Qualcomm spends around 5.5 Billion every year in R&D or 23% of net sales. For comparison, apple spends a paltry 2.2% of its net sales on R&D. Dry up Qualcomm's net sales and the R&D will dry up too.
All the most crucial wireless patents (the really fundamental ones) have already expired. Why doesn't Apple design another, competing system around Qualcomm's patents and license it for free? The answer is that it takes a decade and tens of Billions of dollars.
Apple has the money, but it's cheaper to work the courts over so they pay less. If Apple were the ones who built 4G, you can be very sure they'd be charging at least as much as Qualcomm.
Remember, Apple thought the look of their iphone was worth $40 per device when suing Samsung, but now they think the actual technology to make it work isn't even worth $10 per device. If Qualcomm were making the same profit margins (relative to R&D) as Apple, they'd have to go from $10 per device to $100.
I'm not a Qualcomm fan (or any big corporation for that matter), but if we were making a list of price gouging companies, I think there are a lot of companies that should be getting fined and regulated (especially Apple) before Qualcomm.
The 2G patents (that Qualcomm owned 90% of) have expired.. but who uses that anymore?
Qualcomm also owns 13% of the patents used for LTE (which they agreed to license under FRAND terms).. it's those patents they are using to create a monopoly on LTE chips.
First they refuse to license their patents to other manufacturers who want to produce chips.. then they say to handset manufacturers, they won't sell you chips unless you agree to pay a royalty on every handset (even if it does not contain Qualcomm chips).
They own the same percentage of patents as Erickson, but they produce 4x the revenue from IP licensing (+ the revenue from chipset sales).
Edit: if you believe the 13% of LTE patents Qualcomm owns are worth $10... that would be $77 for all of the LTE standard essential patents at the same rate. So we are not far off from your $100 Apple-like price in your post.
Isn't that a FRAND violation?
But Ericsson and Nokia do charges a lot for their Mobile Carrier Infrastructure and Equipment, where as Qualcomm dont have part in that industry. And one reason why Huawei is winning because Huawei has been offering similar equipment for much cheaper price.
First, Qualcomm chipset also comes with IPs owned by Samsung and a slew of other wireless patent holders who crossed-licensed theirs with Qualcomm. Samsung and LG, along with Qualcomm, are the largest contributors of LTE SEP's and make up the bulk of LTE patents (KFTC likewise found that Qualcomm used its monopolistic position to force them to cross-license their patents for almost nothing in return). So no. Even if you stack everything, it won't be anywhere close to your nonsensical $77.
Second, under ETSI (see section 1.11), Qualcomm has the right to refuse the granting of licenses.
Pot, meet kettle. Apple charges 30% at the App store, whether I want to sell an app for $1 or $1000.
Also, if Apple wanted, they could package the modem separately. Sell it for $50. Again, this mirrors Apple's advice to Samsung to build triangle phones since Apple patented a rectangle with rounded corners. Suddenly, clunky workarounds are bad. Quelle suprise.
I really can't feel sorry for Apple. Live by the sword, die by the sword. Must be nice to be an Apple IP lawyer. They win no matter what happens.
And I don't feel sorry for Apple. I feel sorry for all the other small manufacturer and companies suffering from this situation, but that are too small to make things move on their own. Apple and Samsung may not have the purest of interest in this debate, but if they move things in what I believe is the right direction, I'll be happy.
Or, if we're dictating what's a fair price.. can we at least force Intel, AMD and other relevant parties to license X86 patents?
Because this is a synthetic market the government explicitly created and maintained through patent legislation.
In this case. Apple has a history of demanding extortionate patent licensing fees for incredibly obvious ideas.
You seem to be missing the bigger picture. The attack on Qualcomm is against the company, not the patents. Qualcomm snapdragons are the only competitive ARM chips against Apple's A series.
Apple is trying to destroy Qualcomm and monopolize the market. That's not going to help the little guys you claim to care so much about.
Apple A series tech is destroying the Qualcomm's snapdragons just fine without any need for legalities.
Are you suggesting that Qualcomm is using its licensing fees to support an unprofitable Snapdragons? Overall a confusing argument.
I already addressed it. The poster is repeating the point. That doesn't make it more valid.
