iPhone may become king in cellphone chip ban

[AppleInsider]

The US International Trade Commission has issued a ruling against Qualcomm late this week that would bar many of its 3G cellular network chipsets from export to the US, potentially creating a ripple effect in the cellphone business that may help the iPhone as much as it hurts rivals.

In its ruling, the ITC determined that Qualcomm had infringed on a single patent held by one of its chief opponents in the communications business, Broadcom. The patent, which addresses a power-saving process that kicks in when cellular coverage runs dry, was deemed important enough by the trade bureau that a ban will be imposed in 60 days on any future device found to contain an infringing chip -- including many cellphones from the world's largest electronics firms.

Kyocera, LG, Motorola, and Samsung have already protested the ruling, pointing to the dead end it would create for the companies' US release schedules. LG in particular would suffer the greatest immediate blow from its heavy dependence on 3G chipsets for current and future American phones and has joined Qualcomm in formally protesting the decision.

But regardless of the number of phones affected by the ban, the impact may be especially hard for cellphone creators whose new phones will launch at or shortly after the deadline. Motorola's heavily promoted RAZR2 phone has so far been set to arrive in the US during the summer but would be forbidden under the new import rule, potentially sabotaging the company's marketing campaign.

None of the manufacturers created would be fatally wounded by the ban in the near term, according to research group iSuppli. Only 4.4 percent of North American phones shipped this year would face the restriction. However, virtually all would be forced to sell their existing phones at cut rates to prop up sales rather than take advantage of cutting-edge devices that would command a premium.

Most carriers would face more serious consequences, say reports. Verizon claims that 80 percent of its current devices alone use the patent and has joined Qualcomm in seeking a reversal of the ban during its review, which would be handled directly by President Bush. AT&T, Sprint, and T-Mobile have yet to weigh in on the new ban but have already voiced complaints earlier this spring that bans would hurt profits.

Two companies, however, may find the ban comes at an ideal time.

While a small portion of AT&T's current and upcoming phones use the offending Qualcomm chips, the 2.5G-only iPhone is exempt by using alternate components. This guarantees a smooth launch for the Apple-made device but should also give both Apple and AT&T an unexpected edge in the market, iSuppli analyst Jagdish Rebello has told AppleInsider.

"In the near term the benefits to [the] Apple iPhone will be positive," he says. "The ban will force competing carriers to AT&T to rethink plans to introduce enhanced 3G models to compete with the iPhone. If these new models have Qualcomm chipsets, then the carriers will not be able to offer them in the US under the current ban."

The prohibition would force other carriers, and even cellphone makers outside of Apple who also produce phones for AT&T, to instead push months-old equipment. Many of the phones now in jeopardy due to the ITC ruling are supposed to be the iPhone's main competitors, iSuppli adds, but will have to rest by the sidelines should the ban escape a Presidential veto.

And if it does, Apple's first cellphone will face near-ideal conditions for its June 29th introduction that could leave the device largely unopposed for its critical first months on the shelves.

[EagerDragon]

Sounds like fun times ahead, first post, great

[vinney57]

I hear Steve is also going to re-align the planets for the 29th. Yer know... just because he can.

[Aftershock]

I guess EDGE was a great desicion after all. Never doubt his Steveness!

[iPeon]

Originally Posted by vinney57

I hear Steve is also going to re-align the planets for the 29th. Yer know... just because he can.

So you are saying that Steve is responsible for the US International Trade Commission ruling?

[kresh]

Government: What you are doing is illegal.

American Big Business: Yeah but it means a lot of money to us.

Government: But it's still illegal.

American Big Business: Yeah but it means a lot of money to us. Laws don't apply to us, or celebrities! It's all about the profits damnit!

Government: Not so fast!!! Paris Hilton get back in jail, and Big Business don't even think about trying to import those illegal phones.

American Big Business: Yeah but it means a lot of money to us. Just wait until we tell Dubya, you guys are in trouble. We're above the law, but to show you we have no hard feelings you can have Paris Hilton.

