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

[heov]

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.

Look, no need to be insulting. I have an education. I'm not going to discuss the merits of flat vs non-flat income tax. Hopefully you can appreciate both sides. I prefer a flat tax and think it's best, too. This isn't the point. If everyone agreed, this is how it'sd be implemented in the US. Everyone unfortunately doesn't agree.

When I mentioned volume pricing, I was trying to emphasize that volume pricing is different per company, even if they have the same volume.

What if I changed your argument to, instead of talking about how much you spent on your PC, but how much money your PC makes you? Would you say it's still "ridiculous"? This is about how much you're PROFITING off of a single part.

I assure you if you are using software for commercial purposes, you are PAYING MORE than non-profit purposes. Windows for education costs less than windows for corporations, for example.

It is not ridiculous to charge more if your invention is bring in more profits. Apple does this in the App Store. It is not ridiculous for software to cost more if the software makes your profit. MS does this.

I assure you if Qualcomm could sell modems retail, it'd be a flat price.

 

[TheShadowKnows!]

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?

My exact thoughts as I read Apple's counterpoint: "How is it fair?" [Says the unapologetically greedy Apple representative.]

 

[kdarling]

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.

Those are two totally separate things.

As already noted, anybody can make and sell the modem chips. Just like anyone can make and sell CPUs, displays, or franchises to make burgers.

The real value is in what the IP to run on those chips, or the attraction of a franchise name, brings. And it's not uncommon for such value to be based upon profit being made.

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.

If you make more, you pay more. Same idea.

No, Apple wants Qualcomm to not charge based on the overall pricing of a device to simply use their technology.

Oh for sure that's what they want, but the fact is, there's nothing wrong with doing it that way.

Heck, Apple themselves have charged for their own IP by percentage of price or profits.

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.

Actually, I think the winds of change are mostly against Qualcomm and other cellular patent holders.

This does not, however, change the fact that Apple simply wants to get a better deal than everyone else has gotten for decades. If they wanted to be fair, they'd get a license themselves and pay what others do.

I'm also mostly trying to correct the misconceptions people seem to have about the way patents are often licensed, and in particular the way Qualcomm licenses.

 

[swingerofbirch]

"Cellular connectivity is important," he says, "but it's not as important as it used to be."

The relevant part to me is learning that they switched from Qualcomm to Intel in the iPhone 7—given that my iPhone 7 (on Verizon) drops calls like no other phone I've had before (including iPhone 5s).

 

[deanthedev]

It is not ridiculous to charge more if your invention is bring in more profits. Apple does this in the App Store. It is not ridiculous for software to cost more if the software makes your profit. MS does this.

Does Apple charge more for an App if you install it on an iPad Pro 12.9” or iPhone X vs an iPad Mini or iPhone SE?

 

[neutralguy]

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?

Agree. I do t u derstand this logic of buying any company just because Apple has 200B stashed away. Why people don't understand that to buy such company, the money has to be realized with tax.
Everytime I read such comment, I feel like a child saying I have hundred dollar and I can buy anything that's available for less than 100$. Just add up all the buying comments: Disney, Netflix, Qualcomm.. add these three up and see where apple would be after buying them.

 

[Delgibbons]

I use LTE cellular all. The. Time.

 

[kdarling]

Does Apple charge more for an App if you install it on an iPad Pro 12.9” or iPhone X vs an iPad Mini or iPhone SE?

Invalid analogy.

The percentage is paid by the maker of the app, just as Qualcomm's percentage is paid by the maker of the phone.

A higher priced app makes more money and thus pays more royalty. A higher priced phone makes more money and thus pays more royalty.

As already noted, in this way higher priced/profit products subsidize the the lower priced/profit products which actually create the infrastructure and mass market that the higher priced products benefit from.

 

[FrenchRoasted]

I thought patents had fixed time period, how is Qualcomm able to keep a legal monopoly for so long? A better long term strategy for Apple would be to build a consortium of tech companies and create an open standard of digital wireless communications. Qualcomm would eventually be left in the dark.

