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.

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Re:
by kurkosdr on Mon 2nd Jun 2014 14:08 UTC
kurkosdr
Member since:
2011-04-11

On one hand, I am not naive enough enough to believe that standards like 802.11ac and LTE would have been invented if the incentive of receiving patent royalties didn't exist. Nobody would embark in costly research activities such as studying MIMO and beamforming, just to "scratch and itch".

On the other hand, ISO and IEEE have been known to shove certain patents in standards which could have been avoided/worked-around, or don't offer than much to the standard anyway, since standard bodies are in part controlled by big corps. Just look how the "b-frames" patent (a patent touted as essential by the MPEG) was elegantly worked around by WebM, using "compound prediction".

Anyway, anybody who doesn't want to pay royalties should put his/her money where his/her mouth is and invent a royalty-free standard, like the DisplayPort folks did, or like Google did with VP8.

Edited 2014-06-02 14:14 UTC

Reply Score: 1

RE: Re:
by hobgoblin on Mon 2nd Jun 2014 16:12 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

RE: Re:
by ilovebeer on Mon 2nd Jun 2014 16:49 in reply to "Re:"
ilovebeer Member since:
2011-08-08

Nobody would embark in costly research activities such as studying MIMO and beamforming, just to "scratch and itch".

Scratch an itch. I don't agree that without royalty incentives this stuff would never get done. It all depends. Sometimes it is in a companies interest to take on such endeavors if its a necessity to their long-term goal(s). The payoff isn't always in direct compensation.

Reply Parent Score: 4

RE: Re:
by Kochise on Mon 2nd Jun 2014 20:56 in reply to "Re:"
Kochise Member since:
2006-03-03

Check your facts before getting Google in high esteem :

http://appleinsider.com/articles/13/03/07/google-admits-its-vp8webm...

Kochise

Reply Parent Score: 1

RE: Re:
by unclefester on Mon 2nd Jun 2014 23:52 in reply to "Re:"
unclefester Member since:
2007-01-13

WiFi was developed by Australian government radioastronomers at the CSIRO. They wanted to transmit data wirelessly within their own buildings.

Reply Parent Score: 3

RE[2]: Re:
by kurkosdr on Tue 3rd Jun 2014 10:15 in reply to "RE: Re:"
kurkosdr Member since:
2011-04-11

WiFi was developed by Australian government radioastronomers at the CSIRO. They wanted to transmit data wirelessly within their own buildings.


Yes, the original -slow- WiFi. I am talking about all the inventions that evolved WiFi, just read my previous posts.

They could, there's no way to know. What we do know is that the 70's and 80's, and even the centuries before that, saw rapid scientific advances. In fact, scientific advances have been happening at an increased rate for a long time even before the patent system existed.

Rule of diminising returns. For example, inventing the original WiFi was relatively easy. Just use frequency hopping or DSSS, put a CSMA/CA system, and there, it's practically ready.

But developing something like 802.11n or 802.11ac and make it work in the real world is much more complicated, and requires much more R&D, and R&D will get more expensive as years pass.

Edited 2014-06-03 10:21 UTC

Reply Parent Score: 0