President George W Bush: There is a war on terror going on, we have to have those phones to track terrorists. I hereby veto this ban. (Big words added by author to help prop up Bush's vocabulary)

[DaveGee]

Gotta call a technical foul....

Not only did I post this FIRST but I also posted it in (arguably) the more relevant forum too...

http://forums.appleinsider.com/showthread.php?t=75253

Dave

[Ensign Pulver]

Originally Posted by AppleInsider

Verizon claims that 80 percent of its current devices alone use the patent and has joined Qualcomm in seeking a reversal of the ban during its review, which would be handled directly by President Bush.

Now THAT"s a good idea...

[fraklinc]

i hope this adresses fake signal bars because most of these phones display full bars to make you feel good, until you decide to make a call, and the worst is sprint, follow by the old nextel and so on

[anantksundaram]

Originally Posted by fraklinc

i hope this adresses fake signal bars because most of these phones display full bars to make you feel good, until you decide to make a call, and the worst is sprint, follow by the old nextel and so on

Could you please explain the thought connective between ITC/3G/Qualcomm and signal bars?

[TBaggins]

Originally Posted by DaveGee

Gotta call a technical foul....

Not only did I post this FIRST but I also posted it in (arguably) the more relevant forum too...

http://forums.appleinsider.com/showthread.php?t=75253

Dave

Actually, you weren't first. I beat both you and AI by a day:

http://forums.appleinsider.com/showt...t=75197&page=2

Yesterday, 10:11 PM #49
TBaggins
Registered User

Here's a story AI should get on. Apple got off kind of lucky in a way for NOT having 3G in the iPhone, as many 3G chipsets/phones are affected by this bombshell ruling:

The case involves phones based on two types of high-speed wireless technology, EV-DO -- for which Qualcomm is the dominant chip supplier -- and W-CDMA.

http://biz.yahoo.com/rb/070607/qualc...dcom.html?.v=6



.

[Delfoniq]

Originally Posted by vinney57

I hear Steve is also going to re-align the planets for the 29th. Yer know... just because he can.

Can he also make the AAPL share price shoot to $250 ?

[TBaggins]

Originally Posted by Aftershock

I guess EDGE was a great desicion after all. Never doubt his Steveness!

EDGE wasn't a great decision, just a necessary one, because ATT's 3G coverage wasn't up to the task in '07.

Also, the ban on certain 3G chipsets may or may not be long-lasting... it could drag out, or it could be overturned in short order.

Even so, luck is definitely on Apple's side here. Had the iPhone had one of the banned chipsets in it, arm-waving idiot pundits would be coming out of the woodwork to spout "iPhone is teh DOOMED!!!" FUD in order to grab hits (hi Dvorak).

.

[Splinemodel]

2.5G still sucks, EDGE still sucks, GSM still sucks. Blocking Qualcomm won't make AT&T's abysmal QoS any better.

[daijones]

Originally Posted by kresh

Government: What you are doing is illegal.

American Big Business: Yeah but it means a lot of money to us.

Government: But it's still illegal.

American Big Business: Yeah but it means a lot of money to us. Laws don't apply to us, or celebrities! It's all about the profits damnit!

Government: Not so fast!!! Paris Hilton get back in jail, and Big Business don't even think about trying to import those illegal phones.

American Big Business: Yeah but it means a lot of money to us. Just wait until we tell Dubya, you guys are in trouble. We're above the law, but to show you we have no hard feelings you can have Paris Hilton.

President George W Bush: There is a war on terror going on, we have to have those phones to track terrorists. I hereby veto this ban. (Big words added by author to help prop up Bush's vocabulary)

Yup, Bush will take it hard in an intimate place whenever big business says so. Sadly, so would most other US politicians, and all the ones with a chance of being elected Who was it who said that the US had one political party, the business party, which happened to have two wings, democrat and republican? (Don't get me wrong: the UK is just the same)

[JeffDM]

Originally Posted by Aftershock

I guess EDGE was a great desicion after all. Never doubt his Steveness!

