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Comment by guardiangod | Hacker News Reader

As a former worker at Blackberry(RIM) cellular chip division (hello fellow RCT-ees), this article explains so much it physically hurts me.

RIM pushed hard to develop its own chip 3G/4G chips because Qualcomm absolutely strangled the company with its licensing cost/terms. They pretty much demanded a separate cellular R&D team (QCT) that duplicates half the effort. All CDMA based phones must contain chips from QCT because Qualcomm holds CDMA patents and they won't license them to anyone. Finally, Qualcomm was, while very technically competent, will give you no assistance whatsoever if you deviate from what they want you to do. Basically 'my way or the highway.'

Edit: As an aside, my heart goes out to Intel's defunct Infineon-based 5G modem team.

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I know one person who works in that team. Said he was driving to lunch and heard the news that Apple and Qualcomm had reached a deal. So he buys a few Qualcomm shares (he sold them at peak!), gets back to work and then this e-mail shows up saying Intel is getting out of the 5G modem business. I'm paraphrasing here: "The sight of a whole floor of heads popping up from their cubes at the same time... what an experience!"

So everyone there is hoping that Apple buys them out.

My bet is that Apple buys Intel's modem parents and hires most of the staff from Intel that was doing modem chips. Apple already has a team that is likely working on this.

https://9to5mac.com/2019/04/03/apple-modem-iphone-intel/

Why would Intel sell that though?

Selling toast isn't easy when you let the customer borrow your bread and butter.

To put it another way, Apple took their ball and went home. No soup for them!

Intel has a track record of selling off assets that end up being valuable in the future.

Basically Intel is trying to give away their market share like IBM did.

FYI - IBM handed Microsoft and Intel a big chunk of market share because who would ever want a personal computer...

> IBM handed Microsoft and Intel a big chunk of market share because who would ever want a personal computer...

I believe it was because they needed a PC in a hurry. I have heard that Ken Olsen ridiculed the IBM PC for its crude design, but it was the beginning of the end for DEC.

> I believe it was because they needed a PC in a hurry.

That's a much better explanation. They made the entire thing in a year, and 90% of it was made by outside vendors. I think both of these things, long-term, contributed to its success.

>Qualcomm's first weapon against competitors: patent licensing terms requiring customers to pay a royalty on every phone sold—not just phones that contained Qualcomm's wireless chips. This gave Qualcomm an inherent advantage in competition with other chipmakers. If another chipmaker tried to undercut Qualcomm's chips on price, Qualcomm could easily afford to cut the price of its own chips, knowing that the customer would still be paying Qualcomm a hefty patent licensing fee on every phone.

And that was just the start. Fantastic article. Qualcomm, man, just evil business practices that worked for a decade and may continue depending on appeals.

And if Ericsson, Huawei, Samsung, or ZTE had offer a modern modem, it would be the same.

I don't think Qualcomm strangled RIM with their 3.4% (peak!) licensing fee on the selling price of the phone. If RIMs profit margin was 3.5% they had bigger problems.

Here is the thing. If Apple sold a 2G network based iPhone with a non Qualcomm IP modem, and a 4G iPhone at 2x the price with a Qualcomm modem, which one would make more money for Apple?

Why should the price of the phone matter to Qualcomm? Did they have anything to do with the CPU, screen, memory or battery?

It doesn't and it also doesn't matter. There are lots of license agreement, in tech or not that takes a percentage of your selling price.

And if it wasn't a percentage, it will be a fixed price for everyone, while it may sound fair, all of a sudden everyone selling a phone would be paying in total ~$50 to Patents license. That might not matter to higher end phones, for the lower spectrum that is a huge increase in Total Cost.

I 100% agree with you but those were among the abusive terms

> Did they have anything to do with the CPU, screen, memory or battery?

Sure, without QCOM's IP, other non-wireless parts of the phone won't add/contribute as much value or drive market demand for the phone.

Ehh, the original cellphone patents had already expired at that point. QCOM’s IP had arguable direct value only representing improvements to existing tech.

