Confirmation that all variants of the 2017 iPhone will use an Intel modem.
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Apple Sues Qualcomm for $1 Billion in Unpaid Royalty Rebates [Updated]
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Confirmation that all variants of the 2017 iPhone will use an Intel modem.
Actually, what Qualcomm charges is based on Apple's own technologies. Qualcomm doesn't charge a set fee. If they did, then that would be a fee for their technologies, not Apple's. Instead, as the article states, they charge a percentage of the average selling price of the device. Part of that selling price is due to Apple's own technologies. If we look at the iPhone and say TouchID is worth $50 (just picking a number here) out of the total sale price, then shy should Qualcomm get a percentage of that $50?
This statement by Apple doesn't make much sense to me. They are the on the "consumer" side of the equation, they can vote with their dollars, just like any consumer can. Did they grudgingly continue to pay the "5x rates" just to get their own products out the door? Why didn't they invest into another company, or into developing the needed tech themselves? Has the patent system really prevented this, and Qualcomm abused their position as the patent holder?
The allegation is that Qualcomm demanded improperly high licensing fees from Apple (and others) for its patents, to include standard-essential patents (SEPs). It then rebated a large portion of those fees back to Apple in exchange for Apple agreeing not to buy certain processors from Qualcomm's competitors. The suggestion is that Qualcomm did this so that it could, in effect, charge more for SEP licenses if a phone maker bought processors from its competitors than it did if the phone maker bought processors from Qualcomm, but then allow Qualcomm to deny that it was actually doing that - because, doing that would be a pretty clear violation of Qualcomm's commitment to license SEPs on FRAND terms.
Apple rely far too heavily on suppliers.
Intel modem chip v Qualcomm iPhone 7
http://www.forbes.com/sites/aaronti...y-iphone-7-intel-qualcomm-modem/#79b850847f5d
I find this reliance by apple on suppliers worrisome, I have for a while.
Apple needs to own the companies that supply most of the important components esp for iPhone, they have the stockpile cash 'war chest' to buy.
Also they need to have a backup plan in place if outsourcing, with equally good components, when needed due to supply and demand.
With trump (not a fan) in power this looks like a good time to make a move.
Intel modem chip v Qualcomm iPhone 7
http://www.forbes.com/sites/aaronti...y-iphone-7-intel-qualcomm-modem/#79b850847f5d
I find this reliance by apple on suppliers worrisome, I have for a while.
Apple needs to own the companies that supply most of the important components esp for iPhone, they have the stockpile cash 'war chest' to buy.
Also they need to have a backup plan in place if outsourcing, with equally good components, when needed due to supply and demand.
With trump (not a fan) in power this looks like a good time to make a move.
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In short, the allegation (made, e.g., by both the Korean FTC and the U.S. FTC) is that the answer to your last query is: Yes.
Qualcomm has, allegedly, broken the law in using its monopoly power and failed to abide by its commitments to license standard-essential patents on FRAND terms.
Following an FTC complaint alleging Qualcomm engaged in anticompetitive patent licensing practices, Apple has filed a lawsuit against Qualcomm claiming the company has charged unfair royalties for "technologies they have nothing to do with."
According to a statement Apple shared with several news sites, Qualcomm "reinforces its dominance" through exclusionary tactics and high patent licensing fees. Apple's full statement is below:In the lawsuit, filed in a federal district court in the Southern District of California, Apple accuses Qualcomm of using its position as the supplier of a key iPhone component to drive up patent licensing fees.
Qualcomm supplies the LTE modems used in Apple's line of iPhones, and up until 2016, the company was Apple's sole supplier. The iPhone 7 and the iPhone 7 Plus use modems from both Qualcomm and Intel.
Qualcomm reportedly forced Apple to use its LTE chips exclusively in iOS devices and pay a percentage of the total average selling price of an iPhone for access to Qualcomm patents.
Qualcomm is supposed to provide Apple with quarterly rebates, but has failed to do so for the past year because of Apple's participation in an antitrust investigation against Qualcomm in South Korea. That investigation led to an $850+ million fine against Qualcomm for anticompetitive licensing practices.
