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The Secret Behind Qualcomm's Margins? Patents

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Re: The Secret Behind Qualcomm's Margins? Patents

#71
post #15

Earlier quoted context omitted.

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.

It's not a myth, I've been involved in these sort of negotiations. The particular industry was maybe 10 years older than Google, but the number of patents, rather than their quality was the key factor.

Re: The Secret Behind Qualcomm's Margins? Patents

#72
post #71

Earlier quoted context omitted.

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.

It's not a myth, I've been involved in these sort of negotiations. The particular industry was maybe 10 years older than Google, but the number of patents, rather than their quality was the key factor.

since I've been watching Mythbusters:

this one is not "confirmed." It's "plausible."

There are some, but it's nowhere near universal.

Re: The Secret Behind Qualcomm's Margins? Patents

#73
post #25
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?

They made a ton of money not long ago. 30% in 2021 eye balling it. But all those factories have to be paid for no matter income. So if income goes down your profit margin goes to terrible.

This particular bump in sales might be attributable to the boom in computer sales resulting from COVID and the surge in WFH.

Re: The Secret Behind Qualcomm's Margins? Patents

#74
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…

Do you happen to know if it has always been this way, or is this the result of a gradual squeeze to a limit due to megahertz wars, increasingly shortened product cycles, and each companies product line structured in a way that tends to cannibalize their own sales before creating fresh profit. And the decreasing return, in practical terms, for their customer base when upgrading since most basic computation tasks have…

Thats a great question; I'd have to dig into their statements to see more. It's hard to get reliable data from that long ago for free. From what I remember as a consumer, MSFT + INTC (Wintel) absolutely cleaned up in the 90s until AMD started the CPU price & MHz wars, and Apple started making MacBooks.

For Intel, it looks like they kept one dollar out of every four until the recent crash. I don't know the reason for the decline, but I know I wouldn't want to compete against Apple.

Re: The Secret Behind Qualcomm's Margins? Patents

#75

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…

When was that? They had naming rights to a Major League Baseball & football stadium from ‘97 to 2017. Maybe good for recruitment but seemingly pointless on the consumer side to maintain the contract: https://en.m.wikipedia.org/wiki/San_Diego_Stadium But I get it that in sports, sometimes the big cheques are written because you can.

>Also in 1997, the facility was renamed Qualcomm Stadium after Qualcomm Corporation paid $18 million for the naming rights.[8] The naming rights belonged to Qualcomm until 2017, after which the rights were purchased by San Diego County Credit Union.

Surprisingly cheap! Not that I think it is a good use of money, but less ostentatious than I expected.

Re: The Secret Behind Qualcomm's Margins? Patents

#76

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 get technology is always advancing, but I do wonder what the landscape will look like in 10 years when a lot of these patents start to expire. As a consumer, it feels like we have been hitting diminishing returns for a while now.

Sure, they will have released 11G, and all of the ads will tell me how vital it is the government can track me with millimeter precision, but I think all of my needs were already met with a five+ year old device.

Re: The Secret Behind Qualcomm's Margins? Patents

#77

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…

ok, bro. 100% or nothing? Guess which one you'll get?

Under the current system, it's already effectively "nothing" for

>People who can't afford existing drugs

>People who can't get corporations to develop drugs for their conditions because they wouldn't be "profitable"

>People who can't make their farm's business model work even though they're fully capable of growing the crops people want and getting them to market

and so on. But thank you for being my daily encounter with Better Things Aren't Possible Guy.

Re: The Secret Behind Qualcomm's Margins? Patents

#78
post #54

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.

>Without drug patents drug discovery would completely stop.

I don't believe that, but I won't convince you. Instead, I invite you to try to convince yourself. Imagine a world where drug discovery happens without patents. Talk it out, falsify your propositions as you go, see if you can come up with something workable.

Re: The Secret Behind Qualcomm's Margins? Patents

#79

> Qualcomm’s licensing business is best-in-class and an example many companies can learn from. The last thing this world needs is more Qualcomm. I'd rather see the entire patent system go down in flames than this utter crap continuing. Qualcomm has been a vampire on technology for years now, it's time for this company to end once and for all. We have to get technology under the people's control again - it is ridiculo…

> it is ridiculous and stifling progress that governments legally prescribe standards that are not open to everyone to implement

Standards-essential patents are required to be licensed this way. It's called "RAND licensing": reasonable and non-discriminatory. Everyone who participates in, say, ISO or the ITU, is required to fill out a form documenting if they own part of the standard and what terms they agree to license it on. If they refuse RAND licensing, their inventions get ripped out of the standard[0].

