Qualcomm Says Its Innovations Are At the Heart of Every iPhone as Battle With Apple Intensifies

Discussion in 'MacRumors.com News Discussion' started by MacRumors, Jun 21, 2017.

  1. MacRumors macrumors bot


    Apr 12, 2001

    Apple this week expanded its lawsuit against Qualcomm, accusing the wireless chipmaker of "double-dipping" by allegedly refusing to sell chips to manufacturers unless they also pay separate royalties and enter licensing agreements at unreasonable rates, according to court documents filed electronically.


    Qualcomm has since responded to the amended complaint, claiming that Apple is "trying to distract" from the fact that it has made alleged "misleading statements" about the comparative performance of its Snapdragon X12 modem, used in select iPhone 7 models to enable Wi-Fi and cellular connectivity.

    Apple dual sources wireless chips from Qualcomm and Intel for the iPhone 7 and iPhone 7 Plus. Qualcomm's Snapdragon X12 modem is used in CDMA models, such as those sold by Verizon and Sprint, while Intel's XMM7360 modem is used in GSM models, such as those sold by AT&T and T-Mobile.

    New York-based Cellular Insights last year found Qualcomm's modem to significantly outperform Intel's modem in the iPhone 7 Plus, based on simulated testing of LTE performance at different distances from a cellular tower.

    Apple, however, publicly stated there is "no discernible difference" in performance between the Qualcomm and Intel modems in any of the models. Apple also threatened Qualcomm not to disclose the truth, according to Don Rosenberg, executive vice president and general counsel of Qualcomm.

    Rosenberg said Apple's bigger misconception is that Qualcomm's innovations are limited to technology implemented in the cellular modem, when in fact its patented inventions are supposedly "at the heart of every iPhone" and "enable the most important uses and features" of those devices.

    An excerpt from Qualcomm's statement obtained by MacRumors:
    Rosenberg added that Apple is "rarely first to market with any new technology, which shows it is relying heavily on the R&D investments in the most revolutionary technologies by companies like Qualcomm."

    Apple argued that Qualcomm has been unfairly "levying its own tax" on the iPhone's innovations by charging royalties on a percentage of the entire smartphone's value, despite supplying just a single component of the device.

    An excerpt from Apple's amended complaint:
    Qualcomm said the per-device royalty that it charges Apple's contract manufacturers for the right to use its licensed technologies in the iPhone is "less than what Apple charges for a single wall plug." The only first-party wall plug that Apple sells is a 5W USB Power Adapter for $19 in the United States.

    Apple sued Qualcomm in January for $1 billion in alleged unpaid royalty rebates. Qualcomm countersued Apple for breach of contract, encouraging regulatory attacks on its business, and failing to engage in "good faith negotiations" for a license to its wireless patents on fair, reasonable, and non-discriminatory terms.

    Qualcomm was the exclusive supplier of 3G and LTE modems for iPhones until last year, when Apple began dual sourcing from Intel.

    Article Link: Qualcomm Says Its Innovations Are At the Heart of Every iPhone as Battle With Apple Intensifies
  2. sp3k0psv3t macrumors regular


    Jun 3, 2013
    Miami, FL
    Gonna be fun to see how this works out.

    Gets popcorn.....
  3. Kaibelf macrumors 68020


    Apr 29, 2009
    Silicon Valley, CA
    So, Qualcomm thinks that FRAND doesn't apply to them because they contributed a lot or? I'm not sure exactly what their position is here, but it sounds like they want to have it both ways.
  4. ghostface147 macrumors 68030


    May 28, 2008
    This is going to be a long, boring process in courts. And once a decision is made....an appeal. I mean look how long the samsung v apple trial has lasted.
  5. Avieshek Suspended


    Dec 7, 2013
    This is the first Apple legal case that 'm interested upon.
  6. Wide opeN macrumors 65816

    Wide opeN

    Aug 27, 2010
    Does Apple source any parts from Samsung any longer!?
  7. Red Oak macrumors regular

    Jun 14, 2011
    Qualcomm is on Crack. WTF are they talking about
  8. elvisimprsntr, Jun 21, 2017
    Last edited: Jun 21, 2017

    elvisimprsntr macrumors 6502

    Jul 17, 2013
    Apple likely sat on this while QCOM has been the sole source for cellular modems. Now that AAPL sources modems from INTC, it has some leverage. The question is if this is an indication AAPL will sole source modems from INTC for future products, including CDMA modems. Even if the QCOM modems have 1% better LTE performance, who give a **** since the INTC modems are capable of 1 Gbps and the carriers can't support it yet anyway.

