Apple and Qualcomm’s Billion-Dollar War Over an $18 Part • Hacker News Board

Re: Apple and Qualcomm’s Billion-Dollar War Over an $18 Part

#41

Post by lanaius » Wed, Oct 04, 2017, 5:14 PM UTC

rgbrenner wrote: post #26

throwaway000002 wrote: post #12

If AAPL thinks QCOM doesn't add proportional value to their phone, let them sell their phone without QCOM ip. Because we all know AAPL takes its proportional percentage of flesh from an app developer for having the audacity to add value to iOS, whilst simultaneously holding back the web. Hypocrisy all around.

Apple can't really do that (sell a phone without Qualcomm IP). Qualcomm agreed to FRAND terms in exchange to adding their patents to the 3G standard. Once that happened, Qualcomm then violated their FRAND terms to create a monopoly on CDMA chipsets, charge additional royalties, etc. If they drop Qualcomm, then they'll have to drop CDMA support (Verizon, Sprint, 3g, 4g).

Sewell is directly quoted as saying cellular "isn't as important as it used to be." When they thought 3.5mm TRS wasn't as important as it used to be they cut it. Seems like cellular is perhaps still more crucial to the viability of the phone than they want to admit.

Re: Apple and Qualcomm’s Billion-Dollar War Over an $18 Part

#42

Post by yaantc » Wed, Oct 04, 2017, 5:15 PM UTC

danjoc wrote: post #29

yaantc wrote: post #6

That's a very one-sided pro-Qualcomm piece. 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…

>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. 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 buil…

This story is very Apple vs. QCOM, but I don't care much about this angle really. What I care about is the underlying question: is it ok to charge IPR on value added way outside the scope of the given IP? I don't think so. QCOM does so. Apple is against. So I'm just sympathetic with Apple position in this strong debate and that's it (I'm not even an Apple user).

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.

Re: Apple and Qualcomm’s Billion-Dollar War Over an $18 Part

#43

Post by [deleted] » Wed, Oct 04, 2017, 5:20 PM UTC

sgift wrote: post #33

dpark wrote: post #15

Earlier quoted context omitted.

> I don't understand what the problem is. Qualcomm invents something, patents it, and then they have a monopoly. Apple's assertion is that the pricing is not Fair or Reasonable, which Qualcomm agreed to as a concession to make their patents part of the cellular network standards. > Apple's answer should be to open their own EE labs and start inventing things and getting their own patents. Instead, they complain and g…

The problem seems to be that there's no definition what exactly FRAND actually means. The only thing everyone seems to agree on is that "you cannot exclude companies from licensing your tech", but apart from that it seems to be wild west.

[deleted]

Re: Apple and Qualcomm’s Billion-Dollar War Over an $18 Part

#44

Post by hajile » Wed, Oct 04, 2017, 5:20 PM UTC

dpark wrote: post #15

jeffdavis wrote: post #13

I don't understand what the problem is. Qualcomm invents something, patents it, and then they have a monopoly. Apple's answer should be to open their own EE labs and start inventing things and getting their own patents. Instead, they complain and go to court. Of course, that assumes the patents are good ones.

> I don't understand what the problem is. Qualcomm invents something, patents it, and then they have a monopoly. Apple's assertion is that the pricing is not Fair or Reasonable, which Qualcomm agreed to as a concession to make their patents part of the cellular network standards. > Apple's answer should be to open their own EE labs and start inventing things and getting their own patents. Instead, they complain and g…

Qualcomm's R&D budget is around 25% of net sales. Google, Cisco, Intel, and Microsoft (for example) are considered big spenders, but they only spend 12-15% of net sales (apple spends 2.2% of net sales on R&D).

Qualcomm sounds a lot more fair and reasonable than any of the other multi-billion dollar companies I know of.

Re: Apple and Qualcomm’s Billion-Dollar War Over an $18 Part

#45

Post by smm2000 » Wed, Oct 04, 2017, 5:21 PM UTC

dheelus wrote: post #31

An analogy for this in the real world would be tips for waiters. As a foreigner, I'm aghast at the tipping culture in the US but more importantly, I fail to understand why tips are calculated on a percentage basis. It is no more effort to bring me out a $60 steak than it is to bring me a $5 coffee. So why should I tip $12 for the steak and $1 for the coffee? To Apple's point, they want a "fixed" tip charge. But then…

Throughput, expectation of service and number of tables/waiter are very different for coffeeshop/casual diner and place that sells $60 steak. In casual restaurant you can expect one waiter per 8 tables compared to 4 tables/waiter in fine dining place. People easily take 2x time to eat the same amount of food in fine dining place compared to something cheaper. In fine dining place waiters are better trained/educated (ever tried to ask for wine recommendation at Denny's?) and dress nicer.

