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

[heov]

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.

No they don't. They don't even have to make phones. There is no must.

If they can't afford to buy the parts to make a phone, then don't do it. If the price is too high, don't buy it. Make your own. Intel did. Now Apple has another source. If Qualcomm's price is too high, Apple shouldn't buy, and we should see how the market adjusts. You know why I don't make my own phone? cause I can't afford it. I'm not gonna go to court and force them to lower their price so I can.
[doublepost=1507124434][/doublepost]Basically, Qualcomm wants a percentage of profits. If Apple is making 100$ on one iPhone, Qualcomm will charge say 10$. If Apple is making 150$ per iPhone, Qualcomm wants 15$. This pricing structure is common. Apple wants a "flat tax." Qualcomm wants their piece if Apple is profiting using their tech.

If Apple wants to cry about this pricing model, buy from someone else (which they are doing). now they're crying to the courts saying this pricing structure is unfair. John Adams would roll over in his grave if he heard this.

 

[SarcasticJoe]

“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?”

At least you're getting something from Apple for that extra $100. The fact that Qualcomm gets more for the exact same parts and IP is simply stupid.

But yeah... Knowing Qualcomm and the way they force companies to pay them license fees even when they're not using any of their part or a single line of their code I wouldn't be all that bothered if they went bankrupt tomorrow. If the semiconductor industry has a Monsanto, then it's them.

 

[heov]

At least you're getting something from Apple for that extra $100. The fact that Qualcomm gets more for the exact same parts and IP is simply stupid.

But yeah... Knowing Qualcomm and the way they force companies to pay them license fees even when they're not using any of their part or a single line of their code I wouldn't be all that bothered if they went bankrupt tomorrow. If the semiconductor industry has a Monsanto, then it's them.

Stupid? So if I have an invention that makes another product "work," and that product is making billions in profits, I can't price my invention as a percentage? It has to be a flat fee? Is there a law that says this? If it's so stupid, then maybe the other company shouldn't license it.

Maybe they will go bankrupt. But in the end, this is how free markets work.

 

[AmazingRobie]

Heed these words. Until patents and copyrights are done away with, you will never advance as a society. Apple is just using this as a ploy not to pay, just like their tax loopholes and other baseless lawsuits. One greedy corporation fighting over another greedy corporations profits. Hypocrites.

 

[canadianreader]

Qualcomm does not provide Apple with SSDs in other words Qualcomm is asking Apple to pay when they do a profit on storage, I don't find those demands legitimate.

 

[kdarling]

Stupid? So if I have an invention that makes another product "work," and that product is making billions in profits, I can't price my invention as a percentage? It has to be a flat fee? Is there a law that says this? If it's so stupid, then maybe the other company shouldn't license it.

There is no such law. In fact, it's pretty common for patents to be priced as a percentage of either product price or profit. Apple is lucky it is the former, not the latter.

Readers should note that Apple itself does not (and never did) have a Qualcomm license themselves. Instead, they cleverly have Foxconn pay using the Qualcomm license that Foxconn got to make cellular devices years before the iPhone ever existed.

In this way, the royalty percentage is only paid on what Apple pays Foxconn for an iPhone (well below $300), NOT what Apple charges its own customers.

 

[Michaelgtrusa]

I stand with Qualcomm on this one and will always. It's not fair to support a Foxconn deal that makes the state of Wisconsin no money for decades, secretly outsource jobs to india/china and give us poor QC issues and say nothing, but complain about Qualcomm being unfair.

 

[BootsWalking]

"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?"

The irony and hypocrisy of this statement coming from Apple is mind-blowing.

 

[jayducharme]

As Apple sees it, a cell phone modem is one of many components—and of no special significance. Sewell points out that if your cellular network is down, it’s possible to get online using Wi-Fi, which uses a different chip.

So it IS significant, if it's only "possible" to have a functional phone without cell service. The phone modem is what makes it a phone instead of an iPod Touch. And Apple admits Qualcomm makes the best modems. Just as we pay a premium for buying an iPhone ("the best"), Apple pays a premium for using the best modem. If Apple switches to a modem of less quality, are they really making a premium product?

