Apple's Qualcomm Masterstroke
Last month's settlement between Qualcomm and Apple came as a bit of a surprise - but now that the dust is settling down and more details of the transaction and the environment are emerging, there is some clarity on the matter.
Most people assumed that Intel bowing out of 5G had more to do with this settlement than anything else - because it exposed Apple to being cut out of 5G. However, stories of Apple's own plans for 5G have since come out, which means it is just a matter of a year delay for Apple - not significant enough to prompt them to settle.
However, there is another dynamic that is slowly emerging. There is parallel litigation against Qualcomm by the US Government - and Apple had no need to do the heavy lifting on its own, when the DOJ was expected to do a better job of it.
The more important thing for Apple was cross-licensing of Qualcomm's entire portfolio. With this settlement, Apple has a comprehensive 8 year (6+2) cross license, that Qualcomm can't easily wriggle away from. Apple has made monetary commitments, but the expectation is that as the DOJ case against Qualcomm proceeds, the financial terms will change significantly in favor of Apple anyway. And once Apple is ready with its own 5G modem, it will be able to use that without any fear from Qualcomm's legal threats.
Apple has actually pushed Qualcomm into a corner where it managed to get something very valuable for itself, while still having a good shot at lowering its payments to Qualcomm, and lowering its legal costs as well.
Most people assumed that Intel bowing out of 5G had more to do with this settlement than anything else - because it exposed Apple to being cut out of 5G. However, stories of Apple's own plans for 5G have since come out, which means it is just a matter of a year delay for Apple - not significant enough to prompt them to settle.
However, there is another dynamic that is slowly emerging. There is parallel litigation against Qualcomm by the US Government - and Apple had no need to do the heavy lifting on its own, when the DOJ was expected to do a better job of it.
The more important thing for Apple was cross-licensing of Qualcomm's entire portfolio. With this settlement, Apple has a comprehensive 8 year (6+2) cross license, that Qualcomm can't easily wriggle away from. Apple has made monetary commitments, but the expectation is that as the DOJ case against Qualcomm proceeds, the financial terms will change significantly in favor of Apple anyway. And once Apple is ready with its own 5G modem, it will be able to use that without any fear from Qualcomm's legal threats.
Apple has actually pushed Qualcomm into a corner where it managed to get something very valuable for itself, while still having a good shot at lowering its payments to Qualcomm, and lowering its legal costs as well.