Their business model existed largely via the mismatch between cellphone companies and wireless carriers.

Yea, my point exactly. All the recent IP covers improvements since 2G. Apple can try to sell a 2G network connected iPhone based on expired IP without the Qualcomm tax.

Free market pricing is based on demand of the feature not the cost to make it. Qualcomm should be pricing the part at the point where the phone without the qualcomm part is equal value per dollar.

If a monopolist (or dominant oligopolist) charges too much, it would encourage competitors, at least if they don't have a stranglehold through patents. There may be a sweet spot where the "free market" allows them to remain a monopolist.

Patents don’t last forever, and there are a dozen ways to solve each problem.

Apple is sitting on 200b in cash. What would be great for consumers if they spent some of their cash on 6g networks before they turn into a sovereign wealth fund.

Apple is not a carrier and they don’t own spectrum. So, they would need to buy one expand 6g networks.

Anyway, such verticals integration is unlikely to be good for consumers.

Qualcomm doesn’t own spectrum either. Apple should be investing in tech, not in cash. It’s crazy to think of tech companies sitting on that much cash. At this rate, apple will have 1T in the bank in 15 years.

But they're adding a fixed amount of value regardless of the phone, and so they should get a fixed sum per phone. This business where they get a percentage of the retail price is ridiculous.

Consider the 64 GB iPhone XS selling for $1000 vs the 512 GB one for $1349. Is Qualcomm adding any extra value to the second phone as compared to the first one? Obviously not, so why should they capture any of the extra purchase price?

At least for the license with Apple, it was capped at the first $400 of the phone. I.e. it was a flat rate for virtually all iPhones.[0]

For the industry at large it was $500 (now $400) [1]

https://fudzilla.com/news/mobile/47691-apple-qualcomm-licens... [0]

https://www.reuters.com/article/uk-qualcomm-licensing/qualco... [1]

I believe there was no flat rate. I think during the first FTC trial, it was revealed that Apple paid on average $7.50 per device, or ~$230 (Foxconn's wholesale price for iPhones) x 3.25 = $7.50

If they just charged a flat rate then no low end phones would use their tech as it would eat more heavily into their profit.

On the other hand, consider a video call on the iPhone XS with v.s. a $50 phone with a low resolution screen. The value of a high bandwidth internet connection is higher when the screen allows you to perceive the difference.

That doesn't seem like a reasonable way to price things. It's like Apple charging companies a percentage of all revenue made using their Macbooks

Reasonable way to price things when neither the seller nor buyer are under duress is to for them to an agreement. It doesn’t matter if it’s % of revenue or flat, if they both came to an agreement, then it’s reasonable.

Exactly. Or Apple charging a percentage of all in-app purchases.

> Consider the 64 GB iPhone XS selling for $1000 vs the 512 GB one for $1349.

Sure, first, QCOM licensing fee only applies to the first $400, which is in turn also based on the wholesale, not retail, price from Apple's contract manufacturers.

second, without QCOM, Apple wouldn't be able to price the iPhone XS at $1000 (or the iPhone 7 at $550), much less sell nearly as many units. Would you even consider paying $550 for the 128GB iPod Touch, which is essentially at feature parity with the iPhone 7, but without QCOM's IP?

What a ridiculous argument. Without the OLED screen Apple wouldn't be able to charge $1000 for an iPhone either. And I bet those $1000 that not one of apple's customers, not a single one, bought an iPhone instead of an iPod touch because it had a Qualcomm chip in it. Even in later years half of iPhones include an Intel chip not a Qualcomm one; it has made zero difference. 99.9% of customers don't even know Qualcomm is a thing a won't care if you told them.

> 99.9% of customers don't even know Qualcomm is a thing a won't care if you told them.

Sure, QCOM is not a marketing/consumer electronic company they way Apple is. Your 99% of consumers buy the iPhones over the iPod because of QCOM's wireless functionality, not because of their branding.

