New Article Delves Into Origins of Ongoing Legal Feud Between Apple and Qualcomm

Discussion in ' News Discussion' started by MacRumors, Oct 4, 2017.

  1. MacRumors macrumors bot


    Apr 12, 2001

    A new in-depth story about the ongoing legal fight between Apple and Qualcomm has been posted online today by Bloomberg Businessweek, going behind the scenes of the accusations and rebuttals made by the two tech companies. The fight centers upon the "Qualcomm tax," or the amount of money that Qualcomm charges smartphone makers for the internal components of a device that allows it to connect to a cellular signal, also known as the smartphone's modem.

    According to court documents seen by Bloomberg Businessweek, the true origin of the feud is described as starting two summers ago at the Allen & Co. conference in Sun Valley, Idaho. There, Apple CEO Tim Cook and Samsung Vice Chairman Jay Y. Lee are believed to have "shared a quiet word," where Cook told Lee to "pressure" South Korean antitrust regulators into intensifying a Qualcomm investigation that had been open for about a year at the time.


    Apple wanted to get itself in front of investigators and spur more questions about the Qualcomm tax, which it could do because it was in an agreement with the modem supplier. That deal had lowered the tax from $30 to about $10 per iPhone, with Apple promising not to challenge any of Qualcomm's patents. However, it meant that Apple could truthfully answer any question in an investigation about the supplier that was already under way -- which Qualcomm claims was exactly Apple's intent at the Idaho conference.
    The story then details a few other parts of Qualcomm's history, including its massive "Patent Wall" that greets visitors to its headquarters, displaying patents for Qualcomm's CDMA specification and others that the company claims to be for the first smartphone and app store. "I can't think of a keystroke that you can do on a phone that probably doesn't touch a Qualcomm invention," said CEO Steve Mollenkopf.

    Apple was reliant on Qualcomm for this reason for many years, as it produced the highest quality modems in the supply chain and forced the Cupertino company to deal with the Qualcomm tax. That changed in 2015 when Intel began producing modems that would arrive in the iPhone 7. According to Apple general counsel Bruce Sewell, "What prompted us to bring the case now as opposed to five years ago is simple, it's the availability of a second source."

    This introduction of a quality second source in the modem supply chain was met with another point by Apple: a smartphone modem is simply one of many components that make up an iPhone -- and of "no special significance" as modern consumers rely less on the actual cellular features of the device. These two points encouraged Apple's decision to fight back against Qualcomm, ultimately leading to Apple's lawsuit earlier this year, a Qualcomm countersuit soon after, and more companies joining Apple in its fight.
    In July, Qualcomm claimed that Apple infringed on six of its new patents concerning battery life and graphics processing in smartphones, and in August the U.S. International Trade Commission opened an investigation into Apple's alleged infringement with a decision date aimed around the time of the September 2018 iPhone launch. The patent infringement accusation is said to be designed to disrupt Apple's supply chain and "push the company to negotiate," with Qualcomm CEO Mollenkopf stating that all of the legal back-and-forth won't last forever, expecting Apple to settle soon.

    That won't happen according to Sewell: "There's no way that this case settles, absent a complete reinvention of the licensing model that Qualcomm has adapted in the industry."

    Check out the fully story by Bloomberg Businessweek right here.

    Article Link: New Article Delves Into Origins of Ongoing Legal Feud Between Apple and Qualcomm
  2. calzon65 macrumors 6502a


    Jul 16, 2008
    It's interesting when an Apple patent is disputed, Apple will start a thermonuclear war between companies ...but when it comes to respecting other company's patents ... oh how they love to play the victim.
  3. Cronowerx Suspended

    Feb 23, 2015
    It's all about them shekels....why doesn't Tim just buy Qualcomm with the change in his pockets?
  4. Glideslope, Oct 4, 2017
    Last edited: Oct 4, 2017

    Glideslope macrumors 603


    Dec 7, 2007
    A quiet place in NY.
    They have in the past, however I am with Bruce on this one. Qualcomm want's their cake and be able to eat it too on this one. They are now facing competition for modems, designing stagnant ARM architecture, and use a framed copy of "Airplane Mode" in their lobby to justify their actions. Not very convincing to me. I'm no Apple Apologist. Qualcomm is like a cat backed into a corner now. :apple:
    --- Post Merged, Oct 4, 2017 ---
    No. Gonna buy Sony first. ;)
  5. true god macrumors member

    Sep 3, 2015
    How is it fair for Qualcomm to charge $5 more? How is it fair for #fuglyaapl to charge it's customers $100 more for additional storage that costs them $7?
  6. trifid macrumors 68000


    May 10, 2011
    “The other, which has 256 GB, sold for $100 more. How is it fair, Apple asks, for Qualcomm to charge as much as $5 more for the technology in the more expensive phone, given that the two devices are otherwise identical?”

    This is a joke right? Apple trying to argue about fairness by giving an example in which Apple itself is unfair to customers by charging exorbitant $100 fee to ugrade the SSD when in reality it’s far cheaper? Almost 10 years of unfair 16gb iPhones. And no, there is no R&D costs for Apple to buy more SSD from its supliers.

