I see. So when it's Cadillac, they get a portion of just the component involved. But when it's Apple, they get a portion of the entire device.
Can you say 'hypocrisy'?
It's even worse than that JR. That On-Star device doesn't even have to be using a single piece of Qualcomm hardware for Q to get a piece of the action. Here's an eye-opener.
Apple sold about 125M iPhones (I think) and some substantial number of cellular iPads last year. Based on Qualcomm's licensing terms as stated by Qualcomm themselves and generally confirmed from financial statements and independent examination, Apple would have sent them close to $1 billion dollars in just royalty payments. Approximately 3.1-3.3% of the perhaps conservative $200+ build cost or nearly $7 for the cheapest entry-level iPhone. Their higher spec'd models would send even higher royalties to Qualcomm's bank. That's not chipsets or other hardware either, just royalties.
So how much would Apple have been required to send Qualcomm if they didn't use a single component from them? That same nearly $1 billion dollars, a 3%+ royalty on every iPhone or iPad Apple had built that used Qualcomms standards-pledged IP. . Shocked yet?
I see. So when it's Cadillac, they get a portion of just the component involved. But when it's Apple, they get a portion of the entire device.
Can you say 'hypocrisy'?
I can say, "bad analogy"
I think that most people understand that there's a huge difference between a product like a radio or GPS or phone, and a vehicle (which is a totally different product) that it is mounted in.
Heck, there's a good probability that Qualcomm supplied chips and code for radios used on the ISS. We would expect them to collect royalties on the radios, but not on the space station.
Common sense.
--
Look, we all know what you're trying to say, so just say it plainly instead. For instance:
Some people blindly repeat the notion that royalties should be based on the ever changing price of a piece of silicon, instead of on the actual IP used to run that silicon. That makes no sense except to a licensee selfishly wanting the cheapest royalty payment possible.
Now, if someone said it should just be a set price not tied to anything, that would seem fair. Unfortunately it would also have a terrible impact on the world's populations, by making inexpensive phones impossible to build.
Billions of people rely on affordable phones, some of which make a profit as little as a few dollars per unit.. No way could the maker afford a fixed price royalty on that.
This is the reason why it's tied to price. Those who profit most, pay most. Those who sell for the least, pay the least. This spreads the cost fairly across everyone.
This scheme has demonstrably worked incredibly well. Cellular adoption has exploded and almost everyone in the world has a phone now.
This has also allowed newcomers like Apple, who invested nothing into the infrastructure for decades, to come in cold and make a hundred billion dollars in a few years. That's an incredible result.
You cannot argue with success, but if you can think of another royalty method that would likewise compensate the IP owners and support cheap phones, please let us hear it.
This has also allowed newcomers like Apple, who invested nothing into the infrastructure for decades, to come in cold and make a hundred billion dollars in a few years. That's an incredible result.
But their success isn't due to the cellular option I think. It's all in the software, Steve even said so (AllThingsD 2000something). Sure, the iPhone is a big hit, but I'll bet if they didn't release the iPhone but 'merely' the iPod touch that would be incredible successful as well.
With iOS and the AppStore they created something no one dreamed possible. Look at MS; they didn't start from scratch to build WP8. Apple did, completely customizing the software to the needs of the hardware. The reason they make millions of the iPhone is probably due to the monthly payment people make who buy it on contract. Hidden costs, if you will.
A bit contradictory post, but I'm in a rush. And I'm sure you get what I mean.
That's what I understand too from researching it for myself. Qualcomm charges an on-going per-finished device royalty, currently estimated at something north of 3% of the bill of materials plus a one-time licensing fee for access to Qualcomm's IP.
Right, Apple pays Qualcomm for the chipset, and then also a royalty that is calculated by the wholesale price. However, supposedly Apple made a deal with Qualcomm where the wholesale price used for the calculation, is what Apple pays Foxconn (~$240), not what retailers pay Apple.
As for the previous question about basing royalties on the whole device, here are some more references to that practice (and to cross-licensing):
Keep falling back on ONE analysis by Dean Pinkert. That's an opinion filed by Dean Pinkert, one of the ITC's SIX commissioners.
Which might even have been interesting, were it not for the fact that the five other commissioners thought his reasoning was total BS, and even gave a substantial explanation of just why it was bollocks in the final judgement.
There was no reason that Samsung should have made any 'effort to demonstrate that the licensing terms it offered Apple "satisfied an objective standard of reasonableness."' Apple infringed, and the onus was upon them to demonstrate that Samsung refused to negotiate a FRAND licensing settlement, and the ITC concluded that:
The Administrative Law Judge concludes that the evidence does not support Apple's allegation that Samsung failed to offer Apple licenses to Samsung's declared-essential patents on FRAND terms with a side-order of irritation at Apple's arrogance: it is not enough for Apple to say that Samsung's license offer was unreasonable based on Apple's rationale.