And how many of those 99% of consumers do you think would pay $1000 for a OLED iPhone XS without QCOM's patented wireless features that allow to make phones call or data? Or how many would pay half the price? or even a third? The iPhone 7 without OLED, the most popular selling iPhone in many countries, still costs at least twice as much as comparable iPod Touch and sells multiples of the unit sales of the iPod touch.

Yes, because the value of the 512gb without the qualcomm modem is lower than the 64GB version.

Free market pricing is based on demand of the feature not the cost to make it. Qualcomm should be pricing the part at the point where the phone without the qualcomm part is equal value per dollar.

I’m pro patent and copyright law. But they are, by strict definition, government sanctioned monopolies. There ain’t nothing free market about this licensing situation.

It’s even worse in this case. For Qualcomm’s patented IP to be a part of the standard they agreed to license it on FRAND. They didn’t.

They did, it is just whether it was fair or not was up to debate.

Yea. For sure. Apple should be encouraged to spend their 200b in cash on an alternative instead of lawyers.

I’m sure they would love to. The billions they’ve paid in licensing fees is more than it would cost to actually make themselves.

This is the problem with mandatory standards and patents that cover those standards.

If it cost apple less to build improvement into 5G that would have been licensed to everyone they would have done so.

Standards require all participants to license at a FRAND rate. If apple developed 5G IP they would have effectively received a rebate based on the relative impact of their contribution.

Qualcomm actually has great execution. You realize 5G is going to put a 1 gigabit network in the palm of your hand? I can’t even get that out of cable.

> Standards require all participants to license at a FRAND rate.

Clearly you didn’t read the article. There’s an entire section about Qualcomm not issuing FRAND licenses.

@aey used to work at Qualcomm according to their resume. So, take that for whatever you think it’s worth.

Yep, worked at qcom. I think they should charge what the market could bear, like apple charges consumers :)

They haven’t lost a FRAND case yet.

In the ideal world the phone would be like a PC, and you could buy an iPod touch from apple and swap in the qualcomm 5g modem or the intel one.

Apple pays qcom $14 bucks for the modem. In the PC world I think qualcomm would be able to price theirs closer to 50 compared to intels.

Meh, 1Gbps over cable is nothing, really. Switches with 10g uplink ports cost almost nothing now. Problem is that most software and hardware on user’s side can’t deal with that speed :) 5G smartphones probably won’t be able to give you 1Ggps either.

I just moved, and I have access to 1gbps fiber at my home for $50 a month vs a severely crippled 100mbps from comcast for $120 a month two blocks away. So land internet is not free, and 1gbps is rare.

Qcom charges Apple $14 bucks for the modem. That doesn't sound crippling or unfair or unreasonable. I think if consumers had the option to buy an ipod touch for 500, then add the modem like you do with a PC no one would be buying a fully integrated device from Apple for 1000.

I worked at Qualcomm, so take this with a grain of salt. But I find it laughable that Apple is complaining when they can sell the exact same thing at 2x the price by just adding a $14 dollar qualcomm modem.

I suspect that the fact that those were the only choices is a result of Qualcomm’s abusive licensing.

They have other problems, that's for sure.

But if you need to give Qualcomm money for the 9000 Bold (in house stack, no qualcomm at all, GSM, and sold around the world), because you need to license it to buy the modem for the 9670 Bold (CDMA, sold in select market, and CDMA use was minimal elsewhere), then out of the 99 problems you've got, Qualcomm is one of them.

RIM sold more 9000 than 9670. In its heyday, the GSM stuff is everywhere, but needed to keep the CDMA for NA and a half-hearted attempt to enter China.

>I don't think Qualcomm strangled RIM with their 3.4% (peak!) licensing fee on the selling price of the phone. If RIMs profit margin was 3.5% they had bigger problems.

That entirely depends on what Qualcomm was charging RIM's competitors.

Im inclined to think that there is a third choice.

Yea. Apple can build its own. There is nothing wrong with them spending their 200b+ in cash on integrated modem tech.

