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

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

#61

Post by CamTin »

somenewacc wrote: post #54
yaantc wrote: post #42

Earlier quoted context omitted.

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…

Why can't we let the markets regulate themselves? 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?

> Why can't we let the markets regulate themselves?

Because this is a synthetic market the government explicitly created and maintained through patent legislation.

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

#62

Post by briandear »

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 are free to find customers elsewhere. Perhaps app developers could create their own distribution system that guarantees security, updates and ease of use and create a device upon which it can run.

App developers can also handle the multiple country's tax laws, create a payment system and do all of that on their own as well. Apple devs don't have to deal with collecting taxes in the countries in which they sell. They don't have to deal with fraudulent transactions, chargebacks or distributing updates to users.

The idea that the 30% is somehow unfair is ridiculous. Look at retail markup rates for products sold in conventional stores. That's what that 30% is -- a retail markup and it's completely fair. Whole Foods sells olive oil for $20 that they buy from a supplier for $8. How unfair does 30% seem now? The supplier prices their product at the price they need to collect. What the end-distributer charges really isn't a concern to the supplier. But unlike Whole Foods, Apple doesn't give preference to certain suppliers over others. Everyone on the App Store has an equal chance to sell their product.

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

#63

Post by hajile »

mtgx wrote: post #2

That sounds very expensive. I believe a few years ago the whole SoC with the modem included was something like $20-$25. Qualcomm is basically trying to make Apple and others pay almost as much for the modem as they would pay for the SoC. This is a tactic Intel itself is also very familiar with, as they've done with their CPU and GPU bundles. I believe in some cases it was even more expensive to buy the CPU alone, so…

We have very small companies (in the low tens of millions) that make decent SoC. Nobody is going to make 4G anything for less than the tens of billions). The entire market cap of ARM is half that of Qualcomm (and around a third before they lost a quarter of their valuation).

Building modems is way harder than building SoCs (all the SoC challenges plus all the modem ones too). It's taken a decade of work on 5G to just begin preliminary sampling (How many SoC generations would that be?).

You also have to keep in mind that it's not just the modem in the phone. You have huge software stacks, protocol design and testing, and an entire cell tower worth of electronics to design and build.

There's no free lunch. You have to strike a balance between forcing the cost onto the service provider (higher cell bills and/or slower adoption) and forcing the cost onto the phone.

Considering that Qualcomm's net sales to R&D ratio is basically unmatched (most companies spend half what Qualcomm does by that metric), it's not easy to make the case for gouging in my view.

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

#64

Post by RandVal30142 »

MBCook wrote: post #56
RandVal30142 wrote: post #39

Earlier quoted context omitted.

>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.

FRAND is a legal term in a contract. You can’t just arbitrarily apply it to something that’s not under a contract (Apple’s device prices) and say that because you don’t like that due to a non-legal system definition of FRAND Qualcomm is off the hook.

Not saying Qualcomm is on or off any hook but perhaps Apple's valuations are a bit off and Qualcomm's closer to reality.

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

#65

Post by tooltalk »

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).

in what ways did Qualcomm violate FRAND terms? Nokia, Ericsson and pretty much everyone else uses the entire device as a royalty basis. This is a fairly standard industry practice -- and has been so for decades.

While Qualcomm is the largest contributor of wireless standards, it is far from a monopology.

Also note that Apple accuses of every wireless patents holders of some sort of unfair pricing and violation of FRAND terms whenever Apple is up for license renewal. This is coming from a company that audaciously asked about $30 per device for a handful of frivolous design and utility patents from Samsung.

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

#66

Post by newusertoday »

MBCook wrote: post #52
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…

Qualcomm agreed to only charge 50¢ per item (FRAND licensing) but is complaining Apple isn’t paying 20%. They’re violating an agreement. In the App Store Apple offered a deal and sticks to it. You may not need like it but they’re doing exactly what they agreed to.

So why is apple suing in 2017? why didn't they sued in 2007 at time of launch of iphone? Issue is way more complex in this fight. 1. Qc has more than 130k patents,licensee gets blanket protection for all.(one can argue about bundling though) 2. Qc,ericcson,nokia and other patent holders have cross licensing agreements with each other.This is to avoid negotiating individual contracts with every patent holder in a standard.

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

#67

Post by mcculley »

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…

>they don't charge IPR on the modem function, but over the whole device.

Is this why there's no option for an LTE modem in a MacBook Pro?

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

#68

Post by hajile »

AlphaSite wrote: post #58
hajile wrote: post #44

Earlier quoted context omitted.

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.

Actually don’t they spend 5-7%? It’s not huge percentage wise, but it’s still 10billion.

My number was taken from another source (I lost it). You can get higher or lower numbers by comparing to other things. For an apples to apples comparison (latest Qualcomm data I found was 2015) gives 3.4%.

http://appleinsider.com/articles/15/10/28/apple-rd-spending-...

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

#69

Post by danjoc »

yaantc wrote: post #42
danjoc wrote: post #29

Earlier quoted context omitted.

>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…

>Apple is against.

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.

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

#70

Post by samfisher83 »

hajile wrote: post #51
samfisher83 wrote: post #22

Earlier quoted context omitted.

Qcom is not a chip company. It is an IP company that happens to make some chips on the side. A majority of their profits are based on their IP portfolio. As a percentage of revenue they spend more on R&D than most Tech companies especially apple. Apple spends less than 5% on R&D. However I am not a fan of their chips. Their chips aren't that great, but its hard to compete with them since you have to use their patents…

Qualcomm reports QCT (chips and software) separately from QTL (licensing). In 2015, their Form 10-K reported that licensing was around 30% of their income and the rest was chips and software (see page 8). http://investor.qualcomm.com/secfiling.cfm?filingID=1234452-...

I think you are looking at their revenue figures. Look on page 40. 87% of the EBT are from QTL. Despite being a small portion of its revenue the Licensing business is a large majority of their profits.
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