What is the impact of Qualcomms ban on Apple less than that of the two giants?

 What is the impact of Qualcomms ban on Apple less than that of the two giants?

On December 10, the Fuzhou Intermediate Court granted Qualcomm two interim injunctions against four Chinese subsidiaries of Apple, demanding that they immediately stop infringing on Qualcomms two patents, including importing, selling and promising to sell unauthorized products in China. For a while, the global media have focused on the ban.

What are the two giants fighting for?

In recent years, there have been many lawsuits between Qualcomm and Apple, with more than 20 lawsuits in China alone. It is no exaggeration to say that the ban is only a small battle in the battle between the two giants. Although in each specific lawsuit, the demands and Strategies of the two parties are different, generally speaking, the focus of the debate is only one, that is, patent licensing fee.

Qualcomm is a well-deserved hegemony in the field of mobile communications, charging fees through patent authorization is one of the important sources of its profits. Since many of Qualcomms patents are indispensable for Smartphone production, almost all mobile phone manufacturers have to pay a patent licensing fee to Qualcomm. In the industry, this fee has been nicknamed Qualcomm Tax.

As an important mobile phone manufacturer, Apple of course also needs to use Qualcomm technology, so it is difficult to avoid the Qualcomm Tax problem.

Although in recent years Apple has been trying to avoid Qualcomms technology through independent research and development, using Intel chips and other methods, these attempts have proved ineffective. So far, Apple has had to rely on Qualcomm technology to produce, so patent fees have become an important contradiction between it and Qualcomm.

Qualcomm Tax is highly controversial

In order to help you understand the dispute between Apple and Qualcomm objectively, it is necessary for us to explain the charging method of Qualcomm first.

In some reports, it was mentioned that Qualcomm charged a patent fee of 5% of the retail price of the mobile phone, and pointed out that the price of the 8699-yuan iPhone mobile phone needed to pay 282.7 yuan to Qualcomm. In fact, this statement is not exact.

Qualcomms fee base is not the retail price of mobile phones, but the net wholesale price. In addition, Qualcomm has a cap on the benchmark, and charges for mobile phones whose wholesale prices exceed the cap in proportion to the cap. For example, Qualcomm set a benchmark ceiling of $400 in 2017, so the Qualcomm Tax for all mobile phones with wholesale prices of more than $400 is $20.

It is worth noting that at present, Apples products are mainly produced by OEMs. There is no direct patent licensing relationship between Qualcomm and Apple. Its patents are actually licensed to Apples factories. Therefore, according to the calculation method of Qualcomm Tax, the calculation benchmark should be the factory price of mobile phone from OEM. If we follow this standard, the real fees Qualcomm charges will be far less than the amount understood in many reports.

Of course, Qualcomms existing charging methods are also controversial. As mentioned earlier, Qualcomms fee base is the wholesale price of the whole machine, not the patent technology itself. This means that the higher the price of mobile phones, the higher the Qualcomm Tax that needs to be paid. In many cases, higher prices are not directly related to Qualcomms technology.

For example, if a new model of a mobile phone adopts a new design, the wholesale price will increase by 100 yuan, which has nothing to do with Qualcomms technology, but it will also increase the base of fees. Is this calculation reasonable or not? The controversy is great. In fact, this is one of the main reasons why Apple wants Qualcomm to reduce its patent fees.

_Source of Pictures: Visual China

The effect of the ban is relatively limited.

After the Fuzhou Intermediate Courts ban was promulgated, many media believe that this will lead to Apples many mobile phones can not be sold in China. But in my opinion, the effect of this ban should not be so great.

If we look at the patents involved in this ban, we will find that they are not key communications or hardware patents, but just common software patents. Its role is to allow users to adjust the size and appearance of photos and use touch screen management applications.

More importantly, these patents only work on previous versions of iOS 11, but have no impact on later versions of the operating system. Mobile phones that have been manufactured need only to upgrade the system to avoid the impact of the ban.

As we can see, for Qualcomm, the ban won only a minor battle, and its impact on Apple will not be as great as some reports.

Source: Han Jiapeng_NN9841, responsible editor of Beijing News