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Technology Stocks : Qualcomm Moderated Thread - please read rules before posting
QCOM 172.72-4.4%Nov 4 3:59 PM EST
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To: Qurious who wrote (146643)5/29/2018 5:53:11 PM
From: Jim Mullens10 Recommendations

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Curious re: QCOM IP / royalty business model .................

Art, are you aware of any other supplier of parts for a handset -- or, for that matter, a PC -- which charges a royalty for its IP based on the construed value of the entire device? Does Intel do that for its cpu's? Does ARM? Does MSFT do that for Windows? Everyone of them also claims IP in the parts it sells. This is how the industry works as far as I am aware. If I am remiss, correct me. Based on what I know from my experience in in this industry, Q is the exception, hence all the problems they've had with regulatory bodies and disgruntled customers.

>>>>>>>>>>>>>>>>

It’s my understanding in the early days of the cellular industry when MEN (Motorola, Ericsson, Notkia) ran the show, charging royalty based on the price of entire device was the modus operandi. It’s been said they effectively restricted competition by assessing outsiders upwards of 20% royalties to enter the market while MEN crossed licensed each other to negate their royalty costs. That all changed in 1999 when QCOM prevailed in its WCDMA / UTMS litigation against Ericsson, breaking the MEN domination and permitting others (Asians) to enter the cellular marketplace. Charging royalty at the device level with separate and distinct contracts for cross-licenses, etc. is how the cellular industry has operated for over three decades.

QCOM didn’t invent the device royalty model, it perfected it while reducing the restrictive rates / terms so others (Samsung / LG/ Sony / Kyocera, etc. could enter the market.

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