  7. jon3543 macrumors 6502

    Sep 13, 2010
  8. Michaelgtrusa macrumors 604

    Oct 13, 2008
    Apple and Qualcomm’s Billion-Dollar War Over an $18 Part.
  9. bruinsrme macrumors 603


    Oct 26, 2008
    I have to disagree. If I read the article right the tax went from $30 to $10. I do believe apple passed that savings on to the consumer. <sarcasm>
  10. BB8 macrumors regular


    Jan 26, 2016
    When Apple charges you for more storage, they are charging you for the extra value the device has by having more storage. You can say they charge too much, but that's their prerogative.

    Qualcomm isn't providing any extra value when Apple makes a phone with more storage. They're selling Apple the same exact modem.
  11. ravenstar macrumors regular

    Jan 12, 2005
    Why is it so hard to see the difference between Apple's product line and Qualcomm's fees? Compare it to a car maker charging you $5000 for the luxury version of a car versus the same dealer charging you $5000 more because you intended to use the car to drive to drive to a vacation instead of to work.
  12. heov macrumors regular

    Aug 16, 2002
    Because Qualcomm is worth $76B right now. Do you think this is a wise purchase? Do you think Apple should spend this kind of money right now, instead of investing in other things?
  13. kingpushup macrumors regular

    Jun 24, 2013
    Cases take time. Companies typically adjust.

    Prediction: Apple will drop Qualcomm or completely restructure the contract by next autumn.
  14. Santabean2000 macrumors 68000


    Nov 20, 2007
    "How is it fair, Apple asks, for Apple to charge as much as $100 more for the technology in the more expensive phone, given that the two devices are otherwise identical?"

    Fixed that for you.
  15. daftpunker909 macrumors regular

    Sep 3, 2012
    Oh no poor Apple. Can’t handle being squeezed, when they are used to being the ones squeezing their customers.
  16. udayan81 macrumors regular

    Sep 8, 2017
    In the end, all these costs are passed on to the consumer by making you pay $1500 for a phone which costs them 400$ to make aka iPhone X
  17. heov macrumors regular

    Aug 16, 2002
    But Qualcomm wants the profits. Qualcomm for example would charge $100 per chip if the iPhone was $10,000. This is basic economics. This is American capitalism. Apple doesn't get to decide fair price- the market does. If Apple thinks the price is unfair, then don't buy it and let's see what happens. This is how our markets work. The government needs to stay out.
  18. GrumpyMom macrumors G3


    Sep 11, 2014
    ""This introduction of a quality second source in the modem supply chain was met with another point by Apple: a smartphone modem is simply one of many components that make up an iPhone -- and of "no special significance" as modern consumers rely less on the actual cellular features of the device. These two points encouraged Apple's decision to fight back against Qualcomm"

    Well that attitude explains why my last few iPhones suck in terms of call quality compared to my Android phones. It's known they gimped features on their Qualcomm models to make it even to the sucktastic Intel modems that so many of my friends have had even worse issues with.

    Note to Tim, it's still a phone. People need to make cellular calls on it, too. Stop trying to squeeze every nickel until it bleeds and give us a good product with components that work well. We see your executives are paid and compensated more than most entire families will need over a lifetime. Quit these stupid games. Huawei is breathing down your necks.
  19. Zedcars macrumors 6502


    Apr 5, 2010
    Brighton, UK
    Erm, how is it right for Apple to charge $100 more for the 256GB storage compared to the 128GB, when that extra storage costs Apple only a few dollars more?! It's twice the storage, but they're charging about 4 or 5 times the actual NAND cost.
  20. CristianM macrumors member


    Aug 4, 2015
  21. Amplelink macrumors 6502a

    Oct 8, 2012
    I feel like this needs to be repeated every single time someone with little business experience pops up. You do realize that the cost of designing and marketing an iPhone is not baked into the aggregate component cost of a phone, right? And that we live in a capitalist society where firms need "profit" to grow?
  22. MarkCollette macrumors 68000


    Mar 6, 2003
    Toronto, Canada
    Apple physically could not double base model flash storage years ago to 32 GB. There was no global supply for the 100+ million devices sold per year.

    More niche Android phones, sold in lower volume, will always be able to provide certain features that Apple will not be able to, due to the production scaling issues.

    It’s the same reason why there is an iPhone 8 and X. There is no supply of parts for only an X model.
  23. blackcrayon macrumors 68000

    Mar 10, 2003
    I see your point, but Apple is complaining about a part they, in many cases, MUST buy, and that the pricing/licensing arrangement is unfair. Wake me up when Apple forces customers to pay for more storage or to pay for anything Apple offers at all.
  24. SakeBalboa macrumors newbie

    Jan 6, 2006
    I literally lol'd when I read Apple's argument.
  25. kdarling, Oct 4, 2017
    Last edited: Oct 4, 2017

    kdarling macrumors P6


    Jun 9, 2007
    First university coding class = 47 years ago
    But the Apple tax on consumers is okay, Tim?

    I thought Apple was all about high prices in return for quality. Moreover, Apple wanted Samsung to pay a lot of money for a few questionable patents, but aren't willing to pay Qualcomm for using hundreds of patents that Qualcomm spent billions developing. What's good for the goose is good for the gander.

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