Apple is seeking $1 billion in rebate payments that have been withheld.
Earlier this week, the United States Federal Trade Commission filed a lawsuit against Qualcomm that focused in part on Apple and Qualcomm's licensing deals. According to the FTC, Qualcomm imposes "onerous and anticompetitive supply and licensing terms" on its smartphone partners by abusing its patent portfolio.
Qualcomm has said it has "grave concerns" about the lack of evidence supporting the FTC's allegations and has promised to defend itself in federal court.
Article Link: Apple Sues Qualcomm for $1 Billion in Unpaid Royalty Rebates
Apple better start making all their own components .
Lawsuits against the supplying vendors usually backfire on you.
Better open some more chinese factories Mr. Cook - you will need them.
Typically, it like a volume cash discount, or VCD. If Apple purchases X number of chips per quarter, Qualcomm agrees to a rebate of Y percent based on the actual purchase number. It's standard in a lot of high volume businesses.
Yes, yes it does indeed.
What exactly are you agreeing with? Agreeing they should be paid their $1 billion rebate? If so, we're in agreement there. Apple complied with their end of the contract so they should be paid. Full stop.
Are you agreeing that Qualcomm shouldn't be paid on full device percentage? If so, then you're not really in agreement with Apple. Apple had no problem with the deal as long as they were getting their rebate payments. That deal was made with both companies wearing their big boy pants.
Do I think Qualcomm bullied? Yep. In this case, they just happened to bully another bully.
Apple doesn't manufacture anything and should keep it that way.
How long would it take to built all those factories to make all those-Macs-iPhones-Earpods-Dongles-Keyboards....chips-processors-Displays-speakers-cameras...
Better Not I guess.
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Or maybe some of us that can think critically look at every lawsuit individually, examine the facts and the evidence, then make an educated determination on whether it's legitimate or not.
RE: charging royalties by price of phone.
This is actually not unusual for patent royalties; they can be a percentage of a company's revenue. More to the point, it's EXTREMELY common for cellular SEPs (standard-essential patents).
This was done partly in order to encourage lower prices on phones, to get more phones into the hands of the public. (In essence, companies with bigger profits subsidize cheaper phones, where $2 profit on a $40 phone cannot possibly pay full royalties.) And it worked. In a fairly short period, billions on the planet had phones.
Guess who took advantage of that huge infrastructure and market that they had no part in creating? Yep, Apple, who has made many billions in profit even after paying royalties.
--
Besides the fact that percentage of price is the normal contract for these kind of FRAND patents, here are two important notes that people need to know:
1. Royalty as a percentage of sales was specifically allowed by the DOJ. I tracked down the original approval document back when this was originally questioned:
2. Just as with taxes, Apple cleverly avoided paying full royalties anyway, by lowering the "price of the phone". Insiders claim that Apple only pays Qualcomm a percentage of the price Apple pays for each iPhone AT THE FOXCONN FACTORY, which was around $250 last time I checked on this a few years ago.... NOT on what Apple themselves resell the phone for later on, which is of course hundreds of dollars higher.
So all that whining about poor Apple "paying extra for their technology" amounts to a few dimes per device... and is nothing compared to how much Apple gouges its own customers.
For instance, Apple charges its customers hundreds of dollars for extra storage which only costs Apple a few dollars. Yet Apple only pays Qualcomm a few cents more because the percentage is based on Apple's Foxconn cost, not their final customer profit.
This is actually not unusual for patent royalties; they can be a percentage of a company's revenue. More to the point, it's EXTREMELY common for cellular SEPs (standard-essential patents).
This was done partly in order to encourage lower prices on phones, to get more phones into the hands of the public. (In essence, companies with bigger profits subsidize cheaper phones, where $2 profit on a $40 phone cannot possibly pay full royalties.) And it worked. In a fairly short period, billions on the planet had phones.
Guess who took advantage of that huge infrastructure and market that they had no part in creating? Yep, Apple, who has made many billions in profit even after paying royalties.
