Why Qualcomm won – and why Tim Cook had to eat humble Apple pie The dramatic peace treaty between Apple and Qualcomm is good news for iPhone buyers, but raises questions about the market's ability to produce a viable competitor to the 5G leader – at least in the short term. Simply put, Apple blinked first. Other customers have balked at Qualcomm's royalty structure, and even its own …
why sad? It could be worse... it could be Huawei [and if they play their sueballs right, it could spell a LOT of trouble for Q and Apple as well].
I saw no mention of the Huawei+FTC lawsuit regarding Qualcomm. There was an El Reg article a while back...
https://www.theregister.co.uk/2019/01/08/qualcomm_in_antitrust_epic/
yeah let's keep 5G tech controlled within the "5 Eyes". Just because.
https://en.wikipedia.org/wiki/Five_Eyes
The settlement with Apple won't stop the FTC lawsuit. It has already been heard, and is awaiting a ruling. I suppose the FTC could always settle with Qualcomm and let them off the hook to prevent a 'bad' ruling for a US company. Since Apple is pretty much the only US company selling phones (Google sells a few million a year) if Apple indicates to the FTC they are satisfied with where things stand with Qualcomm this might even be possible.
Perhaps Apple telling the FTC "yah, we good now" was even part of the deal they made with Qualcomm?
The FTC's remit though is to keep the market competitive for consumers, not for major U.S. companies. So if you have a monopoly and it impacts U.S. consumers, you can still get dinged.
I don't fully understand the legalities of this, and there are exceptions. Famous old-boys-network and diamond monopolist De Beers avoided anti-trust actions in the U.S. for decades by not opening a single office or operation in the U.S. instead relying on middlemen to buy the diamonds in Europe or somewhere and ship them on to the U.S. However, its a lot harder for major tech companies/potential monopolists like Qualcomm, Huawei or Samsung to avoid having an actual corporate presence in the U.S. market. Qualcomm itself is of course HQ'd in San Diego.
I agree, yesterday's joint settlement does not affect the FTC's lawsuit against Qualcomm.
Also, saying that "Qualcomm won" is a bit ridiculous. The agreement between Apple and Qualcomm makes both companies winners.
First of all, the amount that Apple is paying Qualcomm as part of the agreement has not been disclosed, but as in all similar out-of-court settlements, the amount is likely substantially lower than what Qualcomm wanted.
Second, Apple is gaining quite a lot in this agreement. Qualcomm and Apple put out a joint press release yesterday, signed by contacts from both companies. What is interesting are the two bullet points at the top of the release:
1) Agreement ends all ongoing litigation, including with Apple’s contract manufacturers
2) Companies have reached a global patent license agreement and a chipset supply agreement
Point 1 announces that the agreement is not only with Apple, but also with "Apple’s contract manufacturers" (who were in litigation against Qualcomm with Apple, since they were being negatively affected by the "Qualcomm tax" and the double-dipping that Qualcomm was doing.). This agreement not only clears the way for Qualcomm and Apple, but also the various suppliers that were affected by Qualcomm's actions.
Point 2 states that as part of this agreement, Qualcomm is providing to Apple "global patent license agreement". This means that Apple now licenses Qualcomm's valuable technology patents (back dated to April 1, 2019), and that the licensing is fully international. This allows Apple to use these Qualcomm technologies in the creation of its own 5G chips, on which Apple has recently started development. This provides a shortcut for Apple to create their own 5G chip using Qualcomm's 5G technologies, in the same way that Apple has licensed technologies from ARM to develop the A-series chips.
In an article yesterday: "[Apple] is in the process of developing its own 5G chips for use in future iPhone models. Reports suggest Apple has between 1,200 and 2,000 engineers on the project, including recruits from Intel and Qualcomm, who are working toward a solution predicted to debut as soon as 2021." (And in the interim, Apple has a mutually agreed up contract with Qualcomm for them to supply their 5G chips for Apple's products)
It also appears that the money that Apple is giving Qualcomm will likely be reimbursed to Apple over the course of Qualcomm's supplier contract with Apple: "Apple paid a sum to Qualcomm as part of the contract, though the company could regain those funds in rebates if the agreement is structured after Qualcomm's typical contract terms."
