Apple Considering Eliminating Qualcomm Chips From Next Year's iPhones and iPads

[kdarling]

I get that argument by Qualcomm but that in itself is flawed, if I were an automaker and wanted to put a Qualcomm modem into a car I build (hypothetically of course), would it be fair for me to be forced to pay by the same percentage of the car price?

Bad example. It wouldn't be based off the car it's in, but on the radio unit in the car. Also, there's a pretty low royalty cap.

You guys need to remember that charging by price is a common practice for things that add value. It allows higher profit makers to subsidize lower profit makers. Same as what's done for say, the Apple App Store. Everyone pays 30%. If your price is lower, you pay less. And vice versa.

Heck, Apple's own initial royalty rate for MFi (Made for iPod/iPhone/iPad) devices was 10% of their retail price, with a $10 minimum. Much higher than Qualcomm's 3.25% rate Apple complains about.

Like Qualcomm, Apple is no stranger to the idea of charging by percentage, or wanting high royalties.

 

[defvphysics]

I get that argument by Qualcomm but that in itself is flawed, if I were an automaker and wanted to put a Qualcomm modem into a car I build (hypothetically of course), would it be fair for me to be forced to pay by the same percentage of the car price?

It's in a much more grey area than that. The short answer is it depends. First off, the cellular tech is a much smaller function in a car versus a cell phone where there are much more Qualcomm IP (otherwise an iPhone would just be an iPod). Second, it depends on the terms, the %, and % of which price cap. For instance, Qualcomm finally settled with China on different royalty % fee based on which technology is being actually being used, multimode, or LTE only, etc. And a while back, not sure if it's still the case but Qualcomm only charged royalty fee up to 65% of phone price in China.

 

[FFR]

Absolutely Qualcomm gets royalties for UMTS 3G using WCDMA.

I think that's one of their bigger revenue makers, if not the biggest.

UMTS 3g royalties go to sipro

 

[FFR]

UMTS 3g royalties go to sipro

UMTS was developed by the 3gpp as a competitor to cdma2000

 

[kdarling]

UMTS 3g royalties go to sipro

Omg, how old is that chart? Qualcomm hasn't charged that much in years. And part of their CDMA fee is for WCDMA.

 

[FFR]

Bad example. It wouldn't be based off the car it's in, but on the radio unit in the car. Also, there's a pretty low royalty cap.

You guys need to remember that charging by price is a common practice for things that add value. It allows higher profit makers to subsidize lower profit makers. Same as what's done for say, the Apple App Store. Everyone pays 30%. If your price is lower, you pay less. And vice versa.

Heck, Apple's own initial royalty rate for MFi (Made for iPod/iPhone/iPad) devices was 10% of their retail price, with a $10 minimum. Much higher than Qualcomm's 3.25% rate Apple complains about.

Like Qualcomm, Apple is no stranger to the idea of charging by percentage, or wanting high royalties.

Mfi isn’t FRAND.

 

[eddy888]

This wouldn’t be the first time Apple made a decision that bit their customers in the ass for a period of time. Case and point: Apple dropping Google Maps in favor of their inferior navigation product.

If Apple makes this move, they’d better make damn sure that Intel’s modems are up to snuff. I’ve seen a considerable amount of side-by-side testing online where the Qualcomm modem outperforms the Intel modem in terms of throughput and also general ability to maintain a more stable signal when a device is on the fringes of coverage.

Still stupid ppl will buy Apple

 

[kdarling]

UMTS was developed by the 3gpp as a competitor to cdma2000

Yes, but in the end they still had to pay Qualcomm.

 

[PizzaBoxStyle]

Many, actually: http://fortune.com/2017/07/20/apple-qualcomm-google-amazon-microsoft-facebook/

I'm not sure why people back Qualcomm. Royalties are one thing, it's another thing entirely to say that as a company you're somehow entitled to a percentage of another company's profits - profits that by and large have zero to do with Qualcomm and more to do with Apple's decisions. Apple doesn't object to paying them at all, they just object to paying more because they charge higher prices for their devices, and I understand their argument. You say that they should just raise their prices, but that just alienates customers *and* puts more money in Qualcomm's pockets.