Did they really 'strangle the company'?

Blackberry had a meteroic rise and they collapsed because of iPhone and (later) Android.

After reading about it particularly "Losing the Signal: The Untold Story Behind the Extraordinary Rise and Spectacular Fall of BlackBerry", I think guardiangod is correct, but also Verizon and, to a much lesser extent, the whole stock dating scandal. If Verizon hadn't been so gun-ho for an iPhone killer, Blackberry would probably of got to something like the Passport a whole lot faster. They needed to stay in their lane for a bit longer. Their market cap actually hit its max a year after the iPhone.

I wouldn't call RIM / Blackberry a meteroic rise. They start in the mid 90's and built up the products in a pretty smart way with each following the next until the total shift of the Storm.

The Passport was a phenomenal device, and nothing like it has been built since. Large square screen and big touch sensitive keyboard, but yet still super manageable due to its squat height... if there was a modern Android version I'd go for it in a heartbeat. Not great for watching videos, but it would be super for everything else.

The problem with the Passport was that it didn't have the Google store. 95% of developers couldn't be bothered to submit their applications to Amazon.

Not by default it didn't, but if you had any sort of technical know-how it was fairly easy to sideload it on.

> Not by default it didn't, but if you had any sort of technical know-how it was fairly easy to sideload it on.

And it was a super outdated Android runtime that ran like dogshit compared to the native BB10 apps.

Also, if you wanted any sort of Google Play services stuff, you had to have an app on a laptop/desktop to sign all your apk's the same and remove a specific check... and you'd have to do it all over again every time you wanted to update an apk with play services.

Not ideal.

I wonder if it's still worth using, despite the outdated OS.

If you don't need many apps and are okay with a web browser that hasn't received updates since 2015 or so, then sure. BB10 can run Android apps with its embedded Android runtime, but it's limited to 4.2 Jellybean (from 2012), so a frustrating experience. The BlackBerry App store is still running, but it's pretty much dead, with zero new development. All apps are free now.

It would make for a great email + basic usage phone, but not for media consumption. And the camera's not great.

I used a BlackBerry Classic that also ran BB10 until December 2017, and I still pick it up from time to time and wish I could still use it. The Classic is unique in that it has three independent input methods, all of which work super well:

1. Touch screen: the BB10 OS is actually designed for touch, with fluid and intuitive gestures. Swipe up to go home, swipe up and to the right to go to the notifications hub (reverse the gesture to just peek), swipe left to pull off a screen layer to go back, swipe down from the top to view the settings pane (standard place for settings in every app).

2. Optical trackpad and hard nav buttons, just like on old BlackBerries. You can fully control the phone without touching the screen (great for when you're wearing thick gloves during winter). Works super well for a mouse pointer in the browser. The trackpad even works reasonably well in Android apps, which weren't designed for it (presumably, it piggy-backed on the accessibility focus stuff).

3. Hardware keyboard: typing experience is great—not necessarily faster, but super precise, and no pop-up keyboard getting in the way. Every app is designed with keyboard shortcuts in mind, and the OS makes discovery super easy, so stuff like [C]omposing an email, scrolling to the [T]op of the page, or scrolling to the [N]ext page in a PDF are single click operations. Modern BlackBerries also have great keyboards, but since they run Android, they have none of the shortcuts (except app shortcuts).

I still don't see how in any way Qualcomm was responsible for or contributed to Blackberry's downfall. No doubt that Blackberry sent tons of licensing money to them, but that didn't seem to hold back their crazy growth rate. Neither did it seem to contribute to their downfall.

I can't get into details, but basically I agree with you. The Storm...was a product of many compromises. But it's only the start of a series of decisions that...

I dearly wish someone would explain the whole idea of why Blackberry built the Playbook. It seems like a product that was so forced with such a confusing development story.

Not sure how much I can share without giving myself away but...

As an active participant in Playbook's entire development from (near) start to end, there were multiple reasons. They weren't good reasons (most of my colleagues had, eh, concerns which got override,) but they somewhat made sense.