Both companies win. The only "loser" here is Intel. Intel announcing today that it is stopping development of 5G chips (AFTER Apple acquired licensing of Qualcomm's technology patents), because Apple would have been its only client for those chips, but NOW (AFTER the agreement between Qualcomm and Apple announced yesterday) that prospect has vanished.
The only "loser" here is Intel. Intel announcing today that it is stopping development of 5G chips (AFTER Apple acquired licensing of Qualcomm's technology patents),
So will Intel be thinking of tossing a sueball over this? Sueballs seem to be the thing lately.
> Apple paid a sum to Qualcomm as part of the contract, though the company could regain those funds in rebates if the agreement is structured after Qualcomm's typical contract terms."
where is this coming from? It looks like it's straight from Apple fanboi site Appleinsider.com.
Why would QCOM offer this to AAPL knowing that suchrebates is what raised ire with regulators around the world and how AAPL tricked QCOM into legal/regulatory troubles?
One shrewd account holds that it was the other way around. Because Intel was getting cold feet about phones, it will have told Apple it couldn't guarantee the product needed, leaving Apple with no choice but to capitulate.
This is where my thoughts wandered as well. It just seems much more plausible that Apple was forced into Qualcomm's arms. Or maybe that's just what I want to be true, either way.
Disclaimer: not an expert in any way, shape or form.
“Intel gave them advance warning they wanted to quit.”
Apple patiently waited for Intel to deliver proof they could produce modems at the volumes required. After waiting ~6 months and realising they were still ~6 months from producing the evidence, Intel closed their modem business.
Given Intels financial health and potentially leaving an almost single vendor market, what could possibly have gone so wrong Intel can’t deliver something? Being around 15 months away from Apples 2020 launch, Intel should have been close to final silicon by now (ie final hardware fixes for test run giving preproduction silicon for final testing in August/September) - I’m not aware of any rumours around problems with the modem design.
I guess some of this may pan out in anti-trust investigations or litigation. But there'll be much lobbying and an interest to protect US tech companies from Huawei.
I'm also guessing Intel's 'C' types looked at the modem business's P&L, and the risks of doing business with Apple, and then attracting sue-balls from the likes of Qualcomm. Both of which seemed to have developed their supplier 'relations' by channeling Torquemada. So the relationships tend to be very one-sided, and no point Intel pumping millions into a business with a single major customer, who you just know is going to screw you to the floor.
Once they told Apple that there was no way that they'd meet the deadlines for the 2020 iPhones with their 5G Modems it was game over.
What it will do is spur Apple along with developing their own Modems then they'll be able to give QC the finger (Apart from paying them loadsamoney for their patent portfolio).
From other reports it seems that Apple has got excusivity on the 855 modem whereas all the Android mob will have to make do with the older 850.
I was looking forward to QC's double dipping being aired in a court of law. What am I going to do with all that Popcorn eh?
Apple is the only customer for Qualcomm's standalone modems, they always get "exclusivity" because everyone else buys them as part of a Qualcomm SoC. Apple will NOT use the 855 because that's a whole SoC, not just a cellular chip. Qualcomm will need to create a new product for Apple for next year that splits out the modem on the 855.
Even if Apple had been working with Qualcomm all along they would have never used Qualcomm's crappy X50 solution this year, they would have waited for the integrated version that didn't need a separate 5G chip. Same reason they didn't do LTE right away, they weren't going to compromise on a half baked solution that complicates design (notice how all the Android 5G phones are bigger than the non-5G versions?) and sucks the battery dry.
I'd be surprised if Intel actually told Apple explicitly that they couldn't deliver, more likely they were unable to show enough progress, and Apple read between the lines to realise that Intel couldn't produce 5G modems in time.
Possibly a too-honest Intel engineer told someone at Apple that they weren't likely to meet their deadlines, but I doubt it was an official communication.
Are still missing. Could it be that Qualy gave something up too, like some of those crazy double dip royalty rates - but just for Apple in a sealed settlement?
Leaving Apple competitively ahead...