Higher tips per person are totally expected in fine dining place purely from economic perspective.

Re: Apple and Qualcomm’s Billion-Dollar War Over an $18 Part

#46

Post by yaantc » Wed, Oct 04, 2017, 5:24 PM UTC

hajile wrote: post #36

yaantc wrote: post #6

That's a very one-sided pro-Qualcomm piece. 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…

That pricing argument is worthless when you start talking about percentages. 5% of a $500 device is quite a lot while 5% of some $25 IoT device is not very much. 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 fundament…

Please see my reply @danjoc. I don't care much about Apple really. The manufacturing world is pretty hard and penny pinching, the practice of charging for value unrelated to one's IP hurts small manufacturers who can't stand to a QCOM. I really don't mind QCOM charging whatever they want on their modem, to sustain their R&D. But I don't agree on their charging unrelated parts just because they can. Hope this clarifies my previous comment.

Re: Apple and Qualcomm’s Billion-Dollar War Over an $18 Part

#47

Post by [deleted] » Wed, Oct 04, 2017, 5:26 PM UTC

RandVal30142 wrote: post #39

dpark wrote: post #15

Earlier quoted context omitted.

> I don't understand what the problem is. Qualcomm invents something, patents it, and then they have a monopoly. Apple's assertion is that the pricing is not Fair or Reasonable, which Qualcomm agreed to as a concession to make their patents part of the cellular network standards. > Apple's answer should be to open their own EE labs and start inventing things and getting their own patents. Instead, they complain and g…

>Apple's assertion is that the pricing is not Fair or Reasonable I assert Apple's markup on products is not fair or reasonable. Perhaps Qualcomm's demands are in line with the true value of the device and not the pie in the sky numbers Apple wants.

[deleted]

Re: Apple and Qualcomm’s Billion-Dollar War Over an $18 Part

#48

Post by briandear » Wed, Oct 04, 2017, 5:29 PM UTC

aetherson wrote: post #16

It's kind of hilarious to hear Apple bitching that when it marks up its phones a ridiculous $100 for $20 worth of memory, it has to share its $80 profit. Neither of these companies deserves our sympathy. They are two big amoral profit-seeking entities wrestling for money in a way that won't meaningfully affect your life. Whether Apple wins or Qualcomm wins or they split the difference, it's neither justice nor injust…

What can you do with the $20 worth of memory by itself? That $100 "markup" is because it's part of a great whole -- a whole that took millions to engineer and create. It isn't like Apple is just reselling memory chips.

I could buy all the raw materials that go into an iPhone, but that doesn't mean that I personally could make an iPhone. I'm glad to pay a premium because I don't have time to build a phone.

Re: Apple and Qualcomm’s Billion-Dollar War Over an $18 Part

#49

Post by MBCook » Wed, Oct 04, 2017, 5:31 PM UTC

mkhalil wrote: post #25

I love battles when you can't really feel sorry for either side. As much as I or anyone hate patent trolls, one can't sit here and complain that a percentage of the value isn't a fair price to pay if one thinks it's okay for Apple to charge Music + App devs 30% to improve their OS + provide content for it's users.

App developers agreed to the 30%. Qualcomm agreed to FRAND pricing.

But that’s not what they’re charging Apple. They broke an agreement.

What Apple is doing doesn’t violate an agreement, whatever you think of it.

Re: Apple and Qualcomm’s Billion-Dollar War Over an $18 Part

#50

Post by rgbrenner » Wed, Oct 04, 2017, 5:32 PM UTC

hajile wrote: post #36

yaantc wrote: post #6

That's a very one-sided pro-Qualcomm piece. 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…

That pricing argument is worthless when you start talking about percentages. 5% of a $500 device is quite a lot while 5% of some $25 IoT device is not very much. 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 fundament…

All the most crucial wireless patents have already expired

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.