--
Besides the fact that percentage of price is the normal contract for these kind of FRAND patents, here are two important notes that people need to know:
1. Royalty as a percentage of sales was specifically allowed by the DOJ. I tracked down the original approval document back when this was originally questioned:
2. Just as with taxes, Apple cleverly avoided paying full royalties anyway, by lowering the "price of the phone". Insiders claim that Apple only pays Qualcomm a percentage of the price Apple pays for each iPhone AT THE FOXCONN FACTORY, which was around $250 last time I checked on this a few years ago.... NOT on what Apple themselves resell the phone for later on, which is of course hundreds of dollars higher.
So all that whining about poor Apple "paying extra for their technology" amounts to a few dimes per device... and is nothing compared to how much Apple gouges its own customers.
For instance, Apple charges its customers hundreds of dollars for extra storage which only costs Apple a few dollars. Yet Apple only pays Qualcomm a few cents more because the percentage is based on Apple's Foxconn cost, not their final customer profit.
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I guess iPhone shipments aren't up to snuff, have to make up the shortfall somehow! lol
That's not a good example without looking at the product being sold. Apple the consumer is essentially buying a special bottled water from Qualcomm. Apple and everyone else. Qualcomm is the only company providing that water. Nothing wrong with that per se. But Qualcomm says, "I'll sell you water... all the water you can carry. I'll even give you a rebate if you buy 1000 gallons or more every quarter."
Here's where Qualcomm gets into trouble:
Apple: "Great, we'll order that and more every quarter."
Qualcomm : "But wait, there's more. Uh, put these on first."
/hands Apple some big boy pants
Qualcomm: "Yeah, we'll sell you water, but you have to buy cups, lids, straws, and napkins from us as well."
Apple: "WTH!?!"
Qualcomm: "Or you can just get the water from someone else. The fact that they either don't have the water or can't provide enough water... it is what it is."
You say Apple should have just invested in another company or developed the tech themselves. If it was that easy, don't you think they would have done that already?
Read the fine print before just stating Apple is bullying because they started the lawsuit and start many lawsuits.
Oh, they will probably do it if Intels parts aint good enough. All depends on how much it will cost them.
Apple produces a unique product and has every right to keep it unique. Qualcomm produces patents many companies use. They provide enough physical products, though, that allow them to escape the title of patent troll (like cellular network parts) but not enough to protect them from lawsuits like the FTC set against them earlier this week, for patent trolling.
Great post.
But Apple have such a gigantic war chest off shore I dont know -$150B is it.
They need to use some of that money to buy component suppliers.
Tim Cook surely now realises that the Beats purchase of the massive headphones that US Basket ball players were seen wearing 3 years ago and that will be 'out of fashion' in 2 years, with the bolt on beats music was the 2nd worst investment in Corporate history.
@$5.3B
esp. with apple going their 'normal' minimalist 'airPods' route.
We live, we learn, hopefully Apple HQ have learned and they will aim their 'war chest' as great value investments and buy out component suppliers.
Assuming all this from OP press statement is not to garner press attention.
Sueing suppliers
I wouldn't expect the same level of service if I sued a supplier.
I'd expect - delays in delivery, phone calls not answered, e-mails not answered, mis-priced invoices, curt response to Head Office etc
This can not go on, Apple are too reliant on iPhone to be sueing iPhone suppliers again and again, a la - Samsung.
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Sorry - are you trying to suggest Apple isn't a bully in the industry? Maybe you're new here?
Apple needs to suck it up. This sounds more like they know their profits will decline soon and they are attempting to renegotiate deals with suppliers. Those negotiations apparently went south and so someone decided to be a real prick at Apple and reported certain "activities" to the FTC claiming that Qualcom is violating this or that and now Qualcom in turn is dragging it's feet on paying the agreed upon discounts. This is tit-for-tat crap that frankly should be beneath them but hey they're the new Microsoft of the mobile world.
I honestly hope Google/Microsoft et al come out and kick their ass in the global market. I liked it much more when Apple behaved more like a start-up and less like a monopolistic behemoth.
I honestly hope Google/Microsoft et al come out and kick their ass in the global market. I liked it much more when Apple behaved more like a start-up and less like a monopolistic behemoth.
I was speaking about Apple being a patent troll which they certainly are or were:
https://en.wikipedia.org/wiki/Rockstar_Consortium