Not saying I know something, other than that secret settlements often don't correspond to what gets reported by PR - and that's very much on purpose. One side gets to look a little off, but gets the money? Other side looks like a winner, but has to pay?
Given the amounts involved here, it could actually be Qualy "paying" a lot more in terms of reduced claims and prices going forward, in return for chump change and PR now, and there is no way to know. Just saying it wouldn't be the first such type of settlement I've been privy to.
No doubt each side had to give, the question is what and how much. We'll probably never know, usually CEOs involved in court cases don't want to disclose terms unless they achieve total victory.
Qualcomm's CEO refused to comment when asked how much Apple's payment will be, if it was the full payment Qualcomm says they were owed or close to it one would think he'd have no reason not to share it. He was happy to talk about the $2/share incremental that will result from Apple resuming purchase of modems from Qualcomm which gives a big clue (or will once the 5G modem Apple buys from Qualcomm is known as far as size/process etc.) as to what Apple will be paying going forward so it doesn't appear the deal imposed on a gag order on him.
We might be able to take a stab at it after Qualcomm and Apple's Q2 results are reported a few months from now, assuming the payment takes place immediately or at least before the end of June. Though there are ways to obsfucate it, should they choose to do so. Since Apple has been holding a contingency on their books for the amount owed, it might be easier to tease out from their results.
Exactly my point, thanks! And yes, financial reports may or may not reveal anything useful. I used to trade markets myself, and...GAAP has been out the window for a long time now. There always seems to be a way to shifty-shuffle things around even when looking like you're following the rules.
Money for ego might well be the norm in these sorts of deals...you win one, lose the other....
"...but just for Apple in a sealed settlement?"
In what universe of fair, reasonable, and non-discriminatory would any underhand agreement not lead both companies into a massive world of litigation when it emerged. And it would emerge, because at some point the two are going to fight again, and its who leaks first...
The patent owner is the only one required to license on FRAND terms, per the contract they signed when they took part in the standards process. Their licensees aren't covered by that because they weren't a party to that contract, so Apple wouldn't be in a "massive world of litigation" if they got more favorable terms than others.
Anyone that has watched and been with Intel any length of time knew that the Modem business wouldn't last. Intel doesn't do cell phones. They spent 4-6 BILLON on the the last phone adventure and sold it for 400-600 million because there was no money in it. Then they got back on to the modems(the hardest part of the phone which cells for cheap) and poured billions more into it. This stuff takes many many years to refine if you have a good design to begin with and if it's longer than 2-3 years, Intels' A D D kicks in and it's gone...
I seem to be missing sources for a lot of statements here:
>Apple didn't fold this week because of Qualcomm's aggressive counter-litigation strategy: going after Apple's supply chain partners and seeking to get iPhones banned.
If Apple's supply chain dries up as Qualcomm gets ITC to ban the imports, how can that not be a huge risk? Supply chains are hard as it is, just not much talked about. So how can you be so sure?
>It caved because Apple needs to keep making competitive iPhones, and in the short term that means they must have Qualcomm Inside.
Yet Qualcomm alleges that Apple throttled the Qualcomm modems and I cannot remember to have heard any complaints then. Why should this be a problem now?
>Apple was reportedly talking to Mediatek and Samsung for supplying 5G modem chips.
And how did that go? After all the second supplier issue remains still.
>"Intel has had enough of losing money on cell phone modems and is instead shifting its focus to integrating them into PCs and other data-centric devices," wrote analyst Richard Windsor.
Losing money on non-core projects is noting new for Intel, so why should this be an issue now? Does the analyst have sources we cannot see? Otherwise Intel "realigning" could equally well be a result and not a cause. If we are fielding theories it might as well be Intel not wanting to face the same treatment from Apple that Dialog and Imagination did.
So I am not saying the article is wrong, I am asking for the sources.
Anonymous since I have had a connection to one of the parties in the past.
Outside of marketing gee-whiz, does anyone actually *want* a 5G phone? 5G isn't about speed, it's about density. 4G provides plenty of speed. So it would seem that 5G is an evolution desired by carriers, not by consumers. Seriously, what is a 5G phone going to give you that you don't have already?