Like he could have predicted the outcome of a legal battle. I would have preferred a different outcome, it seems as if the phone makers are bystanders caught in this though no fault of their own.

[meelash]

Originally Posted by iPeon

So you are saying that Steve is responsible for the US International Trade Commission ruling?

Yes.

Originally Posted by Delfoniq

Can he also make the AAPL share price shoot to $250 ?

Yes.

And?

[melgross]

Originally Posted by Splinemodel

2.5G still sucks, EDGE still sucks, GSM still sucks. Blocking Qualcomm won't make AT&T's abysmal QoS any better.

Picky, picky, picky.

[TBaggins]

Originally Posted by Splinemodel

2.5G still sucks, EDGE still sucks, GSM still sucks. Blocking Qualcomm won't make AT&T's abysmal QoS any better.

Originally Posted by melgross

Picky, picky, picky.

He's got a point, though. EDGE? Slow. GSM? Not as reliable as CDMA, all else being equal (which is why the air interface on 3G GSM is actually CDMA-based, i.e. WCDMA). ATT's quality of service? Consistently ranked mediocre compared to other US carriers. ATT's customer service? Bad.

Will it be enough to derail the iPhone? Hell no. The iPhone is a breakthrough, game-changer of a product. But it's also like the star player on a .500 team here.

.

[melgross]

Originally Posted by TBaggins

He's got a point, though. EDGE? Slow. GSM? Not as reliable as CDMA, all else being equal (which is why the air interface on 3G GSM is actually CDMA-based, i.e. WCDMA). ATT's quality of service? Consistently ranked mediocre compared to other US carriers. ATT's customer service? Bad.

Will it be enough to derail the iPhone? Hell no. The iPhone is a breakthrough, game-changer of a product. But it's also like the star player on a .500 team here.

.

Oh, I wasn't saying that I don't agree.

[ascii]

Apple have the luck of the Irish sometimes. Here they are about to launch their first ever cellphone and, as if on cue, their competitors get banned from importing.

[ajhill]

As if the iPhone needs another reason to succeed, or be more hyped.

Either way I'll be going to the Apple store on the 29th.

Al

[DaveGee]

Originally Posted by TBaggins

Actually, you weren't first. I beat both you and AI by a day:

I humbly bow to your early-birdedness...

D

[TBaggins]

Originally Posted by DaveGee

I humbly bow to your early-birdedness...

What can I say? I'm a mensch.

.

[aiolos]

Originally Posted by kresh

Government: What you are doing is illegal.

American Big Business: Yeah but it means a lot of money to us.

Government: But it's still illegal.

American Big Business: Yeah but it means a lot of money to us. Laws don't apply to us, or celebrities! It's all about the profits damnit!

Government: Not so fast!!! Paris Hilton get back in jail, and Big Business don't even think about trying to import those illegal phones.

American Big Business: Yeah but it means a lot of money to us. Just wait until we tell Dubya, you guys are in trouble. We're above the law, but to show you we have no hard feelings you can have Paris Hilton.

President George W Bush: There is a war on terror going on, we have to have those phones to track terrorists. I hereby veto this ban. (Big words added by author to help prop up Bush's vocabulary)

lol

[monkeyastronaut]

ah, the weather report was right. not a single cloud on cupertino's sky.

i'll just sit here and wait for the following headlines: "bears eat all treos" and "blackberries make baby jesus cry"

[TBaggins]

Originally Posted by daijones

Yup, Bush will take it hard in an intimate place whenever big business says so. Sadly, so would most other US politicians, and all the ones with a chance of being elected

True, but there are degrees of big business whoredom.

Your average politician is a streetwalker, but Bush is the streetwalker who does the nasty things the other girls refuse to do. And likes it.

You get the feeling that Wal-Mart or Exxon or whomever could propose that all US citizens should have RFID chips implanted in their bottoms for 'easy customer tracking' and that children's playgrounds be designated as toxic waste dump areas, and Bush would go, "Sounds good to me. Now pull my skirt up."

