Linked by Thom Holwerda on Mon 2nd Jun 2014 12:45 UTC
PDAs, Cellphones, Wireless

iTnews points to a study performed by Joseph J. Mueller and Timothy D. Syrett of IP firm WilmerHale, and Ann Armstrong of Intel, which concludes that for an average $400 smartphone (no subsidies), patent royalty costs may be higher than component costs.

Indeed, the royalty data shows that the potential royalties demands on a smartphone could equal or even exceed the cost of the device's components. To be sure, for the reasons described above, many of the so-called "headline" rates on which these royalty figures are based may not withstand negotiation or litigation, but they have nonetheless been sought (and received) from some licensees. With the addition of royalties for the components/technologies for which we did not have sufficient data to include royalty figures, the total potential royalties would increase. Without access to the actual royalty figures paid by smartphone suppliers it is impossible to know for certain their magnitude. But our research demonstrates that they are likely significant. Indeed, the available data suggest that the smartphone royalty stack may be one important reason why selling smartphones is currently a profitable endeavor for only a small number of suppliers.

Let me repeat that last line for you - savour it and let it sink in.

Indeed, the available data suggest that the smartphone royalty stack may be one important reason why selling smartphones is currently a profitable endeavor for only a small number of suppliers.

Bingo. This is exactly why the patent system will never change: this construction benefits the large players immensely. Smaller players will have a hard time keeping up with the patent costs, since they most likely won't have much to barter with patent-wise. The result is less competition for established players.

Permalink for comment 589968
To read all comments associated with this story, please click here.
RE: Re:
by hobgoblin on Mon 2nd Jun 2014 16:12 UTC in reply to "Re:"
hobgoblin
Member since:
2005-07-06

Hard to say. The basics for packet radio was pretty much laid because they wanted to link various research locations in Hawaii, iirc.

The framework for GSM came out of NTNU in Norway, as part of a effort to come up with a pan-european digital mobile network standard.

And i think coax Ethernet came about because the scientists at Xerox PARC wanted to link their Altos together.

Hell, the steam engine was pretty much the epitome of "scratch an itch". In that case, finding a more effective way at getting water out of deep coal mines.

Reply Parent Score: 4