The press hasn't caught on to that fact yet. They seem to ignore that LTE is capable of over 2 Gbps itself, and the use case for even faster on a phone is non-existent - at least for the lifetime of any phones sold in the next few years.
Not to mention ignoring all the potential roadblocks there are with the mmWave frequencies required for the really really fast speeds being talked about for 5G. You will need to be surrounded by mmWave antennas on several sides to be able to use it with your phone, since your hand, a building's wall, or even a leaf can block those frequencies. In big cities, sure you will be able to do that, but outside of pretty dense urban areas it simply won't happen. The use case for 5G there is fixed wireless for internet access to homes via overbuild, not mobile use.
You beat me to it, was going to post the exact same question. Nobody is raising the question about what needs it fulfill or what "problem" it will solve. Unless 5G allows to have the same (and more) as 4G or LTE at a fraction of the cost (skeptical of that), I don't see any merit to it. Well, that's like the media buying the BS of Hyperloop, without doing any check whether this thing and Musk wild claims make any sense at all.
I heard stuff like "5G will make autonomous vehicles a possibility". Oh yeah?? Welcome to Newfoundland. What happens when you lose your network connection? Or "people want to stream on their phone!!!". Oh yeah?? In Canada, a medium-large data plan is a mighty 2 GB. With 5G, you get to enjoy a salty surprise by the end of the month.
"The ITU-R has defined three main types of uses that the capability of 5G is expected to enable. They are Enhanced Mobile Broadband (eMBB), Ultra Reliable Low Latency Communications (URLLC), and Massive Machine Type Communications (mMTC)."
In order to enable this ubiquitously, a 5g network deployment is needed and 4g transitioned out of, and as part of this additional capacity and bands (not just mmWave) can be deployed. The topology of a 5g network is different, so there is also the potential to deal with NIMBYs.
Cheaper and faster data is enabled by technology and market forces. 5g is the technology bit, market forces vary; for eg the FCC in America does a very poor job, leaving America with the most expensive data in the developed world (that was true for 3g, 4g and under Pai probably going to get worse). Canada is similar. https://www.cable.co.uk/mobiles/worldwide-data-pricing/. So the American experience does not translate or apply elsewhere, that is a local issue not a technology one.
Just as 2g billed by the kb, 3g by the mb, 4g by the gb, I suspect 5g will be billed differently, perhaps by the tb.
But haters gonna hate, it doesn't matter any which way. And that's fine, you'd keep using your 3g phone until you are the minority or see a reason to change.
Newfoundland? Try BC.
5 people/km2. Linking big cities: 1 North-South road on Vancouver Island, 1 N-S up to Prince George/Alaska. Then TransCanada East-West to Alberta.
Outside of those axes, urban and suburban areas, the rest devolves quickly to small secondary roads, often semi-paved and sometimes without any cell coverage.
I suppose we’re outliers of sorts but any full-autonomous, no human backup driving tech that relies on fast networks and/or thorough and frequent road mapping is going to leave a lot of white spots on our driving maps.
Not quite Silicon Valley VC country ;-). Positive upshot: doing offroad is a vanishingly rare requirement for $$$ SUVs.
If I could get REAL 4G on my entirely REAL 4G capable smart phone, I’d be quite happy. But I can’t.
REAL 4G is AKA LTE Advanced. Good luck finding any. In the USA it’s only available in a very few cities. Otherwise, all we can get is fast 3G marketing re-branded as ‘4G’, which it is not.
AT&T’s idiotic “5GE” doesn’t qualify as REAL 4G either! That’s the state of mobile networking in the USA. It’s shameful. My country looks like a hillbilly mobile network compared to other First World nations. This is the effect of corporatocracy where short-term thinking dumbass companies tyrannize We The People with their lazy, obtuse, predatory bad attitudes. This is Crap Capitalism wrecking my country (vs Quality Capitalism where everyone benefits).
Does your phone work acceptably today? Congrats, you don't need 5g or the inevitably rabid marketing and insanely high prices.
