Apple wanted Samsung to license patents for $30 per smartphone, $40 per tablet

Why licence when you can steal?

Grammar police.

 

 

 

I think you mean "was much less"

I was just reading on CNET the details of Apple's original attempt to get Samsung to see reason. The bulk of the problem then was Android not hardware design. So I assume Apple are not going to let Google off the hook so this hardware design fight is just phase one in a larger thermo nuclear war it seems.

Foolish Samsung. They could easily have increased their ASP by $30 and not worried about looking as bad as they currently do.

This has ALWAYS been about getting Google.

Samsung didn't back down because Google promised to support their licensees.

Apple intends to force Google to back up their promise, thus coming to blows directly with Apple, or destroy their business model by scaring all of their licensees away thus achieving the same goal ...

Wow if Samsung paid Apple $30, and pays Microsoft a little less, this would make Android expensive indeed.

 

Since this is from 2010, I wonder if Nokia is paying a patent royalty for each WinPhone sold?  Does Apple and Microsoft have a cross license deal?  This document raises even more questions.

This offer could come back to bite Apple.

 

Firstly, offering 20% discount for cross licensing Samsung's patents means that the value of Samsung's patents is set at approximately $6 to $8 per device - a lot higher than the numbers Apple is offering now.

 

Secondly, it looks like these numbers could be looked at as being way too high - remember, Samsung prices its devices about 15-20% cheaper than Apple - so a $30 fee could be as high as 7-8% of the device cost.

 

Thirdly, though Apple's patents are non-SEP, these prices make it look like Motorola's 2.25% for SEP patents are not ALL THAT EXCESSIVE. They are excessive, but not as excessive as they looked at first glance.

 

Most importantly, I believe it is these prices that make Samsung believe that it has lesser exposure at a legal trial - a jury is unlikely to cost them much more than agreeing to Apple's rates. Even though the numbers for 2010 look low at just $250 million, the numbers for today will be a lot higher - at 50 million phones a year, the cost for Samsung would be $1.5 Billion for just the last 12 months! Apple is just asking for $2.5 Billion today, which means Samsung is not exposed to much risk. I think even if ALL of Samsung's profits from mobiles and tablets are disgorged, it would be less than $30 per device - remember, not all manufacturers have the kind of profit margins Apple has! Samsung is probably making only 10% margins on its devices.

 

Of course, if they get hit with treble damages for wilful infringement, then the math could be totally different for Samsung. I think Samsung would be smarter to just pay Apple $2.5 Billion today, and get back about $0.5 Billion in their own licensing. At a net cost of $2 Billion, it is quite cheap for Samsung on a per device basis.

Edited by macarena - 8/10/12 at 7:54pm

 

Pun intended? 

Good catch - no, though I would like to believe I thought of that one before!!

 

I don't think the offer of 20% was just for Sammy's FRAND patents but additional patents Apple may look at without stealing like Sammy does.

 

yes, but Moto's 2.25% is more, on a monetary scale, than what Moto charges LG or others. 2.25% of Apple's $600 > 2.25% of LG's $200 phone. That is discriminatory.

Life isn't free. 

 

Of course, they could have chosen the alternate path: innovating.

Duh....!! Of course they do. They are the best frenemies on the planet. What we never know is the extend of the cross licensing deals. I don't know what will happen to the "friendship" post W8-WP8 releases, If you are talking about the patent-crazed Apple which basically files patent for every single one of their designers' wet dreams, well Microsoft is so full of this madness too. A bunch of features and software implementations found in UNIX and miraculously showed up in Windows had been patented by Microsoft, and the best example is sudo.

$30 only sounds like a lot if you were looking at the price someone was paying... subsidized with a 2 year contract and not the full phone price.  $30 per phone does not mean an increase of $30 to buy the phone... it would be partially increase, and Mobile Networks would end up covering it probably by adding some other hidden little fee over the life of a 2 year contract making it barely noticeable.

 

 

Yes. 

To be clear, the only evidence of there being an "Apple Tax" only applies to vendors, not customers, and doesn't apply to any Apple products.
Edited by SolipsismX - 8/10/12 at 9:15pm

 

Bullshit, model for model i.e. 16, 32 & 64GB the SIII is exactly the same RRP as the equivalent iPhone 4S.

 

Quit with the myths.

THe only problem with your train of thought is if Apple was only interested in licensing the patents that they are currently said to be using from Samsung.  The deal might have been for every mobile patent (both SEP and non SEP) that Samsung has.  Which changes that rate for currently used patents dramatically.

True, Samsung does match their flagship models the same to the public but when it comes to what Apple sells their devices to carriers Samsung et al. can't command the same wholesale prices. The problem comes down to the desirably of the devices. Consider that carriers pay a huge premium to get the iPhone and then spend all that effort to deter customers from buying it.

It seems backwards but it does make sense when you consider that the iPhone has such a huge mindshare that just having them for sale will bring in those customers will are not on the fence, and when you look at the US numbers for sales the iPhone is doing phenomenally well despite the attempts by carriers to make up the wildest claims against. If they can get you to buy a Samsung phone you'll probably buy a new phone within a year and that carrier will save at least an additional $100 on the subsidization cost of the handset. it's a win-win. Some of the trolls here should take some pointers from the Verizon, Sprint and AT&T retailer staff.

Can we get a prediction of how many posts there are going to be in this thread about how it is hypocritical for Apple to bemoan a 2.25% licensing fee when they're asking for 30%, all the while completely missing the difference between standards-essential patents and regular patents? Any guess?