.

[TBaggins]

Originally Posted by monkeyastronaut

ah, the weather report was right. not a single cloud on cupertino's sky.

i'll just sit here and wait for the following headlines: "bears eat all treos" and "blackberries make baby jesus cry"

The stars do seem aligned, don't they?

.

[vinney57]

Originally Posted by iPeon

So you are saying that Steve is responsible for the US International Trade Commission ruling?

Of course!

Well OK... it might have been Vin Diesel.

[vinney57]

... or Chuck Norris.

[rjwill246]

Originally Posted by Splinemodel

2.5G still sucks, EDGE still sucks, GSM still sucks. Blocking Qualcomm won't make AT&T's abysmal QoS any better.

As a current AT&T/ Cingulat user, and past Sprint and T-mobile user, I have found that AT&T' service to be courteous and helpful, their plans competitive, coverage in Reno and Las Vegas, Nevada, SFO, LA, OC California to be as good as, or better, than the others I have used. Web access has been reasonable, though somewhat slow- but it was never fast on any system I have used.

GSM has served my phone purposes well. I do use the device to make phone calls- perhaps that is my problem.
I have used it in multiple countries with very little trouble... making phone calls, though.

To simply keep saying "sucks" adds nothing to our undestanding of your problem. One cannot generalize so superficially-- indeed, if AT&T were THAT bad, why would they be in the dominant position they are? Extrapolating from your single adjective-- your fellow citizens must, therefore, be in the same category. Perhaps, in your stunning insight you might expand on "sucks" and tell us how, we and your nemeses, fall under that lacerating description? I would love to know and how it applies to 50 odd million users. Do tell---

[TBaggins]

Originally Posted by rjwill246

To simply keep saying "sucks" adds nothing to our undestanding of your problem. One cannot generalize so superficially-- indeed, if AT&T were THAT bad, why would they be in the dominant position they are?

I agree, saying something sucks doesn't really add much to the discussion.

Far as why ATT is in a 'dominant position', well, they really aren't. They have about 25-30% of the US market, and are one of the 'Big Three' carriers- Verizon and Sprint are nearly as large as they are. ATT/Cingular got to be so big largely writing a check... namely, back when they were Cingular, ponying up $41 billion to buy the old ATT Wireless and its 21 million or so customers. That's what put them up to #1 in customer count. However, they are in danger of losing that distinction, as Verizon consistently net adds more customers than they do, and is right on their heels in # of customers already.

The problem with ATT/Cingular so much isn't size, but quality. Their network is mediocre overall (if you're in an area where its good, bully for you, but ATT/Cing does so-so to poor in nationwide surveys) and their customer service overall is not well-rated or well-respected. They've got excellent distribution (i.e. a lot of places sell ATT/Cingular phones and service), but their churn rate (i.e. the number of customers who leave them) is rather high compared to their best competition (Verizon).

So, a lot of people sign up for ATT/Cing service, but a lot of people leave them too- over a million a month. They're trying to fix that, but it's slow going. On the plus side, at least their churn rate isn't as bad as Sprint-Nextel's, which has been horrific lately, largely due to merger issues.

.

[mdriftmeyer]

AT&T's network will be "different" when the iPhone is launched.

[meelash]

Originally Posted by mdriftmeyer

AT&T's network will be "different" when the iPhone is launched.

I haven't any experience with AT&T (not cell phones, anyway) but I know that I haven't been impressed with Verizon's customer service the few times I've had to use it, and their practice of locking out all the native features of a phone to attempt to suck your blood with their for-pay services is deplorable.

Again, I don't know from personal experience, but from things I've heard I think the cell phone industry, in general, is not really very "good" from a consumer experience and that's what Apple has fortunately managed to address with many of the terms they wrangled out of AT&T. For example, taking over customer support for the device, controlling features and software, etc. Given the stories about how AT&T is beefing up their service in prepping for the iPhone, they problem have some agreements on that issue as well in the 5-year deal.

