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Comment by Analemma_ | Hacker News Reader

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?

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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.

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