I don't think Qualcomm strangled RIM with their 3.4% (peak!) licensing fee on the selling price of the phone. If RIMs profit margin was 3.5% they had bigger problems.
Here is the thing. If Apple sold a 2G network based iPhone with a non Qualcomm IP modem, and a 4G iPhone at 2x the price with a Qualcomm modem, which one would make more money for Apple?
It doesn't and it also doesn't matter. There are lots of license agreement, in tech or not that takes a percentage of your selling price.
And if it wasn't a percentage, it will be a fixed price for everyone, while it may sound fair, all of a sudden everyone selling a phone would be paying in total ~$50 to Patents license. That might not matter to higher end phones, for the lower spectrum that is a huge increase in Total Cost.
Ehh, the original cellphone patents had already expired at that point. QCOM’s IP had arguable direct value only representing improvements to existing tech.
Their business model existed largely via the mismatch between cellphone companies and wireless carriers.
Yea, my point exactly. All the recent IP covers improvements since 2G. Apple can try to sell a 2G network connected iPhone based on expired IP without the Qualcomm tax.
Free market pricing is based on demand of the feature not the cost to make it. Qualcomm should be pricing the part at the point where the phone without the qualcomm part is equal value per dollar.
If a monopolist (or dominant oligopolist) charges too much, it would encourage competitors, at least if they don't have a stranglehold through patents. There may be a sweet spot where the "free market" allows them to remain a monopolist.
Patents don’t last forever, and there are a dozen ways to solve each problem.
Apple is sitting on 200b in cash. What would be great for consumers if they spent some of their cash on 6g networks before they turn into a sovereign wealth fund.
Qualcomm doesn’t own spectrum either. Apple should be investing in tech, not in cash. It’s crazy to think of tech companies sitting on that much cash. At this rate, apple will have 1T in the bank in 15 years.
But they're adding a fixed amount of value regardless of the phone, and so they should get a fixed sum per phone. This business where they get a percentage of the retail price is ridiculous.
Consider the 64 GB iPhone XS selling for $1000 vs the 512 GB one for $1349. Is Qualcomm adding any extra value to the second phone as compared to the first one? Obviously not, so why should they capture any of the extra purchase price?
I believe there was no flat rate. I think during the first FTC trial, it was revealed that Apple paid on average $7.50 per device, or ~$230 (Foxconn's wholesale price for iPhones) x 3.25 = $7.50
On the other hand, consider a video call on the iPhone XS with v.s. a $50 phone with a low resolution screen. The value of a high bandwidth internet connection is higher when the screen allows you to perceive the difference.
Reasonable way to price things when neither the seller nor buyer are under duress is to for them to an agreement. It doesn’t matter if it’s % of revenue or flat, if they both came to an agreement, then it’s reasonable.
> Consider the 64 GB iPhone XS selling for $1000 vs the 512 GB one for $1349.
Sure, first, QCOM licensing fee only applies to the first $400, which is in turn also based on the wholesale, not retail, price from Apple's contract manufacturers.
second, without QCOM, Apple wouldn't be able to price the iPhone XS at $1000 (or the iPhone 7 at $550), much less sell nearly as many units. Would you even consider paying $550 for the 128GB iPod Touch, which is essentially at feature parity with the iPhone 7, but without QCOM's IP?
What a ridiculous argument.
Without the OLED screen Apple wouldn't be able to charge $1000 for an iPhone either. And I bet those $1000 that not one of apple's customers, not a single one, bought an iPhone instead of an iPod touch because it had a Qualcomm chip in it. Even in later years half of iPhones include an Intel chip not a Qualcomm one; it has made zero difference. 99.9% of customers don't even know Qualcomm is a thing a won't care if you told them.
> 99.9% of customers don't even know Qualcomm is a thing a won't care if you told them.
Sure, QCOM is not a marketing/consumer electronic company they way Apple is. Your 99% of consumers buy the iPhones over the iPod because of QCOM's wireless functionality, not because of their branding.
And how many of those 99% of consumers do you think would pay $1000 for a OLED iPhone XS without QCOM's patented wireless features that allow to make phones call or data? Or how many would pay half the price? or even a third? The iPhone 7 without OLED, the most popular selling iPhone in many countries, still costs at least twice as much as comparable iPod Touch and sells multiples of the unit sales of the iPod touch.
Yes, because the value of the 512gb without the qualcomm modem is lower than the 64GB version.
Free market pricing is based on demand of the feature not the cost to make it. Qualcomm should be pricing the part at the point where the phone without the qualcomm part is equal value per dollar.
I’m pro patent and copyright law. But they are, by strict definition, government sanctioned monopolies. There ain’t nothing free market about this licensing situation.
If it cost apple less to build improvement into 5G that would have been licensed to everyone they would have done so.
Standards require all participants to license at a FRAND rate. If apple developed 5G IP they would have effectively received a rebate based on the relative impact of their contribution.
Qualcomm actually has great execution. You realize 5G is going to put a 1 gigabit network in the palm of your hand? I can’t even get that out of cable.
Meh, 1Gbps over cable is nothing, really. Switches with 10g uplink ports cost almost nothing now. Problem is that most software and hardware on user’s side can’t deal with that speed :) 5G smartphones probably won’t be able to give you 1Ggps either.
I just moved, and I have access to 1gbps fiber at my home for $50 a month vs a severely crippled 100mbps from comcast for $120 a month two blocks away. So land internet is not free, and 1gbps is rare.
Qcom charges Apple $14 bucks for the modem. That doesn't sound crippling or unfair or unreasonable. I think if consumers had the option to buy an ipod touch for 500, then add the modem like you do with a PC no one would be buying a fully integrated device from Apple for 1000.
I worked at Qualcomm, so take this with a grain of salt. But I find it laughable that Apple is complaining when they can sell the exact same thing at 2x the price by just adding a $14 dollar qualcomm modem.
But if you need to give Qualcomm money for the 9000 Bold (in house stack, no qualcomm at all, GSM, and sold around the world), because you need to license it to buy the modem for the 9670 Bold (CDMA, sold in select market, and CDMA use was minimal elsewhere), then out of the 99 problems you've got, Qualcomm is one of them.
RIM sold more 9000 than 9670. In its heyday, the GSM stuff is everywhere, but needed to keep the CDMA for NA and a half-hearted attempt to enter China.
>I don't think Qualcomm strangled RIM with their 3.4% (peak!) licensing fee on the selling price of the phone. If RIMs profit margin was 3.5% they had bigger problems.
That entirely depends on what Qualcomm was charging RIM's competitors.
Here is the thing. If Apple sold a 2G network based iPhone with a non Qualcomm IP modem, and a 4G iPhone at 2x the price with a Qualcomm modem, which one would make more money for Apple?