If it proves that, why then did the government take action against them? While you are technically correct that they can refuse, that is far from meaning that there won't be consequences for that choice.
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Apple Wanted to Use Qualcomm Chips for 2018 iPhones, But Qualcomm Wouldn't Sell Them
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If it proves that, why then did the government take action against them? While you are technically correct that they can refuse, that is far from meaning that there won't be consequences for that choice.
Of course iPhone loses market share from Q4 to Q1 and on through Q3. New iPhone models are released just before Q4 starts, so Q4 is its strongest iPhone quarter by a lot. That's nothing new.
Compare Q32018 to Q32017. Or compare any quarter from that report you linked to the same quarter from the preceding year.
They must license the patents for a fair and reasonable cost. They are under no obligation to sell chips.
People seem to confuse licensing the technology and selling chips.
You can buy the chips. but you must have a technology license. You can license the patents and build your own.
Intel pays for the license and makes their own.
Apple knew iPhone sales were slowing down, otherwise they would not have decided to stop reporting iPhone unit sales.
https://www.businessinsider.com/apple-will-no-longer-report-iphone-sales-unit-numbers-2018-11
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I can't say it's greed for sure. However, if the number of iPhone units are slowing down, then it's logical for Apple to increase the price to see if consumers will continue to buy.
Why are you making this nonsensical comment without evidence? No wireless standard setting organization (SSO) requires that wireless patent holders license at component level. In a recent ruling HTC vs Ericsson last week, judge Gilstrap ruled correctly that "FRAND commitment does not require licensing chip level:"
"... The district court, held that, as a matter of French law, “the ETSI IPR policy neither requires nor precludes a license with a royalty based on the SSPPU. ..."
"... French law may imply certain terms into the contract based on, among other things, “customary practices in a particular field. .."
Further in 2015, China's NDRC who fined Qualcomm to the tune of $950M upheld Qualcomm's royalty basis and rates (with somewhat smaller cap):
"... Qualcomm will charge royalties for 3G and 4G Chinese SEPs for branded smartphones sold for use in China based on a royalty base of 65 percent of the net selling price of the smartphone and royalty rates of 5 percent for 3G devices and 3.5 percent for 4G phones; ..."
With only singular exception of Apple hometown judge Koh who in a pre-trial decision ruled that Qualcomm must license their SEPs to competing baseband OEMs, no other regulator or court around the world came out against the industry's customary practice.
The FTC isn't arguing that Qualcomm's royalties are in violation of FRAND, but that Qualcomm is charging "elevated" royalties on products that use a competitor’s baseband processor.
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The case being tried now, and which the testimony referred to in the OP is from, is about alleged antitrust violations. There's far more to it than just alleged FRAND violations. Qualcomm is accused, among other things, of having monopoly power and engaging in anticompetitive conduct in violation of the Sherman Act.
They are definitely moving in that direction. Will they maintain the strong revenue stream to allow for this is a more likely seneraio. Modems are complicated. QC does hold the patents for much of a modems functionality.
If Apple were able to design a modem they could easily fab them with TSMC. TSMC will be the dominant Fab for the foreseeable future, with more than enough capacity growth.
Again, the issue is that it’s a modem. Not the same as their evolution of ARM in their A Series chips or their other silicon.
Certainly premium smartphone sales are slowing down, for a number of reasons. That's one reason why Apple has, wisely I think, shifted strategy somewhat when it comes to iPhones. It is adapting to, e.g., lengthening replacement cycles. It's shifted the price range of its offerings upward so as to clear market room for what is, in effect, its biggest competition - used and older model iPhones. Instead of leaving a considerable amount of revenue on the table which it could have easily captured, in order to build install base quicker (which is what it used to do), it's now capturing that additional revenue.
That makes sense now because the reality of the market is such that unit sales were going to slow regardless. So it now has the best of both worlds: Older models sold new at lower prices and used iPhones remaining in use for a long time mean that it can maintain (and even continue to build, though perhaps at a slower rate) install base while higher price points for new models mean that it can capture more revenue from their sales. It could have been doing the latter all along, but it sacrificed short-term profit for more install base.