South Korea apparently agrees, considering the fine they just levied against them.

This/yours is a good argument.

The only thing I could even respond with is where you say:

You say that they should just raise their prices, but that just alienates customers *and* puts more money in Qualcomm's pockets.

I mean... they just released a phone that costs $1k to start with, and the iPhone 8 series starts at $50 more/phone than the 7 series did. I'd say they are doing a mighty fine job of alienating customers without Qualcomm.

 

[FFR]

Yes, but in the end they still had to pay Qualcomm.

Sipro not qualocomm.

 

[Abazigal]

Apple suing others over obvious IP didn't win it any allies either

It's not the pricing method that the other companies or givernments are really being supportive over, btw. Charging by phone price is decades old and not an uncommon IP licensing method in general.

What they're unhappy about, are other QComm license requirements such as having to pay for a full IP license instead of just for the technologies they use.

Thus, for example, the Chinese government recently upheld the fee method based on phone price, but required two different rates depending on whether all comm modes were being used, or just LTE.



Apple "stands up" to anyone other than itself making high profits.

That's all this is about. IPhone prices won't fall. Apple's coffers will simply get fuller, and companies such as Qualcomm will have less incentive to do as much R&D. Apple isn't the one who helped invent 3/4/5G. They only use it to profit from.

And now, Qualcomm may end up not getting a single cent from Apple if the latter decides to go with a different supplier who is willing to undercut them.

Congratulations Qualcomm. You “won”.

 

[kdarling]

Mfi isn’t FRAND.

FRAND does not negate the use of various rate methods.

It simply means a company has voluntarily agreed to contribute patents in return for offering same value rate structures to everyone,

 

[eddy888]

Makes sense.

Today, Qualcomm is cutting off the testing software.

Tomorrow, they will be cutting off modem firmware updates.

If I were Apple, I sure as heck wouldn't want Qualcomm anymore. Risk of being stuck with something that can't be firmware updated? No thanks!

its not testing software that is stopped !!

 

[kdarling]

And now, Qualcomm may end up not getting a single cent from Apple if the latter decides to go with a different supplier who is willing to undercut them.

For the zillionth time, it does not matter whose silicon chip is used.

The IP royalties owed to run it are still the same.

This is not that difficult to understand, folks. Silicon != IP, any more than buying an ARM chip gives you the right to use iOS.

It's no different than the way Apple has to pay Nokia, LG, Ericsson, Motorola, Samsung, et al for cellular IP... none of whom sells Apple the modem chip.

 

[FFR]

FRAND does not negate the use of various rate methods.

It simply means a company has voluntarily agreed to contribute patents in return for offering same value rate structures to everyone,

FRAND stands for
Fair Reasonable and non-discriminatory terms (RAND)

 

[1025976]

What does the Apple Watch use? Pure apple designed chip embedded in right?

No it uses the Intel modem with an eSIM. I’m sure all future phones will be eSIM but unless Intel gets their newest modems to market so Apple can use the decent ones versus the old models I’d be worried I wish Broadcom still made modems! Or I’m hoping Apple will surprise us all with a in-house designed RF chip!

 

[g000]

Bad example. It wouldn't be based off the car it's in, but on the radio unit in the car. Also, there's a pretty low royalty cap.

You guys need to remember that charging by price is a common practice for things that add value. It allows higher profit makers to subsidize lower profit makers. Same as what's done for say, the Apple App Store. Everyone pays 30%. If your price is lower, you pay less. And vice versa.

Heck, Apple's own initial royalty rate for MFi (Made for iPod/iPhone/iPad) devices was 10% of their retail price, with a $10 minimum. Much higher than Qualcomm's 3.25% rate Apple complains about.

Like Qualcomm, Apple is no stranger to the idea of charging by percentage, or wanting high royalties.