    The 7560 supports LTE, GSM, CDMA, and TD-SCDMA (China) in one package. This allows AAPL to have a single SKU world wide, including China. This coupled with eSIM would significantly reduce manufacturing, distribution, and inventory complexity.



    Time to short QCOM and buy INTC!
  9. pat500000 Suspended


    Jun 3, 2015
    My understanding is that Qualcomm has better performance tha intel when it comes to download/upload wise.
  10. prasand macrumors 6502


    Mar 24, 2015
    UES, New York
    Basically, Qualcomm is reaching. Stating that the modem enables things like higher compression, which no doubt may in part be true. But neglects that codecs and other things exist on a level before data transmission comes into play, and significantly reduces the amount of bandwidth necessary in the first place.

    Essentially they are wording it in such a manner to basically state, "although our compression factors in 'after-the-fact' we want to be compensated for the compression that occurs before our technology is factored."

  11. Marshall73 macrumors 68000


    Apr 20, 2015
    In the grand scheme of things the majority of consumers don’t notice speeds above 10mb in day to day use so the intel chips, which far exceed this are more than adequate.
  12. FrenchRoasted macrumors regular

    Sep 21, 2016
    Apple works zealously to ensure patent law is enforced when it protects their products, but not so much for vendors. No surprise they are self interested, but the current patent system is being shown as just a tool for large entities to bash each other with. It would be in most people's interest to have an open, patent free standard. Qualcomm can suck it.
  13. prasand macrumors 6502


    Mar 24, 2015
    UES, New York
    Indeed, hence Apple stating "no discernible difference." That would be like a 10% increase on a CPU chip, yes ... it's measurable, but day-to-day can a person tell the difference? No.
  14. pat500000 Suspended


    Jun 3, 2015
  15. Iconoclysm macrumors 68020


    May 13, 2010
    Washington, DC
    Being first to market doesn't mean you did more R&D, especially when you're first to market with something that's half baked. Apple has been guilty of this more than once, but man...take a look around you at first gen anything.
  16. ThreeOlives macrumors newbie

    Feb 12, 2014
    Qualcomm had nothing to do with creating the revolutionary Touch ID, the world's most popular camera, or the Retina display Apple's customers love

    To be fair Apple only created the Touch ID (through an acquired company), the camera and LCD are basically off the shelf and not even top of the line off the shelf.
  17. Jsameds macrumors 68040

    Apr 22, 2008
    So basically they made a processor and are taking the praise for Apple's software running on it.

    I suppose we'd better thank Intel for all the amazing things Final Cut Pro and XCode can do..
  18. twolf2919 macrumors regular

    Aug 26, 2014
    It is qcomm that's guilty of misdirecting, not Apple. For the purpose of the modem licensing, it's irrelevant how much other research they've done whose results have made their way into the iPhone - those are, presumably, licensed as well.

    The two central issues are the double dipping - why should someone pay for a qcomm modem - which used its tech - AND a separate license fee for the same tech? - and what constitutes "reasonable" in FRAND - Apple thinks qcomm should not be able to make it a percentage of its phone's sales price.
  19. ChrisCW11 macrumors 65816

    Jul 21, 2011
    Well, I agree if Qualcomm is charging more for the same parts because they are being shipped to Apple vs another vendor, then that is bad, however if Qualcomm is creating custom parts for Apple, given Apple's demands for quantity, quality and speed of delivery, then I do not believe Qualcomm is taking advantage of Apple by charging more.

    Also, Apple has set the bar very high for the price of their phone. You can ALL go on about about how much R&D or engineering they put into every phone and the cost of the iPhone justifies recovery of this expense...but then why is Apple breaking profit records every year and building mega-billion dollar campuses if that was the case. Apple is obviously taking advantage of customers by charging a ridiculous profit margin on their phones. It does't make sense given that Apple is also buying and contracting A LOT of parts in the iPhone that other companies are innovating. Apple's claim that the price of the iPhone is justifies based on what money and effort they put into each generation is a fallacious, period.