That said, I was answering a question about market share - why Apple's market share fell from Q42017 to Q32018. The main reason for that is the timing of new iPhone releases. It isn't anything new. iPhone market share for Q32018 was up from Q32017.
That didn’t answer my question, in fact it highlights why Apple is stupid to fight with Qualcomm even more, because Intel won’t be as advanced with their 4G chip.
Apple should never have picked the fight for cheaper prices, and then to tell its suppliers to not pay Qualcomm is really underhanded.
You are wrong. Qualcomm has 5g SEP patents.
The rates are as follows from Qualcomm for SEP licenses:
- An effective running royalty rate of 2.275% of the selling price of branded single-mode 5G handsets; and
- An effective running royalty rate of 3.25% of the selling price of branded multi-mode (3G/4G/5G) handsets.
This is for licensing the technology.
The rates for the licenses cap at $400 for the wholesale pice of the handset, so no license for an iPhone or any other will cost more than $20. Samsung makes some of their own modems and does not use Qualcomm in some devices outside the US market, but they still pay the license. They announced these rates for 5G in 2017.
Previously the rates capped at $500 of wholesale cost, for 4G.
So Apple claiming that the price was insane when the cost hit $800 or more for the phone was not accurate.
People talking about percentage of the handset cost posed specious arguments, because they never mentioned rates being capped.
These are the maximum rates.
Apple wants to also use the chips and pay a discounted price.
Chip purchase and license are not the same.
Qualcomm must provide a technology license. They are under no obligation to sell anyone chips.
They surely are not, if you are already not paying. At the time Apple had stopped paying.
Check this video out, it's pretty kewl. Notice the trend? Apple keeps fluctuating up and down, while Android just keeps achieving sustained growth. IMO that's a direct result of Apple's pricing model. How could it be anything other than greed of profit margins?
The number that matters is another one: Apple gets 83% of the profit (2017) in the entire smartphone market, even while only owning that small slice. Since Qualcomm wants to base royalties on the device sales price, you can see where this goes.
Qualcomm has that absolute right. Apple is better off. It will just develop in house and with Intel and Broadcom.
In the final analysis AAPL will win a large award against Qualcomm going back years and over several countries without a statute of limitations.
In the final analysis AAPL will win a large award against Qualcomm going back years and over several countries without a statute of limitations.
Anyone can make a phone but very few can make good baseband radios with Intel still trailing, Broadcom quitting AFAIK, etc. Long term QCOM is a smarter investment than AAPL.
To be fair, Apple was/is still paying, only it's being held in an Escrow account until the matter is resolved.
Because Apple’s prices are for an optional thing and Qualcomm gets paid if you want to make a smartphone period. That’s a huge difference and you’re being willfully obtuse.
So we should let Qualcomm continue to do whatever they want. Congrats, that’s how we got in the situation we are in right now. Nobody wanted to mess with Qualcomm. I’m guessing you would also tell the guy to just pay the protection fee from the mafia?
If Apple wants to use a Qualcomm part, they need to pay. Royalties are part of the product.
Apple might not like to pay for royalties, but nearly every technology has it, including H.264 and WiFi.
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Apple ordered its manufacturers to withhold paying royalties as well. Those funds aren't in escrow.
VP9 for YouTube 8K/4K HDR is royalty free but Apple won't support it. Why? Because they're getting kickbacks for supporting the competing royalty based HEVC. Why isn't this in the news since it harms customers/consumers?
To be clear, you believe Apple should be compensated for use of its patents because the products are nonessential and useless without Apple’s own products? Meanwhile, the iPhone—a product that has numerous equals—shouldn’t have to pay for Qualcomm’s patents similarly, even though it would be useless without Qualcomm’s inventions.
I suppose Apple’s reach and popularity should excuse it from paying royalties to anyone.