Wrong, Apple is suing Qualcomm for charging a percentage based on the selling price of the entire phone, not just part of the phone, which does not equate to a radio inside a car, it more equates to the price of the entire car. As Apple added more advanced tech components to the phone, OLED screen, AR and 3D modules, more advanced cameras, all of which naturally increases the selling price, Qualcomm gets a cut from those as well, which makes absolutely no sense. It discourages companies from innovating and improving with more advanced tech.

 

[CarlJ]

And now, Qualcomm may end up not getting a single cent from Apple if the latter decides to go with a different supplier who is willing to undercut them.

If Apple goes with a different chip supplier, Qualcomm loses out on the physical chip revenue. They still get all the same patent/licensing royalty either way.

 

[Abazigal]

For the zillionth time, it does not matter whose chip silicon is used.

The royalties owed are still the same.

It's no different than the way Apple has to pay Nokia, LG, Ericsson, Motorola, Samsung, etc for cellular IP... none of whom sells Apple a modem chip.

This is not that difficult to understand. Silicon != IP.

Then why would Apple choose to opt for intel modems vs Qualcomm ones, if both cost the same and the latter offers better performance?

 

[CarlJ]

FRAND stands for
Fair Reasonable and non-discriminatory terms (RAND)

I'm sure kdarling is quite well aware of what FRAND means. Did you have a point?

 

[kerrikins]

This/yours is a good argument.

The only thing I could even respond with is where you say:



I mean... they just released a phone that costs $1k to start with, and the iPhone 8 series starts at $50 more/phone than the 7 series did. I'd say they are doing a mighty fine job of alienating customers without Qualcomm.

Oh yeah, absolutely, Apple did a good job there all on their own, lol. I just fully support them when it comes to Qualcomm being a bit too greedy for its own good.

 

[FFR]

Omg, how old is that chart? Qualcomm hasn't charged that much in years. And part of their CDMA fee is for WCDMA.

It’s current.
One more time:

Wcdma royalty go to sipro.

 

[FFR]

I'm sure kdarling is quite well aware of what FRAND means. Did you have a point?

Obviously he doesn’t, if he did I wouldn’t have had to literally spell it out for him.

What’s your point Carl?

 

[defvphysics]

Wrong, Apple is suing Qualcomm for charging a percentage based on the selling price of the entire phone, not just part of the phone, which does not equate to a radio inside a car, it more equates to the price of the entire car. As Apple added more advanced tech components to the phone, OLED screen, AR and 3D modules, more advanced cameras, all of which naturally increases the selling price, Qualcomm gets a higher percentage from those as well, which makes absolutely no sense. It discourages companies from innovating and improving with more advanced tech.

Wrong, Qualcomm doesn't charge % of total price of iPhone. There is a cap on the price that the royalty % can charge up to. The thing is we don't know what this cap is we can only speculate based on the finance numbers. The fee charged could be totally fair, could be not.

https://www.forbes.com/sites/aaront...e-maker-of-deceiving-regulators/#599cc6711fec
"In Apple's lawsuit, the company also claimed that Qualcomm charges higher royalties whenever Apple adds new features. Qualcomm said this allegation is outright false. Because of royalty caps, Qualcomm said, licensees aren't ever paying above a certain net selling price."

 

[kdarling]

Wrong, Apple is suing Qualcomm for charging a percentage based on the selling price of the entire phone,

One more time:

It's no different than the way Apple has to pay Nokia, LG, Ericsson, Motorola, Samsung, et al for cellular IP... none of whom sells Apple the modem chip.

Not to mention that Apple does not pay based on the ridiculously high profit price that they charge us or stores.

Since Apple has no license, Foxconn pays using their license, based on the ~$250 they charge Apple.

No reason to feel sorry for Apple, not with a $1,000 phone.

It discourages companies from innovating and improving with more advanced tech.

lol Hardly. Plus Apple has a quarter trillion dollars in the bank partly because of the tech that others invented, without which there could be no iPhone.

Again, higher profit makers subsidize the low profit makers, without whom there would be no worldwide cellular network and marketplace for the higher profit makers to live on.