| | | Curious, re: QCOM IP / royalty business model .................
+ The difference is, unlike Q, MEN did net sell ICs which already embodied their IPs. Thus they licensed use of their IP on the device. Whether the royalty is fixed per device or calculated based on the construed value of the device is secondary to the method of license. TXN, by contrast, sold gsm modems, did they charge royalty on the device? Q is not MEN. Q is TXN.
+ Q is like TXN, Intel, ARM, MSFT. Q sells a set of ICs which embodies their SEP patents. The std practice afaik would have been to roll the patent royalty into those ICs. Of course, for manufacturers of similar radio ICs (Intel, Mediatek, Spreadtrum, Huawei etc.) then, yes, Q must license their use of its IP in those ICs. Device manufacturers, whether edge (handsets) or core (infra) pay for those SEPs when they pay for those ICs. This, I submit, is the std industry practice. Are you aware of any other company which sells ICs but licenses its IP separately on the end-user device, not their ICs?
>>>>>>>>>>>>>>>>>>>>>>>>>
+ TXN, by contrast, sold gsm modems, did they charge royalty on the device? Q is not MEN. Q is TXN....... Q is like TXN, Intel, ARM, MSFT. Q sells a set of ICs which embodies their SEP patents.
>>>>>>>
1) QCOM is like TXN only in that both sold chipsets for mobile devices. It’s my understanding that TXN was basically the chipset supplier to NOK, developed very little 3G IP itself while mainly working off of NOK’s cellular IP, and sold very few mobile chipset solutions to companies other than NOK. As such (minor 3G IP / NOK folding ) , TXN abandoned the baseband market in 2010. I don’t believe INTC, ARM, nor MSFT have developed any level of cellular IP close to the degree that QCOM has. As such, QCOM is unique unto itself as the pioneer for over 3 decades in foundational cellular IP and the foremost leader in the standards setting organizations driving the adoption of key 3G/4G/5G technologies.
2) Q sells a set of ICs which embodies their SEP patents.
Again, that’s not my understanding . As QCOM has stated, only a small percentage (<10%) of QCOM’s IP is embodied entirely within the modem, with the bulk contained in tandem with the modem and the device, and within the network infrastructure itself. Thus, if the IP royalty associated entirely within the modem were collected on modem sales, it would still be necessary to go to the inefficient and costly administrative task of collecting royalty on the device and infrastructure manufactures separately. This would be extremely burdensome on all parties, and unnecessarily drive up the cost to the ultimate consumer.
It appears to me that AAPL’s (& others) desire to apply royalty at the component level is purely to lower its overall QCOM royalty costs.
Do they really want IP royalty collected at the lowest component level.... on each the modem and all the ancillary front end parts (transceivers, power amps, power management, etc, etc.)? To take it to the lowest component level, is QCOM to charge its modem competitors and other component suppliers (Skyworks, etc) for using its IP a royalty?
If QCOM were to recover its ~8B QTL revenue on modem rather than device sales.---
+ Would that cost add-on be proportional to the modem’s sales price, or per unit regardless of price? If not proportional, a low cost modem could have its ASP doubled.
+ If proportional and if the average modem’s ASP is $15, the royalty would amount to 37%.
.......would that be acceptable? A high end state of the art modem’s cost (including QCOM’s) could be increased from $25 to $34.
Bottom line, to satisfy the whims of AAPL (& others), if QCOM’s IP royalty were to be collected on modem sales rather that device sales, modem prices on average could increase by at by 37% and shake up the entire mobile industry as the transition took place.
Is this what you're asking for?
FY 16 .........................Tot................QCOM............others
QTL rev.......................$7.665B
Device Sales................1.372B
MSMs/ modems..............................0.843B...........0.529
.....% of device...................................61%...............39%
Royalty $/ device ..........$5.59
Royalty $........................................$4.676............$2.989
$/ modem.......................................$5.59..............$5.59 |
|