I don't know about AT&T being different after the launch, but I think Apple is doing their best to make sure that the iPhone experience is radically different.

[EagerDragon]

Originally Posted by ascii

Apple have the luck of the Irish sometimes. Here they are about to launch their first ever cellphone and, as if on cue, their competitors get banned from importing.

Yes, that is why they are involved in about 12 law suits a year.

[TBaggins]

Originally Posted by mdriftmeyer

AT&T's network will be "different" when the iPhone is launched.

In just three short weeks? Not really. All they're doing is something called 'Fine EDGE', where they're trying to bump up their EDGE network speeds a little. It'll still be quite slow. And their network reliability won't be dramatically different either.

To truly improve a network takes billions of dollars and a lot more time than a few weeks. They'll probably get there, but its going to be awhile.

.

[TBaggins]

Originally Posted by meelash

...[Verizon's] practice of locking out all the native features of a phone to attempt to suck your blood with their for-pay services is deplorable.

Word on that. I think their policy there is ultimately self-defeating.

I had one of the few (only?) Verizon phones that supported OBEX (the Nokia 6256i; in other words, I didn't have to pay the 'toll' to transfer pictures from my phone to my computer- bluetooth object exchange was not disabled on it) and Verizon treated that phone like a red-headed stepchild.

Great phone, but you almost never saw it in the Verizon corporate stores (and even when they had it, it was often mysteriously not on display), and it was discontinued after a fairly short run, even though Nokia didn't really have a replacement for it.

Coincidence? Hmmm....

Point is, Verizon is hurting their phone lineup and alienating a certain percentage of their existing and potential customers by engaging in such shenanigans. Some bean counter probably did the sums and said they'd come out ahead by doing it this way, but you have to wonder if its really worth it.

They're being cocky because their customer loyalty is #1 by a wide margin, but if the competition gets better, this will bite them in the ass.

.

[melgross]

Originally Posted by EagerDragon

Yes, that is why they are involved in about 12 law suits a year.

That's not bad. Other large companies can be involved in a hundred. It's the way of the world.

Most of these suits are nuisance suits.

[mdriftmeyer]

Originally Posted by TBaggins

In just three short weeks? Not really. All they're doing is something called 'Fine EDGE', where they're trying to bump up their EDGE network speeds a little. It'll still be quite slow. And their network reliability won't be dramatically different either.

To truly improve a network takes billions of dollars and a lot more time than a few weeks. They'll probably get there, but its going to be awhile.

.

Really? Why do you think Apple spent 3 years in the development. They negotiated the AT&T deal over a year ago. They've been working together to throw the switch.

Think about the billions of dollars at stake.

[melgross]

Originally Posted by mdriftmeyer

Really? Why do you think Apple spent 3 years in the development. They negotiated the AT&T deal over a year ago. They've been working together to throw the switch.

Think about the billions of dollars at stake.

I agree with you.

To add to what you've said:

We have 19 days left before this will be resolved. At that point we will know the Good, the Bad, and the Ugly.

Just remember this:

If the network is so bad, why did Apple put their precious reputation on the line with it?

If there is a serious problem, the iPhone could fail. I would think that Apple has tested this plenty. I just don't see them thinking,"What the hell. if it works, it works".

Just think about this. In a few years, Apple could be selling 50 million phones a year, if it is sucessful. That's big bucks. Bugger bucks than Apple has ever seen.

If the average price of an iPhone will be $350 at that time, yearly sales would be $17.5 billion a year, of which Apple would be getting more than half, perhaps two thirds. That's a LOT of money.

If Apple becomes a sucessful phone manufacturer, they could sell 100 million phones annually. That would be about 10% of the market today, but less in the future, as phone sales are still on the rise. So, it's doable. Think of the money then, even if the average price drops to $250.

And then Apple would be getting sales from their own software, plus a possible royalty from third party software, plus a percentage if it is sold over iTunes.

That could come out to another billion or three a year, almost all profit.

Do you think Apple would risk all of that if they thought the network was so crappy?

I don't think so.