What you want is royalty-free RAND licensing. There are a few standards bodies that insist on royalty-free licensing, notably the W3C[1] and Khronos Group[2], but it's uncommon. Most standards bodies are in fields of endeavor that don't actually require free redistribution - in fact, they don't want it. They pay the people doing research for the standards on a "for exposure" basis[3]: they get their patented inventions in the standard, and as payment for their work, they get to charge a $2/unit royalty on every user, which they can then pour into research that yields more patents.

I'm going to be honest, royalty-bearing RAND (as in, pay up or don't implement) is probably the right fit for a lot of industries. We hate it because it steps on our (FOSS) toes, and if we can develop the software as a community, why can't we invent the underlying technology too? This is the idea behind royalty-free video codecs like AV1 - it turns out a community of amateurs can do video codec research after all[4]. But at the same time, cellular radio technology is quite possibly the worst thing to leave to amateur[5] software development. There's a lot of very expensive lab tests you need to do to make sure the technology works, to ensure hundreds of devices can communicate with the towers without jamming each other, and to ensure each one of those devices isn't pumping the user with shittons of radiation. There's a lot of boring research and regulation needed to make radio work at all, it's not something that can be hacked together in a weekend and collaborated on over time.

The real problem with RAND is that a lot of the licensing bodies that require it don't actually enforce that requirement all that well. For example, 4G and 5G cellular technology has a RAND requirement. If you want to put a 5G modem in a cellphone, there's a defined fee structure you pay that's the same deal everyone else gets. BUT, if you want to put a 5G modem in a laptop, that's not covered by the RAND promise, so Qualcomm reserves the right to charge whatever price it wants to each individual licensee, or even just not license it. This is why laptops with cellular modems in them are rare[6] and hideously expensive.

[0] For the record, most standards bodies do NOT have a means to do this to people who refuse royalty-free licensing, which is why ISO has failed to create a royalty-free video standard. Every time they try someone says "I own this, here's your royalty bearing RAND license", and the standard is dead in the water. In fact, not only did they fail to make the standard, they kicked Leonardo Chiariglione, co-founder of MPEG, out of MPEG for making too much of a fuss about it.

[1] Specifically as a reaction to the University of Minnesota trying to charge licensing fees for Gopher

[2] Which has resulted in a number of "ubiquitous" OpenGL extensions that aren't in the standard solely because they cost money to license, but can be accessed through de-facto standard extension names

[3] https://blog.chiariglione.org/a-crisis-the-causes-and-a-solu...

[4] To be more accurate, AOM AV1 was only partially done by the community. Xiph.org contributed their work on Daala, but Google also included what would have become VP10. So there's still a lot of Google monopoly money in there. Furthermore, there's at least two companies claiming patent ownership on AV1 anyway, but I've yet to hear of any enforcement actions.

[5] Amateur as in ham radio, not amateur as in unskilled layman

[6] Apple doesn't sell a laptop with a cellular modem in it, and why the only Surface tablet Microsoft sells is the Qualcomm ARM version, not the x86 version. Qualcomm wants cellular capability to be a selling point of their ARM processors, so they (refuse to) license appropriately.

Re: The Secret Behind Qualcomm's Margins? Patents

#80
post #69

Oh, is Qualcomm the reason why adding cellular to an iPad is so expensive? I never understood how such a relatively small feature would cost that much. The alternative is that Apple just makes more money when setting prices like that. Would be curious how much of the price difference is extra license fees for Qualcomm.

I'm not sure why you're inclined to pin the blame on qualcomm, when the pricing is set by a company that charges $200 for 256GB of nvme storage[1]. For that price you can get a high end pcie 4.0 2TB nvme drive.

[1] price difference between an mac mini 256GB vs 512GB: https://www.apple.com/shop/buy-mac/mac-mini/apple-m2-chip-wi...

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