of the development of patents in this technology over the years. In this entry, we look at individual players in this field and compare the performance of their portfolios against each other.

Like this, throughout this series, by analyzing the patents that were filed in the ‘smart-homes’ technology and various other technologies, we explain how patent quality is discernibly present, relevant and important for strategic decision-making. Read on to find out how moving away from a volume-based approach towards value-driven intellectual property management can help you increase business and organizational value.

In the first part of our blog series on technology intelligence, we discussed a technological landscaping chart based on a definition of the technology field “smart homes”, which EconSight GmbH, a swiss-based technology consulting firm, had defined. This primary analysis, focused on the development of the overall portfolio of patents in this field and the portfolio’s Patent Asset Index™, over time. We discovered that, countering common views, some patents that can be attributed to this technology already existed 20 years ago. However, we also inferred that there has been substantial growth in this technology with annual single- or double-digit growth in both the key performance indicators (KPIs).

Click here if you would like to read part 1 of this blog series.

Technology Intelligence at the Industry-Level: Patents in “Smart Homes”

While the first technology-field or industry level analysis described in our previous analysis provides us with information that there has been increasing R&D activity and continued growth in firms’ patent portfolio strengths in this field – deeming it interesting for innovation managers considering “smart homes” as a promising technology field – the results did not allow us to form an opinion about the most important firms innovating in this technology space. Zooming in from an industry to a corporate level analysis, we obtain insights on the firms that are the strongest innovators.

Portfolio Size Trends of Individual Players

Key Players‘ Portfolio Size Development in Smart Homes

The above chart, developed using quantity-driven patent data, displays the ten companies with the largest number of patents, or patent families to be precise, in “smart homes” on December 31, 2019. For these ten firms, the overall growth rates from 2000 to 2019 vary between 73.37% for Sony to 32,050% for Midea Group. These are astonishing growth rates, but not surprising, given that most of these firms held few to no patents in 2000, resulting in such tremendous growth rates with a fractional increase. In fact, Xiamoi had its first “smart homes” patents in 2001, Midea Group and Haier entered the space in 2002, whilst State Grid Corp had their first “smart homes” patents in 2004 and Gree Electrical Appliances only in 2006. In 2000, the only companies out of the top 10 to own more than 100 patents in this technology were, Sony with 184 and Panasonic with 350. In terms of annual growth, no real universal or consistent trend is detected. While Haier experienced continuous double-digit growth rates with the exception of 2005, and Samsung experienced relatively stable double-digit annual growth rates that only dropped to single-digit growth rates in 2009, ’10 and again from 2012-14, other firms were subject to more fluctuations. LG’s portfolio, for example, grew from 2001 to 2007 and 2011 to 2014 – with single-, double- and in the early years even three-digit annual growth rates, but also declined in the remaining years, for example in 2009 by 21.64 percent. It is interesting to note that for firms with fluctuating positive and negative growth rates, crowding out effects occur, which also affect the overall growth rates mentioned above.


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Portfolio Strength Trends of Individual Players

Key Players‘ Portfolio Quality Development in Smart Homes

Turning from patent counts toward portfolio strength indicators – and thereby from quantity-driven to quality- or value-driven patent analytics – the above chart displays the development of the Patent Asset Index™ for the top 10 companies in “smart homes”. Using the values of Patent Asset Index™, a scientifically-proven methodology to discern the strength of patent portfolios, we note that a different composition of firms constitutes the top 10 firms on December 31, 2019. Compared to the top 10 firms as ranked by the portfolio size, four firms, i.e. Gree Electrical Appliances, Haier, Mitsubishi Electric, and State Grid Corp, drop out and are replaced by Alphabet, Apple, Microsoft, and Qualcomm when ranked by the Patent Asset Index™. When extending the list of the top firms beyond ten entries, e.g. to the top 25, 50, or 100 firms, even more rank order and entire composition changes are detected when using the Patent Asset Index™ instead of portfolio sizes for ranking. These results emphasize the importance of Patent Asset Index™ as a key performance indicator to reveal portfolios that are considerably smaller in size but containing important and high-quality patents.

Top 10 players by Size and Quality of their portfolios_published

In terms of annual growth, no real universal trend is detected – just like with the portfolio size. Some firms experienced mostly single-, double- or even three-digit growth rates, others are subject to more fluctuations. Particularly two firms stand out with relatively stable values over time. For example, Alphabet, Google’s parent company, experienced continuous single- or double-digit growth in terms of the Patent Asset Index™, with the exceptions of slightly negative growth rates in 2007 and 2011. Panasonic, experienced continuous single- and double-digit growth of the Patent Asset Index™ until 2015, where after they became subject to single-digit negative growth rates. It seems that these slight trends could be detected particularly for firms that did not start at absolutely low levels of patents in “smart homes” in 2000. All in all, these annual growth rates show something important – value-driven patent metrics do not aim at proving existing patent-based analytics wrong. Instead, they often allow to derive additional insights.

Value Addition by Value-Driven Patent Management

What do the above analyses tell us about the advantages of value-driven intellectual property or patent management? Precisely that, by shifting focus from patent quantities and portfolio sizes to an alternative set of value metrics that incorporate different patent qualities and patent strengths, such as the Patent Asset Index™, we gain unique and actionable insights that cannot be inferred from a simple “counting patents” approach. In fact, looking at the value of portfolios comes particularly handy when trying to differentiate between portfolios that have stark differences in size. This is immensely useful in the early identification of novel market entrants, like start-ups or spin-offs, or smaller market players that fall through the cracks in traditional analyses. Moreover, comparing the strength of patent portfolios by combining its size and quality considerations allows for insights on the balance of power in industries or markets.

Our next blog posts detail how relying on these patent portfolio strength indicators developed around the Patent Asset Index™ allows us to obtain value-related information on firms’ portfolios and how data quality is crucial for value-driven innovation and intellectual property management using patent analytics.

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If you are interested in a personalized patent analytics session using harmonized patent data and smart patent indicators, please click here to schedule a free demonstration for you and/or your team.

Interested in similar analyses? Watch our most recent webinar - 'Uncovering Cost-Savings in your Patent Portfolio'

To obtain more information on the patent analytics used in this blog post, please contact:

Carsten Guderian                                                                                                                                            Senior Project Leader                                                                                                                        PatentSight GmbH                                                                                                                                              Mail: cguderian@patentsight.com                                                                                                                  Phone: +49 171 5364 429

Topics:Patent ValuationPatent Asset IndexIP BenchmarkingBenchmarkingPatent LandscapeCompetitive Impact™


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