 

[EdT]

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.

And this is different from how any mult-national company in any business acts?

 

[heov]

Does Apple charge more for an App if you install it on an iPad Pro 12.9” or iPhone X vs an iPad Mini or iPhone SE?

No, but you are missing the point. What one company does is irrelevant. I'm saying in the United States of America, a company can do EXACTLY what Qualcomm is doing. There is nothing wrong with it. Intel, for example, may be charging a flat fee. Qualcomm is apparently not charging a flat fee. Yet you seem to be arguing that what Qualcomm is doing is illegal? Or "unfair?" If Apple doesn't like it, don't buy it. Buy Intel. This is what they're doing, and now they want to force Qualcomm to do the same. Just because Intel's pricing is different than Qualcomm's doesn't mean Qualcomm is "wrong." If they are wrong, let the market pummel them into bankruptcy then.

If Apple did charge more for an App on the iPad Pro, this would be FINE. Perhaps the market would reject this model- who knows. They probably would reject it. But if Apple wants to do that, that is THEIR CHOICE. The government shouldn't have to force them to do otherwise (ignoring all monopoly arguments- discussion monopolies is a separate issue).

The point is, Apple does charge more for software that sells for more. You're hand-picking examples where Apple charges a flat fee, and ignoring when they don't. You're saying because a company does something one way, that the other way is wrong. They get to decide how their pricing works, and if they want to do flat- let them do flat. If they want a percentage, let them do a percentage. If companies don't want to play ball, don't play ball. Remember when MS and Spotify didn't allow you to buy subscriptions through App Store? That's the wonders of a free market.

On a separate note, don't be surprised if you see App pricing change on iPad in the near future. PC software costs more than mobile software. Windows price for RT was proportional to screen size, for example. This isn't unheard of, but most importantly, it's not legally "wrong."

 

[chrisbru]

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.

There is an also. They are two separate amounts charged to Apple... One for the modem, one for the license. Unless I'm misunderstanding, Apple is using their IP by using the modem they purchased from Qualcomm in their phones. I'm not here to debate the validity of the IP fee on top of the cost of the modem, but IP fees should not vary between different storage sizes of the same device.

 

[neutralguy]

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



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?

May be MS does not. But there are lots of companies do. For example: Oracle. If you buy expensive CPU with more cores, you have to pay more.

 

[macfacts]

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 Qualcomm gets less money from Apple for the modems in the iPhone SE. I don't see Apple offering to pay more for the modems in the iPhone SE. That lower priced iPhone SE is possible because the modem tech in it is subsidized by other premium costing smartphones.

 

[neutralguy]

I do t understand all these defense for apple. Apple does not like the license deal, buy from another company. This like saying I don't like Samsung charging 2000$ for a tv and I file a lawsuit against Samsung to lower the price of the tv. Ridiculous!

 

[chrisbru]

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.

How typical is it? Do they pay Samsung for the display and then an IP fee based on the cost of the device to use that display? In my understanding, you either pay an IP fee to use the IP when making your own component, or you pay for a finished component. Since they are buying a complete modem from Qualcomm, why is there also a license fee? I must be missing something.

 

[udayan81]

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?

Yes, i am quite aware. However, are you going to actually justify that going from 64gb to 256gb costs them additional 300$ of research? That research has already been patented and implemented by loads of other companies. That is just passing on the cost of other things onto the consumer in order to "grow" as you said. After all one has to keep the stock price going higher.

 

[heov]

There is an also. They are two separate amounts charged to Apple... One for the modem, one for the license. Unless I'm misunderstanding, Apple is using their IP by using the modem they purchased from Qualcomm in their phones. I'm not here to debate the validity of the IP fee on top of the cost of the modem, but IP fees should not vary between different storage sizes of the same device.

