Tech Giants to Keep Their Secrets

Article By : Rick Merritt

The tech industry talks about the values of openness and collaboration, but it thrives on secrecy and self-interest, as the recent mobile shenanigans of Apple, Intel, and Qualcomm show.

The patent disputes between Apple and Qualcomm opened a door to what the two companies and their handset and chipset rivals were doing. Court documents revealed details of their strategies and deals.

In this sunshine, we learned that Qualcomm was charging 5% of the value of a handset in exchange for a license to its 130,000 patents. We learned that Huawei’s objections to the costs drove a regulatory process in China that hammered the fees down to about 3.5% for handsets sold there.

Now, the litigation is largely over. The legal discovery process of putting documents and testimony on a public record for juries and judges to review has ended.

So we won’t know what royalty rate Apple just agreed to pay Qualcomm in exchange for what volume-purchase guarantees or other concessions. That would be pretty useful information for any maker of cellular handsets or chipsets.

We may never know the details of Apple’s motivation. Maybe Intel could not field a 5G modem in time for Apple’s iPhone plans. Maybe Apple decided that it needed a better 5G chip faster, leaving Intel without a major customer for a modem business that was still not profitable.

What we know is that the cellular modem market has one less competitor. We know that Qualcomm stock soared 23% in a single day. We know that Apple will have a 5G iPhone within a year or so.

We also know that leading-edge cellular modems are valuable. Both Huawei and Samsung have designed ones for their own handsets, and Apple is ramping a team in San Diego to work on them, too.

We heard Qualcomm make its case for the many innovations in cellular systems that it pioneered since the early days of CDMA. We heard that it maintains a team of 90 engineers focused on the 3GPP cellular standards process.

Perhaps for something as valuable to the industry as standards-essential patents, we need a public registry. This registry could list patents related to a standard and what companies charge to license them.

That would be open and collaborative. But it would be so unlike the tech industry that loves to move fast, get ahead of the next guy, and operate behind closed doors.

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