It's not 30% it's $30. It's fair across the board. There is no scale based on the retail price, just a Non-Disrimatory cost for using certain patents. I won't say Fair or Reasonable because I don't think there is enough to know if Apple ever expected the vendors to take it or if it was just a starting point for what would be a lengthy legal battle.

If Samsung loses the suit and pays the $2.5Billion, it must still stop infringing the patents or take a license. There will be a continuing cost for Samsung going forward, either in loss of revenue from reduced functionality of their products, or license fees.

Apple to Samsung: We tried to offer you a fair deal where we could both benefit but you are forcing us into litigation!

Samsung to Apple: PSHH bring it on we have amazing trial lawyers, see you in court!

Samsung's Legal Rep: No lets hear what they have to say *nervous laugh*

Samsung to Apple: We have heard enough!, we will destroy you in court!

Samsung's Legal Rep: *sweating nervously* can I umm speak to you in private....

Samsung to Apple: our Legal team will crush you!

Apple to Samsung: our legal team is pretty good too.

Samsung's Legal Rep: *chokes on his water while uncontrollably urinating* I need to go!

Samsung to Apple: See how eager he is! you stand no chance!

and from the damage to their reputation, no one likes a cheater

 

All the bandwagon jumpers, probably made up of ex-Nokia Fanboys who used to frequent sites, usually outside the US, seem to adore Samsung's cheating heart, like parasites who latch on to any substitute once their host has died.

 

Secure in their sheeplike flock, they seem to delight in throwing their weight around.

 

That, and the 'anyone but Apple' brigade, who will bash, trash, and mock any new Apple product, then when the competition realizes what the hell is happening and starts producing some shittily built and thought-out knowckoff, they'll run to champion that device as the best thing ever, and being so superior to Apple product X, pretending they never trashed the entire concept in the 1st place. 

Don't forget they change their argument about new features as being stupid and pointless to being obvious and self-evident.

I don't think you need to say fair or reasonable at all. It would seem to me the Apple patents aren't essential to meet standards. Between Apple and Samsung in this case, it would be purely a commercial matter.

It's interesting to see that Apple did offer licensing terms, rather than flat out refusing to license their technology. I don't think that ever been reported before.

 

Two things stand out though:

 

1) $30 per unit is an extremely high figure for a set of patent licenses. It could be argued that Apple intentionally set the bar so high to deter other companies from agreeing to the deal.

 

2) Wasn't one of the points raised in the Apple vs. Nokia case that Nokia wanted a cross-licensing deal and Apple refused? That's how it was reported on AI. 

Not many, because if you re-read the article, a little slower this time, it says "According to court documents made public on Friday, Apple in 2010 offered Samsung a $30 per smartphone/$40 per tablet license deal for use of the Cupertino company's patents. etc..." Apple wasn't asking for 30% of the retail price.

 

$30 to license "the rectangle with curved corners". No wonder Samsung turned it down.

I wonder if Samsung can claim insanity to avoid penalties.

 

The masses are too stupid to remember anything past the current day.  They will be onto the next "crisis" spoon fed them by the corporate news/government propaganda machine and lap it up like a dog licking ice cream off the floor.  Unfortunately, outside a few free thinking people with a mental capacity beyond a lab rat, the masses will continue buying the cloner Samesung/HTC/Nokia/<insert generic cloner company> rip offs

Typo.

I also get the impression that many MS "fanboys" have embraced Android in general as a surrogate while MS attempts to gain traction in the mobile space, probably so they can continue hating Apple. These are the people who claim the Win8 tablets will destroy the iPad.

Actually, since Apple has destroyed so many once-huge platforms, there are many "refugees" who have embraced Android: Nokia, Blackberry, MS...

Thank you for the correction. Pretty sure it was a typo, although I was half asleep whilst posting, so...

Apple has no obligation to be fair or reasonable regarding proprietary intellectual property that has not been declared essential for an industry standard. I'm guessing Apple would prefer Samsung simply refrain from using their tech, but then again this shows the age old adage true: everything has a price.

Sure, been there. I speed read through most tech articles and forums these days so I certainly miss things, too.

[/QUOTE]Apple has no obligation to be fair or reasonable regarding proprietary intellectual property that has not been declared essential for an industry standard. I'm guessing Apple would prefer Samsung simply refrain from using their tech, but then again this shows the age old adage true: everything has a price.[/quote]

Yeah, I didn't mean to imply they would need to be FRAND. I was just breaking down the acronym's to its constituent parts to show that Apple may not have made this offer because they thought the licensing would be fair or reasonable but because they were planning for a court case all along. If anyone planned ahead it's Apple.

Apple is well-aware it has standards-essential IP, but chooses not to license it anyway. That's according to Boris Teksler, Apple's director of patent licensing. 

 

"According to his testimony, Teksler noted Apple held patents required for standards, core computing and those associated with what has become iOS. Apple is not interested in licensing the patents. . ."

 

Are you trying to look at it from their perspective, or is this what you actually believe?

That's certainly an argument that one could make but I certainly can't make that determination at this time. I do wonder why Samsung, Google et al. haven't been fighting for Apple's patents to be FRAND. Isn't that something that the SSO* determines?

Let's remember that the iPhone was only announced less than 6 years ago. I have to assume that the SSO might see inventions as having a healthy grace period for the inventor even if it is so revolutionary that it's the only feasible way to proceed moving forward.



* Or is that FRAND-McNally?