Furthermore, Samsung didn't require licenses in return: it may, allegedly, have proposed negotiating a cross-licensing deal, but so what? As the ITC points out, " negotiations often involve a process of offer and counteroffer before the parties arrive at an agreed price."
In fact, the ITC concludes that Apple made no effort to negotiate:
Apple's evidence does not demonstrate that Apple put forth a sincere, bona fide effort to bargain with Samsung.
Remarkably, even though Apple complains that Samsung's license offer was not FRAND, Apple has not shown that, as a member to ETSI, it ever availed itself of the process and procedures of the ETSI under Clause 4.3 of the ETSI Guide on IPRs, which provides for mediation by ETSI Members or the Secretariat.
I'm no fan of SEPs myself, but just striking down judgements because they might hit your rich donors and lobbyists is crony favouritism at best, and in many countries would be called as the blatant corruption that it is.
The ITC is the only venue in the US system that can offer time-sensistive investigation of infringement of FRAND patents, and also the only venue where the public interest is as important as the private agendas of litigants: these are the reasons it exists at all. If Obama thinks that these functions are unnecessary then he could propose to lawmakers that they modify its authorising statues (effectively abolishing it) ... but he seems to prefer to act autocratically to protect his donors rather than offering any legal argument (as usual, one might even say).
As I look at Samsung getting a ban from the ITC, i am left to ponder (because of their approach and history in this case) if they actually bribed people on the ITC to get their end.
I certainly would not be inconsistent with their methods, in certain parts of Asia this is an accepted method of doing business... what keeps them from bribing officials on the US (or other countries) legal side...
There is a reason why i do not buy Samsung anything... i dislike the company's ethos and methods. Some people around me tell me the integration between products is fantastic but all this is moot when the company providing them to you can turn around on their deals... what makes you so special they won't do the same to you?
They turned their back on their biggest client (AAPL) and tried to get more money from an already considerably profitable association. They wanted more... now they have less... and less...
AAPL is not the meek company it was 20 years ago. AAPL can fight back, even giants like Samsung. Bottom line, we may end up seeing another smaller company rise and profit (TMSC) from their association with AAPL. Samsung, instead of renewing their patents with new technology and ideas is spending their money trying to milk a cow... in the end, they may end up with only the used straw the cow sat on...
Comments
It's even worse than that JR. That On-Star device doesn't even have to be using a single piece of Qualcomm hardware for Q to get a piece of the action. Here's an eye-opener.
Apple sold about 125M iPhones (I think) and some substantial number of cellular iPads last year. Based on Qualcomm's licensing terms as stated by Qualcomm themselves and generally confirmed from financial statements and independent examination, Apple would have sent them close to $1 billion dollars in just royalty payments. Approximately 3.1-3.3% of the perhaps conservative $200+ build cost or nearly $7 for the cheapest entry-level iPhone. Their higher spec'd models would send even higher royalties to Qualcomm's bank. That's not chipsets or other hardware either, just royalties.
So how much would Apple have been required to send Qualcomm if they didn't use a single component from them? That same nearly $1 billion dollars, a 3%+ royalty on every iPhone or iPad Apple had built that used Qualcomms standards-pledged IP. . Shocked yet?
Quote:
Originally Posted by jragosta
I see. So when it's Cadillac, they get a portion of just the component involved. But when it's Apple, they get a portion of the entire device.
Can you say 'hypocrisy'?
I can say, "bad analogy"
I think that most people understand that there's a huge difference between a product like a radio or GPS or phone, and a vehicle (which is a totally different product) that it is mounted in.
Heck, there's a good probability that Qualcomm supplied chips and code for radios used on the ISS. We would expect them to collect royalties on the radios, but not on the space station.
Common sense.
--
Look, we all know what you're trying to say, so just say it plainly instead. For instance:
Some people blindly repeat the notion that royalties should be based on the ever changing price of a piece of silicon, instead of on the actual IP used to run that silicon. That makes no sense except to a licensee selfishly wanting the cheapest royalty payment possible.
Now, if someone said it should just be a set price not tied to anything, that would seem fair. Unfortunately it would also have a terrible impact on the world's populations, by making inexpensive phones impossible to build.
Billions of people rely on affordable phones, some of which make a profit as little as a few dollars per unit.. No way could the maker afford a fixed price royalty on that.
This is the reason why it's tied to price. Those who profit most, pay most. Those who sell for the least, pay the least. This spreads the cost fairly across everyone.
This scheme has demonstrably worked incredibly well. Cellular adoption has exploded and almost everyone in the world has a phone now.
This has also allowed newcomers like Apple, who invested nothing into the infrastructure for decades, to come in cold and make a hundred billion dollars in a few years. That's an incredible result.