Should it vary by profit, then? What if I told you Apple profits more on the higher storage options (I do not know if this is true, but I think it is)?

 

[deanthedev]

Invalid analogy. The percentage is charged to the maker of the app, just as Qualcomm's percentage is charged to the maker of the phone.

No, my analogy is absolutely correct. App Store cut is simply a retail markup on a finished product. Like you’d see in all retail stores. Buy at wholesale, sell at retail.

 

[TheShadowKnows!]

Does Apple charge more for an App if you install it on an iPad Pro 12.9” or iPhone X vs an iPad Mini or iPhone SE?

No, they do not.

But they could. [Nothing stops them to charge distinctly more for the iPad Pro vis iPhone apps, for example.]

The fact is that Apple decided not to. [it is indeed common practice with backend, professional applications to charge more depending on the platform -- e.g. dB server applications.]

Cogently said before: free-market enterprise at work.

 

[deanthedev]

Should it vary by profit, then? What if I told you Apple profits more on the higher storage options (I do not know if this is true, but I think it is)?

Not the same. Apple is pricing a retail product at different levels based on options.

Do you think Toshiba is selling 64GB NAND chips at different prices depending on whether they go into an 8, 8+ or X?

 

[Robert.Walter]

“I don’t know about...”

Vs

“I can’t think of a...”

Traveling through both “gonna settle” and “not gonna settle” and the court of public opinion.

Given the sums involved, it will be a long, interesting and bumpy ride.

 

[deanthedev]

No, they do not.

But they could. [Nothing stops them to charge distinctly more for the iPad Pro vis iPhone apps, for example.]

The fact is that Apple decided not to. [it is indeed common practice with backend, professional applications to charge more depending on the platform -- e.g. dB server applications.]

Cogently said before: free-market enterprise at work.

Those are highly specialized applications, and yes, DB and server software is often licensed based on the processing power of the hardware.

Since you brought up these licenses, do you think MS charge Dell, HP and others a price for Windows based on the retail price of the computer?

 

[Robert.Walter]

Not the same. Apple is pricing a retail product at different levels based on options.

Do you think Toshiba is selling 64GB NAND chips at different prices depending on whether they go into an 8, 8+ or X?

That would be like Cummins charging more for some engines than others because your Diesel Ram pickup has a longer bed. Or Libby’s charging more for a can of peaches because you are dressed when you eat them.

 

[heov]

How typical is it? Do they pay Samsung for the display and then an IP fee based on the cost of the device to use that display? In my understanding, you either pay an IP fee to use the IP when making your own component, or you pay for a finished component. Since they are buying a complete modem from Qualcomm, why is there also a license fee? I must be missing something.

I'm not going to act like I know much about IP law, but I do know that contracts are negotiated, and often times, the profits someone reaps from their IP can dictate their price of the contract. But this is out of my league.

Not the same. Apple is pricing a retail product at different levels based on options.

Do you think Toshiba is selling 64GB NAND chips at different prices depending on whether they go into an 8, 8+ or X?

The question isn't whether Toshiba does or doesn't. The question is, would it be WRONG if Toshiba did? Should Toshiba be taken to court if they do charge differently? Or should Apple simply not pay? Toshiba prices according to the market. I assure you Toshiba priced to maximize their profit from Apple. Turns out a flat-price structure was a good deal for them. Qualcomm thinks otherwise.
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Those are highly specialized applications, and yes, DB and server software is often licensed based on the processing power of the hardware.

Since you brought up these licenses, do you think MS charge Dell, HP and others a price for Windows based on the retail price of the computer?

Question should be: is it wrong if MS charges Dell, HP, and others a price for Windows based on retail price of the computer? What if they did. Should they be taken to court?

The reason MS probably chose a flat price is because that's what the market dictated. Simple as that. Maybe with competition from Intel, Qualcomm will change their pricing structure. The US Govt shouldn't change the pricing, the free market should.