What happened was that multiple teams (internal and external) screwed up, so much so that the thing's internal was completely redesigned half way through development ie. Switched to a completely different SoC .

As another poster noted, their power supplies were great. I still have a couple left around my house. They had to be great partly because of a design oversight....

To give BB credit, the playbook was a '1st gen' device for that category, it's really only when compared to Apple, an amazing company with so much to leverage, that the Playbook was bad.

If they could have taken more time, it might have been better.

But the Playbook product did effectively expose the lack of depth, talent and relevant experience at RIM. I'm ashamed to say.

I worked with a VAR when that shipped. They gave us some to try and encourage sales. It was a terribly slow device with poor battery life compared to iPad.

I still use the well made power adapter (Micro USB) that came with it to charge devices to this day. Kinda sad seeing that blackberry logo and knowing the tablet was horrible.

I've heard that the Playbook was actually in development before Apple's iPad was announced, and after that it got rushed out. I don't remember where I read this (it was a couple of years ago), so I don't know how accurate that is.

I worked at RIM during the rise/collapse and would indicate the issues were mostly structural, cultural, and competitive.

BlackBerry was a small company up against the #1 product of the era (iPhone) and a 'free' competitor. Both companies are basically #1 and #2 brands in the world. They have very deep experience in all things, channels, money etc..

We had no 'mapping team' really, Google had 100 people.

iOS is from MacOS. BB had this ancient thing.

We were just a tiny company that got clobbered, but frankly, BB was culturally more like 'motorola' than an advanced, well run entity. BB could not compete.

RIM started in 1982, not in the 1990's. The 'rise' was quite meteoric when they decided to put email on your hip, and added a phone.

My wife got one of the last Blackberries for work a few years back. She had never had one so wanted to try.

Build quality was very poor. Overall experience was very poor.

She ran back to iPhone as soon as she could.

RIM died because their products were poor compared to the competition, it's as simple as that.

That's a good question. Yes, margins are low for most phones, most of the time. And cheaper modem chipsets would help with that. But if everyone had cheaper chipsets... then the phones would be a little cheaper. But I don't think that would have changed the competitive landscape at that time.

There was a fundamental change in phone capability and interaction that really shifted the market, and made new winners and losers.

I was a die hard Blackberry (my business phone, using a private iPhone) user, the last one perhaps in the large corporation I've worked for.

Then the Passport launched, LOVED the format, best format ever squared and large screen, beautifully fitting everywhere though being larger, loved the TOUCH keyboard, loved the unified messaging but had NO F* network connection ever. Just could't be called or call others. A second Passport the same. Then one got dropped and it totally broke internally, the "steel frame" didn't help in any way, I assume it contributed due to its weight and momentum.

That's like saying all of the US's problem is Trump.

Reality is often a bit more nuanced than that.

Patent licensing fees were a big part of the equation, which led to inability to lower costs to compete.

>Patent licensing fees were a big part of the equation, which led to inability to lower costs to compete.

Yes. OP asserted that too. Like OP, you haven't actually given a reason why. Here's some counter-arguments:

1) BB grew exponentially all the while paying Qualcomm licensing fees - why didn't it affect them then?

2) EVERYONE was paying the same licensing fees to Qualcomm. You couldn't build a smartphone connected to the cellular network and not pay those fees. So are you saying that it affected BB more than it affected Apple, Palm, MS, Samsung, etc. ?

BB phones, <= v7, are split between an internal gear without Qualcomm, and the CDMA capable stuff is with Qualcomm. So they would have to pay Qualcomm even for the phone with internal gear.

As to #1, around BBOS v5 and v6, when they were pretty much top dog, all the cellphone accounts that wants to use a BB pays a service-access fee, or a BlackBerry Tax that goes to the company. Enterprise companies that want their emails and everything else also pays for the BlackBerry Enterprise Server. They were practically the only game in town.