You cannot argue with success, but if you can think of another royalty method that would likewise compensate the IP owners and support cheap phones, please let us hear it.
Nope. I can actually confirm this.
But their success isn't due to the cellular option I think. It's all in the software, Steve even said so (AllThingsD 2000something). Sure, the iPhone is a big hit, but I'll bet if they didn't release the iPhone but 'merely' the iPod touch that would be incredible successful as well.
With iOS and the AppStore they created something no one dreamed possible. Look at MS; they didn't start from scratch to build WP8. Apple did, completely customizing the software to the needs of the hardware. The reason they make millions of the iPhone is probably due to the monthly payment people make who buy it on contract. Hidden costs, if you will.
A bit contradictory post, but I'm in a rush. And I'm sure you get what I mean.
Quote:
Originally Posted by Gatorguy
That's what I understand too from researching it for myself. Qualcomm charges an on-going per-finished device royalty, currently estimated at something north of 3% of the bill of materials plus a one-time licensing fee for access to Qualcomm's IP.
Right, Apple pays Qualcomm for the chipset, and then also a royalty that is calculated by the wholesale price. However, supposedly Apple made a deal with Qualcomm where the wholesale price used for the calculation, is what Apple pays Foxconn (~$240), not what retailers pay Apple.
As for the previous question about basing royalties on the whole device, here are some more references to that practice (and to cross-licensing):
You guys really don't understand the case...
Keep falling back on ONE analysis by Dean Pinkert. That's an opinion filed by Dean Pinkert, one of the ITC's SIX commissioners.
Which might even have been interesting, were it not for the fact that the five other commissioners thought his reasoning was total BS, and even gave a substantial explanation of just why it was bollocks in the final judgement.
There was no reason that Samsung should have made any 'effort to demonstrate that the licensing terms it offered Apple "satisfied an objective standard of reasonableness."' Apple infringed, and the onus was upon them to demonstrate that Samsung refused to negotiate a FRAND licensing settlement, and the ITC concluded that:
The Administrative Law Judge concludes that the evidence does not support Apple's allegation that Samsung failed to offer Apple licenses to Samsung's declared-essential patents on FRAND terms with a side-order of irritation at Apple's arrogance: it is not enough for Apple to say that Samsung's license offer was unreasonable based on Apple's rationale.
Furthermore, Samsung didn't require licenses in return: it may, allegedly, have proposed negotiating a cross-licensing deal, but so what? As the ITC points out, " negotiations often involve a process of offer and counteroffer before the parties arrive at an agreed price."
In fact, the ITC concludes that Apple made no effort to negotiate:
Apple's evidence does not demonstrate that Apple put forth a sincere, bona fide effort to bargain with Samsung.
Remarkably, even though Apple complains that Samsung's license offer was not FRAND, Apple has not shown that, as a member to ETSI, it ever availed itself of the process and procedures of the ETSI under Clause 4.3 of the ETSI Guide on IPRs, which provides for mediation by ETSI Members or the Secretariat.
I'm no fan of SEPs myself, but just striking down judgements because they might hit your rich donors and lobbyists is crony favouritism at best, and in many countries would be called as the blatant corruption that it is.
The ITC is the only venue in the US system that can offer time-sensistive investigation of infringement of FRAND patents, and also the only venue where the public interest is as important as the private agendas of litigants: these are the reasons it exists at all. If Obama thinks that these functions are unnecessary then he could propose to lawmakers that they modify its authorising statues (effectively abolishing it) ... but he seems to prefer to act autocratically to protect his donors rather than offering any legal argument (as usual, one might even say).
You know what I love about Gatorguy and KDarling?
Their posts on this site don't change a damn thing in the real world. And they know it.
Send it to the President, boys.
The veto has been enacted and, regardless of how you try to spin and deceive, Samsung has failed. Yet again.
But keep supporting them.
The failure suits you both.
I certainly would not be inconsistent with their methods, in certain parts of Asia this is an accepted method of doing business... what keeps them from bribing officials on the US (or other countries) legal side...
There is a reason why i do not buy Samsung anything... i dislike the company's ethos and methods. Some people around me tell me the integration between products is fantastic but all this is moot when the company providing them to you can turn around on their deals... what makes you so special they won't do the same to you?
They turned their back on their biggest client (AAPL) and tried to get more money from an already considerably profitable association. They wanted more... now they have less... and less...
AAPL is not the meek company it was 20 years ago. AAPL can fight back, even giants like Samsung. Bottom line, we may end up seeing another smaller company rise and profit (TMSC) from their association with AAPL. Samsung, instead of renewing their patents with new technology and ideas is spending their money trying to milk a cow... in the end, they may end up with only the used straw the cow sat on...