 

[kdarling]

Qualcomm does not provide Apple with SSDs in other words Qualcomm is asking Apple to pay when they do a profit on storage, I don't find those demands legitimate.

Apple does not provide anything extra for hosting higher priced apps in its App Store, nor does it cost them more to store and deliver them (beyond a few percent for credit card fees perhaps).

Yet they still charge developers 30% of the app price, no matter what.

Why? Partly because in this way, higher priced apps subsidize lower priced apps.

In a similar way, cellular patents have been charged by phone price for decades. In this way, higher priced (and profit) phones subsidize phones which have as little as $2 profit. Those phones could not possibly pay a $10 royalty fee, but phones making hundreds of dollars in profit certainly can.

Moreover, just as with apps, the higher priced/profit phones would not have had much of a market without all the lower priced phones, as it is the latter which led to the construction of the global cellular network. Lower priced apps/phones constantly prime the pump for the higher profit makers to make billions.

 

[deanthedev]

Microsoft should start charging for Windows based on your machine.

You have a $499 desktop from Acer? You pay $20. You build a custom gaming machine with dual GTX1080’s? You pay $300.

Seems fair, right?

 

[chrisbru]

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.

Apple already pays market price for the modem, though. The problem is Qualcomm ALSO charges a license fee based on the price of the device it goes into.

 

[heov]

Microsoft should start charging for Windows based on your machine.

You have a $499 desktop from Acer? You pay $20. You build a custom gaming machine with dual GTX1080’s? You pay $300.

Seems fair, right?

Yes. If you don't like their pricing structure, buy a different OS. If MS loses money because of this, they will adjust. This is how free markets work. Don't tell MS how to price their product. They decided to keep a flat pricing structure on retail Windows because it is most profitable to them. If they decide to price based on CPU cores or cost of machine, this isn't "unfair," this is capitalism. But they do charge more if you want it on 10 devices, even though it's at no extra cost to them! That's their choice. There is no "fair" or "unfair". Qualcomm has decided a flat tax is not most profitable to them. Maybe they will learn the hard way- who knows. That's what's great about a free market.

Oh, and MS does charge differently in volume licensing. It's much, much less than their retail pricing, too. MS has a flat fee for retail prices. And guess what? volume pricing isn't fixed for every company... they come to an agreement. You want to run MS software on your profitable company? I'm sure their price is different than a non profit, for example.
[doublepost=1507127738][/doublepost]

Apple already pays market price for the modem, though. The problem is Qualcomm ALSO charges a license fee based on the price of the device it goes into.

What's wrong with that? This is TYPICAL. Total cost of licensing almost always depends on price of product. This is how deals are made. "Market price" here means total cost to license, and to price based on profits of a company is typical. It's not unfair, unless you believe in a more communist or socialist type of economy. Which is fine. But that's not how America works today. That's also not how Apple work either. Look at their App Store. They take 30%, not a flat fee. Does it cost them more? Is Apple being unfair?

Hell, our federal tax rates adjust based on your income, too.

 

[jhende7]

Microsoft should start charging for Windows based on your machine.

You have a $499 desktop from Acer? You pay $20. You build a custom gaming machine with dual GTX1080’s? You pay $300.

Seems fair, right?

This ^

I'd like to see some Qualcomm supporters explain themselves out of this comparison. Fact is they make one simple product for the iPhone and they are trying to Leech profits from any innovation Apple makes. Imagine every part maker for iPhones did this? 128 SSD more expensive in the iPhone X then the iPhone 8 because they are basing pricing on the total cost of the device? I don't think so.

Fact is Qualcomm hasn't done a damn thing since they made some broadband inventions 10 plus years ago. Just look at how poorly the snapdragon performs compared to the A-series chips. They know they can't bring anything to the table and are trying to pad their bottom line off of Apples innovation.

My best guess is 5 years from now Qualcomm will go the way Blackberry.

 

[kdarling]

Apple already pays market price for the modem, though. The problem is Qualcomm ALSO charges a license fee based on the price of the device it goes into.

There is no "also".