>Apple A series tech is destroying the Qualcomm's snapdragons just fine without any need for legalities.
You might want to review world wide market share numbers before you try to defend that statement.
>Are you suggesting that Qualcomm is using its licensing fees to support an unprofitable Snapdragons?
I'm suggesting Apple is using litigation expense as an avenue to destroy the business of their competitor, again. Apple has much deeper pockets than Qualcomm. It's very simple math.
But Apple is not doing that. It is keeping that competitive advantage in house.
Whether you like Apple or not, you have to understand their business model before you criticize it. Apple doesn’t care about competing with component manufacturers. Not even a little bit.
Apple learned this the hard way in the 90s. Don’t compete on price, and don’t compete on specs. Apple happens to be winning on specs right now. The snapdragon procs are not even close to the A-series in performance. But that wasn’t always the case.
This is about maximizing profit. Not about putting anyone out of business.
When ? I am only aware of one situation in their history i.e. Android where Apple has sought an ongoing royalty.
> Apple is trying to destroy Qualcomm and monopolize the market
What ? Apple is never going to sell their CPUs to their competitors. They are a product company not a components vendor so not sure what market you are referring to. Also Intel sells modem components as well.
>What ? Apple is never going to sell their CPUs to their competitors.
Who said Apple would sell CPUs to competitors? You don't monopolize a market by having competitors. Not real ones anyway.
And that's exactly where you're looking at this wrong. it's not just Apple that loses out because of this, it's consumer's at large.
Likewise, the same thing happens with apps, consumers must pay more money for apps which will have less revenue to invest in themselves.
That's the thing about unfair economic practices, it never just hurts the people directly involved, but also the massive amount of people indirectly involved.
Not really equivalent though. Apple advertises and makes the whole app available on the App Store, delivers the whole app from their infrastructure, manages upgrades and back end services for the whole app, provide access to millions of customers and handle the financial transaction for the full cost of the app. It seems reasonable they get a percentage of the whole app’s price.
Meanwhile Qualcomm only own a few patents on a tiny sliver of the circuitry of one component for one function of the device.
Apple can do whatever it wants on its own App Store. It's their device and they aren't a monopoly nor is it anti-competitive for them to charge a high fee on their own store.
But Qualcomm IP is part of the LTE standard on the express condition that they will license their share of LTE mandatory features fairly. I don't think it's fair to take a percentage cut of the whole package price for an IP license that's part of a global standard.
Is this why there's no option for an LTE modem in a MacBook Pro?
Apple would never (for some value of never) ship a laptop with an external device like that. The LTE is either baked into the laptop (at which point Qualcomm would demand a % of the entire laptop's sale price), or it's not included at all. They choose not at all.
I assume the difference between those two would be the difference between price?
Qualcomm's patented features do drive market demand (or add value) for mobile devices, including that of Apple's. That's why Qualcomm can ask a percentage of the entire device.
This is not so with MacBook Pro -- unless Qualcomm can prove it otherwise.
Read up on Token ring vs Ethernet to get some understanding of the history in this area.
The big issue with Qualcomm IP practice is that they don't charge IPR on the modem function, but over the whole device. So put the same modem in a cheap phone, or in an expensive laptop, and the IPR will be very different. This is really charging IPR on a lot of value completely unrelated to the modem.
Historically, the cellular/3GPP world was very phone centric. The specs were for a phone, and the chipset was really the core of the phone. At that time, charging cellular IPR on the device embedding the chipset was reasonable: the device was just a phone, with all the intelligence coming from the chipset.
We're obviously no longer living in such a world. But Qualcomm keeps this practice, as it's very profitable for them and their dominant position let them do it (so far). Apple is mad at this, as most of the value of a smartphone is outside of the modem part nowadays (even more for a PC). Other device makers hate it too, but don't have the muscle to go against QCOM and can't afford alienating them. Europe is looking into it too, and will issue a recommendation that cellular IPR is charge only on the modem subsystem, not the including device (basically, Apple position). It will start as a recommendation, but could become law later on.
So it looks like it's QCOM against everybody else. Considering the money involved, I'm sure that QCOM has a pretty fat budget to push their angle. Hello Bloomberg ;)