    So Apple is being very hypocritical that a vendor is taking advantage of Apple's success when Apple has and continues to take advantage of consumers with the price of the iPhone. NO PHONE is worth $1000, period, and Apple is due to release a new iPhone 8 that is expected to START at $1000. And when a new iPhone is released, a break down of its parts show the phone costs is usually about 1/4 of the total price of the phone, meaning that either Apple's overhead is very high, or Apple's profit margins are very high, and Apples quarterly financial reports show that Apple doesn't have a high overhead when their profits keep growing they way they have.

    At the end of the day, Apple can pick a new vendor if they don't like their pricing. Your beloved company is ******** on vendors left, right and center all in an effort to squeeze out even more profit for themselves, whether its Samsung or Qualcomm or whomever.

    The idea that Apple might have to pay more to companies that actually make the iPhone innovative is not outrageous given the ridiculous profit margins Apple takes from every customer.
  20. prasand macrumors 6502


    Mar 24, 2015
    UES, New York
    Ultimately, if Qualcomm charging for the chips, and a royalty ... is indeed valid, even if Qualcomm wins, they'll lose. As their revenue model will need to change, and they will take a hit to their bottom-line.
  21. Glideslope macrumors 603


    Dec 7, 2007
    A quiet place in NY.
    It's the FRAND issues that will bring them back down to reality. They have their own interpretation. Apple will just keep pushing this along until Intel Has their Modems up to speed in 2018. Then cut off QC entirely. It's personal now. :apple:
  22. Flytrap21 macrumors newbie

    Jul 1, 2015
    I think that Qualcomm is missing the point... nobody - not even Apple - is saying that they should not be fairly compensated for their intellectual property. Apple is a big proponent of the protection of proprietary intellectual property rights, they would never advocate that Qualcomm should be made to forgo fair compensation for licensing their technology.

    However, there are two things at stake here:
    1. The first is whether Qualcomm, which receives a license fee for the incorporation of its intellectual property and technology into the components manufactured by independent component manufacturers such as Foxconn, should be allowed to demand a second license fee for the same intellectual property and technology from the downstream users of those components when they incorporate the components into their products.
    2. The second is whether the value of Qualcomm's intellectual property and technology should be linked to the gross value of the final product within which the intellectual property or technology is being used or the value of the radio component into which it has ben incorporated. Linking it to the final product value creates a discriminatory (non-FRAND) licensing regimen, as Apple ends up paying more to Qualcomm for the same license than its competitors simply because the gross price the iPhone is higher than that of its competitors, regardless of the margins.

    The current Qualcomm licensing regimen would mean that if Apple made a connected car that relied on a radio component incorporating Qualcomm's intellectual property or technology, the licensing costs would be prohibitively high as the fee would be a factor of the gross value of the connected car and not the radio components within that car. It also means that nobody would even make a connected car if the entire profit margin would have to be paid to Qualcomm, for the car to work - give how thin the margins are in the motor industry, unless Qualcomm gave the car industry favourable terms. This, in turn, would be discriminatory to a potential competitor such as Apple that is trying to break into the car industry from another industry that does not enjoy those favourable terms.

    As you can see, Qualcomm has been abusing its ownership of the intellectual property and technology that is key to the standards that underpin much of our modern interconnected world. Nobody says that they should give their property away for free... but they seem to have lost sight of their commitment to license their intellectual property and technology on a Fair, Reasonable And Non-Discriminatory basis, when they submitted their intellectual property and technology to be incorporated into the standards.
  23. devsfan1830 macrumors regular


    Aug 26, 2011
    Wait. So this whole thing biols down to Qualcomm being butthurt that Apple simple stated that for the purpose of their implementation in the iPhone that there's no discernible difference? Sound like all Apple did was try to head off people pestering stores to hunt for specific modems when in real world usage you'd never see more than a marginal (if that) advantage for one over the other. Qualcomm then takes that as an insult? How ****ing childish.
  24. patrickbarnes macrumors regular

    Sep 24, 2012
    Yup. Theoretical peak speeds mean nothing when most people are getting 10-40 Mbit.

    Even if Qualcomm win, they've lost in the long term. They just don't get it yet.
  25. navier macrumors regular


    Aug 4, 2011
    "Qualcomm Says Its Innovations Are At the Heart of Every iPhone as Battle With Apple Intensifies"

    So are screws, and last time I checked there was zero innovation

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