Qualcomm ONLY charges a license fee to device makers using their IP. Not on the chips themselves (unless of course you use a Qualcomm design, which is a different kind of fee).

Anyone can make modem chips and sell them for any price they wish. Which is why in fact that other modem makers are outselling Qualcomm in places like China.

Someone brought up PCs. Does the price of an Intel CPU include a Windows license? No. That is always negotiated separately.

 

[Zaft]

It's all about them shekels....why doesn't Tim just buy Qualcomm with the change in his pockets?

Who said Qualcomm is for sale? Not sure you would convince stock holders that thats a good idea.

 

[deanthedev]

Yes. If you don't like their pricing structure, buy a different OS. If MS loses money because of this, they will adjust. This is how free markets work. Don't tell MS how to price their product.

Oh, and MS does charge differently in volume licensing. It's much, much less than their retail pricing, too. MS has a flat fee for retail prices. And guess what? volume pricing isn't fixed for every company... they come to an agreement. You want to run MS software on your profitable company? I'm sure their price is different than a non profit, for example.

Perhaps you should read what I said, because nothing you said applies.

Volume licensing discounts ARE NOT the same as charging someone based simply on the value of the product it gets used in.

 

[kdarling]

Fact is Qualcomm hasn't done a damn thing since they made some broadband inventions 10 plus years ago.

That's not even close to being a "fact".

Qualcomm not only created most of the standards that are used by both CDMA and GSM networks for 3G, they also did and are doing a large part of 4G and beyond.

Without their investment of billions in R&D, we would not be where we are now. And Apple couldn't have stashed away a quarter trillion dollars in pure profit by riding on the back of the global cellular infrastructure and mass market created by those who paid royalties for years before the iPhone existed.

Apple simply wants to be treated special, and not pay what others pay. It's about profit, that's all.

 

[Pilgrim1099]

This ^

I'd like to see some Qualcomm supporters explain themselves out of this comparison. Fact is they make one simple product for the iPhone and they are trying to Leech profits from any innovation Apple makes. Imagine every part maker for iPhones did this? 128 SSD more expensive in the iPhone X then the iPhone 8 because they are basing pricing on the total cost of the device? I don't think so.

Fact is Qualcomm hasn't done a damn thing since they made some broadband inventions 10 plus years ago. Just look at how poorly the snapdragon performs compared to the A-series chips. They know they can't bring anything to the table and are trying to pad their bottom line off of Apples innovation.

My best guess is 5 years from now Qualcomm will go the way Blackberry.

Will never happen.

Maybe you should ask Apple what the hell they were smoking pricing the iPhone X $999? If you think it's defensible, I find it inexcusable especially if they're attempting to ditch Touch ID. Once Face ID becomes a standard on all iOS devices, Apple is going to look like a silly fool charging $1K for iPhone X. Think about it.

 

[Iconoclysm]

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.

It almost seems like the entire point here flew over your head.
[doublepost=1507128465][/doublepost]

Heed these words. Until patents and copyrights are done away with, you will never advance as a society. Apple is just using this as a ploy not to pay, just like their tax loopholes and other baseless lawsuits. One greedy corporation fighting over another greedy corporations profits. Hypocrites.

You do away with patents and copyrights and I guarantee you things will get even worse than they are now.

 

[jhende7]

Yes. If you don't like their pricing structure, buy a different OS. If MS loses money because of this, they will adjust. This is how free markets work. Don't tell MS how to price their product. They decided to keep a flat pricing structure on retail Windows because it is most profitable to them. But they do charge more if you want it on 10 devices, even though it's at no extra cost to them! That's their choice. There is no "fair" or "unfair". Qualcomm has decided a flat tax is not most profitable to them. Maybe they will learn the hard way- who knows. That's what's great about a free market.

Oh, and MS does charge differently in volume licensing. It's much, much less than their retail pricing, too. MS has a flat fee for retail prices. And guess what? volume pricing isn't fixed for every company... they come to an agreement. You want to run MS software on your profitable company? I'm sure their price is different than a non profit, for example.
[doublepost=1507127738][/doublepost]

What's wrong with that? This is TYPICAL. Total cost of licensing almost always depends on price of product. This is how deals are made. "Market price" here means total cost to license, and to price based on profits of a company is typical. It's not unfair, unless you believe in a more communist or socialist type of economy. Which is fine. But that's not how America works today. That's also not how Apple work either. Look at their App Store. They take 30%, not a flat fee. Does it cost them more? Is Apple being unfair?

