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The Secret Behind Qualcomm's Margins? Patents

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Re: The Secret Behind Qualcomm's Margins? Patents

#51

Post by Pxtl »

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.

Not only that, but the patent system is 100% essential to pharma research. Pharma takes a crapload of time from patent to market because of the many layers or trial safety. There are drugs that just plain miss their deadline -- setbacks during the testing process for enough time and then the patent expires and a medication with useful applications get lost to history.

If you substantially screwed with that without a very careful and thorough knowledge of the consequences, drug discovery could grind to a halt.

Remember, this is an industry that's more than happy to just stop making drugs and let all the sufferers die if it's not profitable enough.

Re: The Secret Behind Qualcomm's Margins? Patents

#52

Post by jandrese »

gary_0 wrote: post #36
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?

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

And Intel has just been poorly managed for over a decade now.

Re: The Secret Behind Qualcomm's Margins? Patents

#53

Post by asianometry »

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?

I cannot speak to AMD, but for the case of Intel, it is hard to be a fast follower. The billion dollar factory translates to hundreds of millions of dollars of depreciation each year - a fixed cost that means declines in revenue hit the bottom line very hard.

Re: The Secret Behind Qualcomm's Margins? Patents

#54

Post by Pxtl »

underlipton wrote: post #44
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.

I'm not convinced that pharma or bio patents are justified, either. >Strategically, you don't want those drug people as enemies. Oh, actually, yes, can we please ream the m*****f*****s already? To talk about a group of people like that, suggests that they wield far too much power. It gets worse when you learn about what they actually do. Enough already. An "extremely powerful lobby" is not so scary when you outlaw th…

Without drug patents drug discovery would completely stop.

I'm not averse to looking at alternative models for providing revenue to the drug discovery and testing infrastructure (the current model of patents is flawed as hell), but if you like new medications like the COVID vaccines then you have to respect the important of protecting the incentive to create them.

Re: The Secret Behind Qualcomm's Margins? Patents

#55

Post by senderista »

er4hn wrote: post #14
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…

I think this is valuable for those outside of Qualcomm to understand why they have the role that they do in the mobile space. Having worked there as well I have two observations: - So much of that wall of patents was undergrad level CS concepts with ", for mobile device" tacked on the end. Paraphrasing, don't sue me (kidding..), but that was the gist of it. - Their actual development process was pretty bad. I submitt…

About a decade ago I had to help with due diligence on a potential acquirer in the San Diego area. Qualcomm was the largest tech employer there and from the developers I talked to they seemed to have a terrible reputation at least among software folks.

Re: The Secret Behind Qualcomm's Margins? Patents

#56

Post by fomine3 »

Madetocomment wrote: post #12
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…

The article specifically refers to the patent division of Qualcomm which has margin of 68%

I wonder how R&D cost divided into patent and real product cost

Re: The Secret Behind Qualcomm's Margins? Patents

#57

Post by contingencies »

IANAL but the patent system seems to be based upon outmoded thinking that a theoretical monopoly: (A) can be established (B) can be practically guaranteed or enforced by a single government authority (C) is a desirable 'deal' for the inventors vs. the nontrivial fees, disclosures and temporal inputs required on their part. Essentially the inventor is asked to invest in the commercialization of their idea before the viability is known. This greatly favors larger corporations as it is a resource vs. risk question.

In fact you need deep pockets to litigate, and you get ~zero protection until that is done save threatening C&D letters. Most patents are garbage (eg. clear prior art exists, they are obvious and non-inventive, or they are poorly structured and easily sidestepped - but make the governments and lawyers money) and most alleged infractions are settled out of court (possibly largely because most patents are garbage, but invalidating their claims in court costs too much money).

In the recent words of a prominent university law professor, "IP law is the field of law in which I have witnessed the most inconsistent results during my career" ... ie. great firms sometimes yield crap results, and crap firms sometimes yield great results - it's a relative shit show.

In an ideal world it would be great to see either a deconstructed patent system or a revised patent system with lower fees, more boolean logic, less jurisdiction-specific human language verbiage, and a more structured character to the claims and description text. Realistically, that isn't going to happen because vast investments in the status quo exist.

(Source: Spoke with four IP law firms across two countries and some prominent law professors in the last month, currently spending ~100% time on patent theory, drafting and review - 'tis the season to be lawyery!)

Re: The Secret Behind Qualcomm's Margins? Patents

#58

Post by fomine3 »

jauntywundrkind wrote: post #45

In the west, Qualcomm won. There's basically no one else even trying to make medium or high end chips. The patent encumbrance seems total. Even the mega giant Apple is reportedly just giving up on trying. And at huge real world impact, as well as market drive. Apple designs tend to use a third or more of their phone motherboard's real estate supporting Qualcomm's forest of different parts required for cellular. It's…

I'd count Taiwanese MediaTek as "western", maybe at least half

Re: The Secret Behind Qualcomm's Margins? Patents

#59

Post by senderista »

Pxtl wrote: post #54
underlipton wrote: post #44

Earlier quoted context omitted.

I'm not convinced that pharma or bio patents are justified, either. >Strategically, you don't want those drug people as enemies. Oh, actually, yes, can we please ream the m*****f*****s already? To talk about a group of people like that, suggests that they wield far too much power. It gets worse when you learn about what they actually do. Enough already. An "extremely powerful lobby" is not so scary when you outlaw th…

Without drug patents drug discovery would completely stop . I'm not averse to looking at alternative models for providing revenue to the drug discovery and testing infrastructure (the current model of patents is flawed as hell), but if you like new medications like the COVID vaccines then you have to respect the important of protecting the incentive to create them.

The whole premise is flawed. Drug research is a public good and should be publicly funded. Private funding horribly distorts incentives (only drugs that are lucrative enough to recoup R&D costs are funded).

Re: The Secret Behind Qualcomm's Margins? Patents

#60

Post by terragon »

Pxtl wrote: post #51
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.

Not only that, but the patent system is 100% essential to pharma research. Pharma takes a crapload of time from patent to market because of the many layers or trial safety. There are drugs that just plain miss their deadline -- setbacks during the testing process for enough time and then the patent expires and a medication with useful applications get lost to history. If you substantially screwed with that without a…

Drug discovery has already mostly ground to a halt, so I don't think we'd be breaking much of a system.
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