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The Secret Behind Qualcomm's Margins? Patents

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Re: The Secret Behind Qualcomm's Margins? Patents

#31

Post by AlbertCory »

RachelF wrote: post #15
beambot wrote: post #5

Earlier quoted context omitted.

Patents don't protect smaller players -- enforcement is cost-prohibitive. The only sector that could plausibly justify patents is biotech... but even there, the vast majority of early R&D is publicly-funded, and thus should negate protection. A Government-mandated monopoly on ideas may have made sense at some point, but it's antiquated today. Today they serve to stifle innovation, extract rent and act as yet another…

In fact they have the opposite effect on smaller players. The big players all have a few thousand (junk) patents and they make deals with each other to exclude the smaller players, who can't afford to file thousands of patents to join the club.

Everyone always says this. In fact, I was in Google's patent litigation division, and I can tell you firsthand that there is WAY less of this than you think. A cross-licensing deal is incredibly hard to negotiate.

So if you could back this up with some links, it'd be appreciated. Otherwise it's just an urban myth.

Re: The Secret Behind Qualcomm's Margins? Patents

#32

Post by antonvs »

whynot-123 wrote: post #4

I question who this article is for - having worked at Qualcomm, they beat you over the head on how their business is built on patents and how they were going to go belly up some 20 years ago had they not pivoted to this model. I can't imagine a single analyst or anyone interested in the company not aware of their business model in the same way it doesn't take long to figure out that Apple is in the business of sellin…

The headline doesn't cover the main thrust of the article, which is:

> "...like other semiconductor majors, the San Diego-based company also protects its inventions with intellectual property. But Qualcomm has a unique model at the heart of the way it uses those patents"

The article dives into that model.

Re: The Secret Behind Qualcomm's Margins? Patents

#33

Post by AlbertCory »

If you're serious about "reforming" software and standards patents, you should first carve off that area from pharma and bio patents. Make software just plain not patentable.

Why? Strategically, you don't want those drug people as enemies. They have an extremely powerful lobby in D.C. and many "reforms" that make sense in software would get them up in arms. Choose your battles.

Re: The Secret Behind Qualcomm's Margins? Patents

#34

Post by verditelabs »

gota wrote: post #21
whynot-123 wrote: post #4

I question who this article is for - having worked at Qualcomm, they beat you over the head on how their business is built on patents and how they were going to go belly up some 20 years ago had they not pivoted to this model. I can't imagine a single analyst or anyone interested in the company not aware of their business model in the same way it doesn't take long to figure out that Apple is in the business of sellin…

Do you recall what kind of bonuses they award to patent authors, if any? Seems like the message behind 'this is core to our business' is easily communicated with financial incentives backing that up.

I got one patent while I was a Qualcomm for some fairly inconsequential software thing. I was awarded $3k USD. Had the patent been filed in other countries and awarded, I would have been awarded I think 1.5k USD per country. This is/was the standard deal at Qualcomm when I was there (2013-2021). I would not be surprised if core researchers are awarded more for stronger and more applicable patents.

Re: The Secret Behind Qualcomm's Margins? Patents

#36

Post by gary_0 »

axlee wrote: post #11
FredPret wrote: post #7

Qualcomm does have a nice margin (20%) [ https://valustox.com/QCOM ] but this is roughly in line with other big co's in the industry. Motorola makes 18% [ https://valustox.com/MSI ] Broadcom, Nvidia, and even Texas Instruments are around 40%! [ https://valustox.com/AVGO , https://valustox.com/NVDA , https://valustox.com/TXN ]. Intel and AMD bring up the rear with 1.8% and 0.5%. [ https://valustox.com/INTC , https://v…

It's so weird that an oligopolistic industry with the largest barriers to entry (your average CPU factory will cost $5/10+ billions, and that's just the factory) have the lowest margin, by far. Why is that so?

You're looking at the wrong company. TSMC has a margin of 40%.

Re: The Secret Behind Qualcomm's Margins? Patents

#37

Post by daniel_grady »

whynot-123 wrote: post #4

I question who this article is for - having worked at Qualcomm, they beat you over the head on how their business is built on patents and how they were going to go belly up some 20 years ago had they not pivoted to this model. I can't imagine a single analyst or anyone interested in the company not aware of their business model in the same way it doesn't take long to figure out that Apple is in the business of sellin…

Absolutely. There’s no secret here.

Re: The Secret Behind Qualcomm's Margins? Patents

#39

Post by mschuster91 »

AlbertCory wrote: post #33

If you're serious about "reforming" software and standards patents, you should first carve off that area from pharma and bio patents. Make software just plain not patentable. Why? Strategically, you don't want those drug people as enemies. They have an extremely powerful lobby in D.C. and many "reforms" that make sense in software would get them up in arms. Choose your battles.

Pharma and bio patents are a troubling issue on their own. We're already seeing this with the patent issues surrounding the Covid vaccines in pharma and with Monsanto and their accomplices monopolizing the agricultural high-yield seed markets. They need to be broken as well.

Re: The Secret Behind Qualcomm's Margins? Patents

#40

Post by lotsofpulp »

FredPret wrote: post #22
axlee wrote: post #11

Earlier quoted context omitted.

It's so weird that an oligopolistic industry with the largest barriers to entry (your average CPU factory will cost $5/10+ billions, and that's just the factory) have the lowest margin, by far. Why is that so?

It might be that that's not as high of a barrier to entry as it seems. It would cost much more than that to replicate the engineering quality that goes into the Apple system of products for instance.

Also, Apple has lots of products and services to lots of potential buyers it can sell to at lots of price points, whereas a fab owner only has a few buyers and therefore less negotiating power, plus all the buyers are sophisticated and well informed.
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