Hell, our federal tax rates adjust based on your income, too.

This comparison is so Apples to Oranges. Volume discounts have nothing to do with it. The fact is Qualcomm makes a part and should be charging a fixed price for that part. What other parts manufacturers charge you for the part and then a licensing fee (based on Total cost) to use said part. Imagine I had to fill out a survey when I was building my PC so on top of the 400 dollars I paid for my CPU I also had to pay a licence based on how expensive my PC was going to be? It's ridiculous.

Also I think everyone can agree that tiered federal tax rates suck. Why should I pay more just because I work harder or have a better job. If you had any education in Tax economic you would understand that a flat (and low income tax rate), with a higher consumption tax rate is far superior.

 

[Iconoclysm]

That's not even close to being a "fact".

Qualcomm not only created most of the standards that are used by both CDMA and GSM networks for 3G, they also did and are doing a large part of LTE.

Without their investment of billions in R&D, we would not be where we are now. And Apple couldn't have stashed away a quarter trillion dollars in pure profit by riding on the back of the global cellular infrastructure and mass market created by those who paid royalties for years before the iPhone existed.

Apple wants to be treated special, and not pay what others pay.

No, Apple wants Qualcomm to not charge based on the overall pricing of a device to simply use their technology. Yes, it has a great value, Qualcomm did a lot of good with their R&D. But it sounds to me that you're defending Qualcomm the same way someone would try to defend a pharmaceuticals company for overpricing.

 

[deanthedev]

Did I wake up this morning and type IHateApple.com into my browser?

Someone brought up PCs. Does the price of an Intel CPU include a Windows license? No. That is always negotiated separately.

Does MS charge you a license fee for Windows based on how expensive a CPU you purchased?

Does Intel charge different prices for their CPUs based on the machine you install it into?

 

[jhende7]

Will never happen.

Maybe you should ask Apple what the hell they were smoking pricing the iPhone X $999? If you think it's defensible, I find it inexcusable especially if they're attempting to ditch Touch ID. Once Face ID becomes a standard on all iOS devices, Apple is going to look like a silly fool charging $1K for iPhone X. Think about it.

What does the price of the iPhone X have to do with anything I said. Your comment literally adds nothing to the conversation and has nothing to do with the topic. I'll bite though.

The Note 8 is also $1000, do you think that's a fair price? What is a fair price? Only Apple knows that. What i'm arguing is that what if Apple looked at your income. If you make 50K a year the iPhone X is $500. If you make $100k a year, the iPhone X is $1000. Do you think that's fair? Or would you rather just pay a fixed prince supported by supply and demand.

 

[Iconoclysm]

This comparison is so Apples to Oranges. Volume discounts have nothing to do with it. The fact is Qualcomm makes a part and should be charging a fixed price for that part. What other parts manufacturers charge you for the part and then a licensing fee (based on Total cost) to use said part. Imagine I had to fill out a survey when I was building my PC so on top of the 400 dollars I paid for my CPU I also had to pay a licence based on how expensive my PC was going to be? It's ridiculous.

Also I think everyone can agree that tiered federal tax rates suck. Why should I pay more just because I work harder or have a better job. If you had any education in Tax economic you would understand that a flat (and low income tax rate), with a higher consumption tax rate is far superior.

Why would you think everyone agrees that tiered tax rates suck? I do pay more because I have a better job and work harder...and I expect those that make hundreds of times more than me to pick up an even larger responsibility for taking care of our country's costs. Then to make a broad statement about someone's education for disagreeing with a flat tax? The people who make the most money in our country don't consume like the rest of us, they do not spend as high a percentage on goods because they don't have to, and that's why it's easier to accumulate wealth the more money you make. This just gives them an incentive to spend even less. And it will put an even heavier weight onto the shoulders of the poor who spend every penny to get by.

Otherwise, we agree.