There's some indications it will have lower latency, higher speeds in dense areas like sports stadiums, and possibly some nice 5g-to-wifi handover features. But frankly, unless you download 4k qhd porn onto your phone in public spaces, there is no real product and it will eat your battery life.
Happy to be proved wrong, but so far this is the tech industry crying out for a new differentiator and journalists hoping for ad revenue. My phone will easily download 30mbs with 8GB monthly sim only contract for £17pm, its all need...
I loathe 5G because I know the cellular phone companies will spend money on that instead of money on improving their coverage area. What is the point of 5G if I cannot get 1G service in many places? With every mobile phone provider here in the US, I can take you to well populated places with no coverage. Sure, these area aren't cities; but neither is it in the middle of nowhere either. What is the point of a smart phone if I cannot use the phone part?
“Simply put, Apple blinked first“ <- No. Please try to keep up.
That ignorant statement ignores the fact that specifically Intel caused this travesty of monopolistic tyranny. Everyone loses but Qualcomm. They are a monopoly. This fact means there will be new legal ramifications.
Intel giving up on 5G tech explains Apple's sudden Qualcomm settlement
Intel said it will not launch 5G products for smartphones.
>>Everyone loses but Qualcomm.
I don't think Apple is losing here.
Remember that Qualcomm had declared in court they would not refuse chips during any negotiation. Apple could have used Qualcomm 5g chips anyway with an outstanding and prolonged "negotiation".
So the terms must be quite favourable to Apple.
Intel is arguably wise to leave the mobile space and avoiding a single point of failure in having one customer - with Apple it is a bad idea in the wake of how they have treated Imagination, Dialog, and even this Qualcomm drama (where it has been revealed Apple had *always* enjoyed far more preferential terms because of volume).
Also a single chip multimode modem is of little use outside of high throughput+small form factor (mobile, tablets), where it is also the evolutionary path from 4g. The iot, m2m, vehicular segments should be covered with single mode 4g/5g nr which Intel remains committed to.
BTW mediatek, huawei and samsung are alternative modem suppliers, just that their roadmap is different - I'd go so far as to say that the cellular modem is probably the most complex widely used consumer tech so rather expensive to get a lead on. the flagship consumer end of market and the cost associated probably does not make sense for them to invest in. b2b is preferred to b2c and huawei and samsung have spent here and are leading suppliers for 5g infrastructure.
There are many situations where the leading technology supplier is limited/exclusive to the point of market dominance - Intel, data centers cpu. Google and search, facebook and social n/w, ...
It's important to differentiate a monopoly resulting from a technology advantage against antitrust behaviour (which is what microsoft did by taking targeted steps to stop non-windows use and increasingly apple with the app store).
Im the biggest most profitable company - Qualcomm.
No I am! - Apple.
There seems to be a lot of corporate dick waving here.
However, as mentioned by the an earlier poster the company that comes out the worst, eating humble pie is Intel who, once again, have proven they really struggle to actually design silicon.
Sure, Intel were a winner back in the days when they could afford to marshall more n more capex to get those transistors smaller and those clock speeds higher.
However, transistors are not getting (economically) any smaller. And clock speeds are stuck around 3ghz.
Another incident where it shows that, outside of fabrication process, Intel are just shit.
Why 5G? Same reason you can't concentrate when there's a jackhammer outside being used to break up concrete. Your brain/mind is also electric by nature. Create enough electronic noise in the world around you and your spirit and mental connection with God gets weakened and drowned out more. If you've ever felt that connection you will feel it and know it less immersed in a 5G environment. Blue Bloods that run things in this world actually believe 5G does that and so goes their race to promote it when when many tech people can't see a strong enough reason why we needed it.
"One of their tech recruiter is literally visiting any profile with baseband keyword inside to recruit EU folks in Munich."
... that's the way tech recruiters work now - stick in a few keywords into LinkedIn, find the search results and send the "I've an interesting opportunity I'd like to discuss with you" InMail messages ... given some of the ones I've had they clearly don't always bother read the actual profiles in any detail (e.g. recently despite my profile clearly stating I would be interested in a digital front-end design role near where I live I had a recruiter contact me about an analog job on the other side of the country!)
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