They didn't have problem then, because they were rolling in cash; just like how they didn't have a problem basically buying up Philips st expanding, or keep coming up with phone models even though there's no way that there's enough demand to actually absorb the production.

#2 on top of needing to deal with Qualcomm licensing fees, which often applied (as the article stated) on non-qualcomm phones, they basically freaked out after losing that lawsuit to the patent troll, so they end up overpaying for licenses (not sure who's the licenser in this case) to avoid getting hit with more patent trolls. The contracts for those licenses were quite hard to get out of. By the time they were making the BlackBerry Priv, they don't have the SAF to juice their income. Patent licensing, Qualcomm and others, were disproportionally high, compared to other Android providers. They can't renegotiate some of them due to the contract wording. Being 1% of the market means Qualcomm hardly cared to give support, because Qualcomm is far more likely to help Samsung and other android phone, that pushed out far more numbers than BlackBerry did at the end.

It ends up being that they end up licensing their brand, because had they manufactured their own phone, they'd have to deal with the patent licensing contracts that they can't get out from.

There's probably a reason why OP won't be too forthright in describing why. I'll leave that as an exercise to the reader.

To add, the SAF is not just a pure BlackBerry tax. Without getting too deep into it, there's stuff that needs to be set up with the carrier, and that's why BlackBerry push was a true push back in the day, without the phone burning through both battery and data. And when this gear malfunctions, you'd know, because you're not getting push at all.

They sipped battery and data, and once that gear is setup, the SAF was very profitable.

Even to this day, email is not the same level of instant.

Yup. And I remember how quickly all the press panned subsequent attempts, saying BlackBerry overcharged.

This is one big piece of that puzzle. I'd still kill to have a vertical slider for a phone...

I'd say Intel should just spin out it's 5G modem team and let a neutral (!Apple) vendor develop it.

Samsung should start selling 5G modems in NA as well. I know this stuff isn't going to work in the short term, but this is the sort of choices we need.

Semiaccurate has a rather interesting take here. TL;DR is that modems are very hard to make. Intel's modems were much slower and used much more power for last generation. They ran into issues and don't seem to even have a shippable 5g chip.

https://www.semiaccurate.com/2019/04/16/qualcomm-just-beat-a...

https://www.semiaccurate.com/2019/04/18/why-did-intel-kill-o...

Semiaccurate also said Intel's 10nm is dead. And Nokia was going bankrupt.

So please, please, stop bringing up SemiAccurate on HN.

Intel's 10nm was a failure. Cannonlake was a mostly broken chip. It's taken them a year and a half from shipping Cannonlake to starting to ship Ice Lake. The 10nm process Ice Lake is fabbed with is not the same process Cannonlake was fabbed with; Intel has disclosed a few of the changes that were made in order to produce a viable chip, but we won't know the full extent of the changes until TechInsights gets their hands on an Ice Lake chip.

Icelake was never meant for the 10nm used in Cannonlake, it was a 10nm+ part. 2nd the shrink is there, at least according to what just announced ( or picture shown ) in Computex by counting how many die on Wafers. 3rd They are shipping it, we don't know yield but we know they are shipping it at least in decent quantities.

And 4th, 10nm is not dead, Intel is not skipping it for 7nm. Nokia is not dead either. And it doesn't matter how anyone spin it, SemiAccruate is like tabloid of Tech Report, and to ensure the quality of news I personally believe it should serve no role on HN.

> Qualcomm holds CDMA patents and they won't license them to anyone

I thought chip-makers weren't required to license QCOM's patents -- QCOM like all other wireless SEP holders only collect licenses at system-level.

> They pretty much demanded a separate cellular R&D team (QCT) that duplicates half the effort.

They could have formed a joint venture with other manufacturers to split the development costs.

Qualcomm charges the same 4-5% patents price to license to EVERY manufacturer. You have no idea what you are talking about. They did a 3%(domestic sales) - 7%(exports) deal in China because it was a poor country in the early 2000's and they demanded it but Chinese makers later switched back to the 4-5% deal.

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