Linked by Thom Holwerda on Wed 4th Oct 2017 10:56 UTC

Within a matter of weeks, Qualcomm, which had been valued at more than $100 billion in December 2016, had lost a quarter of its market capitalization, an outcome that Qualcomm executives say was Apple's intent all along. "Apple's game plan is to squeeze people until they finally say, 'OK, the pressure's too hard. I'll just take a deal,'" said Derek Aberle, then Qualcomm's president and the company's chief negotiator, in an interview in July. Apple, on the other hand, presents the dispute as a matter of fairness. "It's not that we can't pay," Sewell says. "It's that we shouldn't have to pay."

The case, which could go to trial in a San Diego federal court as early as next year, could have a profound impact on the mobile phone business. A Qualcomm win would hamper Appleā€™s efforts to cut costs and preserve margins that have allowed it to capture most of the profits generated by smartphone makers worldwide. If Apple wins and succeeds in ending the Qualcomm tax, that could marginalize one of the most powerful American technology companies and upend the balance of power in the semiconductor industry.

I have zero sympathy for either of these two companies. I literally cannot find a single fournication to give.

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Qualcomm is in the wrong
by jonsmirl on Wed 4th Oct 2017 12:22 UTC
Member since:

As much as I hate both companies, Qualcomm is in the wrong on this. Qualcomm is manipulating the patent system to collect unreasonable amounts of royalties. While this may be an $18 part, Qualcomm also demands an estimated 6% of the retail price of the phone as an IP royalty. So an iPhone X would have to pay around $60 in royalty plus $18 for the part - $78 for the cell modem.

Qualcomm is doing this by creating patent bundles that include FRAND patents. The non-FRAND patents carry the 6% royalty, but you can't get a license unless you take the whole bundle. Of course, Apple/Samsung have no use for many of the patent licenses included in that bundle.

The whole cell phone world is ridiculously over patented. 250,000 patents, 1/6 of all active patents, are on the cell phone and related technologies. And every one of those 250,000 patent holders is after their pound of flesh.

Edited 2017-10-04 12:23 UTC

Reply Score: 4

RE: Qualcomm is in the wrong
by ksec on Wed 4th Oct 2017 15:29 in reply to "Qualcomm is in the wrong"
ksec Member since:

Exactly. You dont have to buy an iPhone, You dont have to buy an Android either, it could be Windows Phone, but you cant escape the 4G LTE patents which Qualcomm collect.

I hope this will soon open up to the public how ridiculously expensive these patents are. And it was one of the reason why HEVC, also called H.265 Video Compression Standard has its patents price jacked up by 20 times. Once they saw what could be done on the mobile Phone patents. (* H.264 only cost tens of cents per devices and capped about 5 million / year. H.265, when all three patents pool combined could cost $100+ Million / year! )

If we just assume $10 per devices on all 4G / 3G patents, on a industry scale of ~1 BILLION 4G smartphone shipment, that is $10B / year revenue spread across a few companies ( The industry has consolidated and there are only few left ), for the life time of 4G that is $100B / year for these patents! And that is if the shipment unit dont grow, it is very likely we will hit 1.5 or even 2B 4G devices in the next 5 years.

That is if it was actually $10 per devices, and it is not! It is charged with a minimum rate along with % of the devices. I.e The industry as whole are gouging 10s of billions every year from these patents! And we are talking about devices only, we havent included those from Infrastructure uses, i.e The one your Mobile Carrier buys equipment from.

Then Qualcomm, the major owner of all LTE patents also sell its baseband chip with significant profits. Hence the double dipping. Some would argue that is because Qualcomm engineered the best baseband for the price. Which is true, but the whole system is so integrated, Qualcomm essentially has made LTE what it wanted for CDMA, a complete closed monopoly within its hand that you can not escape from. They have their baseband modem ready as soon as the design for next 3GPP draft were approved and put into usage.

I am not against patents by any means, innovation comes at a price. But somewhere along the line they have jacked the price far too high. I hope someday someone like Intel will retry WiMax again.

Reply Parent Score: 3

jonsmirl Member since:

The egregious behavior is using standards to extract massive patent royalties far, far, far in excess of development costs. Qualcomm has put in about $100M of R&D and yet extracts $6 billion a year in royalties. This is similar to the MP3 patents, $10M in R&D resulting in close to $20B in payments.

Personally, I'd like to see the proceeds from spectrum auctions used to buy out the patents necessary to implement the devices used in that spectrum. That would amply compensate the patent holders without leading to excessive compensation.

This is going to repeat again with 5G. It is not like 5G is a risky proposition. Everyone already knows what technologies it will employ. But there will be a new round of patents granting 20 years worth of monopoly profits.

Reply Parent Score: 0

jonsmirl Member since:

BTW, the price of h.265 is so high it appears that h.265 is going to fail and everyone will just stick with h.264. At least with h.265, we can choose not to upgrade. With the phone patents, there is no choice when they turn off the previous generation's cell towers.

Intel's baseband is "not as good" because Qualcomm has patented some hardware areas where there is no reasonable workaround. So Intel's engineers are certainly capable of matching Qualcomm's baseband, it is the patent system forcing them to make inferior chips.

Reply Parent Score: 1

darknexus Member since:

I hope this will soon open up to the public how ridiculously expensive these patents are.

It's already open to the public. They just don't give a crap, sadly.

Reply Parent Score: 3

RE: Qualcomm is in the wrong
by unclefester on Thu 5th Oct 2017 10:47 in reply to "Qualcomm is in the wrong"
unclefester Member since:

You can buy 4G LTE phones for less than $50. So it is unlikely that the patents royaltie are $10 let alone $60.

Reply Parent Score: 4

RE[2]: Qualcomm is in the wrong
by PhilB on Fri 6th Oct 2017 13:35 in reply to "RE: Qualcomm is in the wrong"
PhilB Member since:

The royalties are 6% of the value of the phone. The more expensive the phone, the more expensive the royalties.
At Apple they reached $30 per device which they then negotiated down to $10, and then other people started to ask for similar deals.

Reply Parent Score: 2

RE: Qualcomm is in the wrong
by zima on Sat 7th Oct 2017 17:17 in reply to "Qualcomm is in the wrong"
zima Member since:

Though the rhetoric of Apple sounds suspiciously like when they claimed that Nokia abused FRAND ...and as we all know it was Apple who turned out to be abusive (trying to game the FRAND rules by participating in them with worthless UI patents) and it ended up paying billion+ to Nokia...

Reply Parent Score: 3