Where did all of this Qualcomm hate come from?

Around the web, you'll find plenty of things written about Qualcomm. Most of it is news about its latest products, or reviews of the same products but you'll also see a new trend of ... distaste for Qualcomm. Most of the time there is no back story given about why. So that's what we're going to talk about in a non-lawyerly way and with no full disclosure on the standards-essential patents fees or any royalty caps. If you're reading and happen to know patent law, please feel free to correct the "internet wisdom" at play here in the comments so we all can benefit.

Qualcomm makes great stuff

Qualcomm has done some amazing things to move mobile forward. Its Snapdragon platform blends processing power, graphics rendering and network connectivity together in a way that's better than anything else you can buy off the shelf, especially if you're in North America. Qualcomm's products don't need to have the best CPU (they aren't), the best GPU (same, not even) or the best wireless radios (they do, though) as long as the complete package is better than anyone else's complete package. And Qualcomm's packages are just better than the competitions.

Qualcomm's networking technology is unmatched.

Qualcomm's networking technology — including things like Bluetooth and Wi-Fi as well as LTE — is a must for any mobile device in North America. Not only because it's great, but because patented technology is needed to properly connect to this generation of robust LTE networks, as well as the next generation. Qualcomm invented a lot of this stuff. And like any other company, they patented it.

Since you need to use this technology to properly connect to the latest networks, the patents are labeled as fair-use. Some rules go with that, mostly about who can use them (anyone) and what they should cost. Here's where things go south, because the way Qualcomm is charging for this technology has some other companies up in arms. And rightfully so.

Fees and royalties need to be fair

Qualcomm prices the use of their tech differently for people who buy a complete Snapdragon package than they do for a company who just wants the network patents. This isn't unheard of, and it's a fine way to sell your products: use our stuff and you don't pay extra for our other stuff. But some companies think Qualcomm is charging too much and are unhappy with the way Qualcomm is charging for these fair-use patents on their own. Most notably, Apple, who has started an action in court to have this addressed.

More: Qualcomm: Unfair, unreasonable, and discriminatory and why Apple needs to win (iMore.com)

Qualcomm is said to charge between five and seven percent of the total retail price as its FRAND (Fair, Reasonable, And Non-Discriminatory) terms for every device sold using their patented tech. There are two issues with this — the exact same tech in a $700 phone costs more than it does in a $400 phone, and as prices for other components rise or more expensive materials are used for things like camera glass or displays, Qualcomm earns more money. Many feel this is exorbitant and doesn't follow the FRAND rules.

A company deserves to be paid only for the things they created.

For Apple, this means it is paying a lot more to license a network patent in a 256GB iPhone 7 Plus than it is for a 32GB iPhone 7. Even though the technology is exactly the same. Apple feels like Qualcomm should not be allowed to profit from anything it didn't create. I think this is a valid complaint, and something needs addressed. I'm no fan of Apple or Qualcomm and think both companies make great products they want us to buy. But they need to do so fairly.

The fees themselves are also said to just be too high. If you're Samsung, number one you're rich as hell and can afford to buy anything from anyone when it comes to fair-use tech. But you did not get rich as hell by buying things that cut into the profit margin of a product. This is why Galaxy phones in the U.S. and Canada now use Snapdragon processors. It's a lot cheaper to build a phone with a Snapdragon SoC for sale in North America than it is to sell one with Samsung's own in-house Exynos SoC using Qualcomm's patented tech.

No profit left for the manufacturers

Things get worse if you're not Apple or Qualcomm. Not every company can afford to give 7% of the total price to Qualcomm, because they simply don't have the profit margin. Apple and Samsung have a fairly high profit built into the price of every device. Rumors suggest this is about 20% for Samsung and about 35% for Apple. While a 7% cut would be more than just a nuisance at those margins, it's a deathblow for companies who are only making 10% profit on each device.

Many companies simply can't afford a 7% cut into their profit margin.

Without mentioning any names, more than one company has stopped selling devices in the U.S. or stopped making phone altogether because they can't afford to make a phone that works great everywhere in North America, or works on Verizon and Sprint at all. You need Qualcomm's technology to do either, and using Snapdragon isn't an option in these cases. These companies simply didn't have 7% per device to pay, so they don't make a product that uses the tech. Qualcomm essentially has used what are supposed to be fair-use patents to push these companies out of the market.

My take

Again, I want to stress that I am not a lawyer. I would make a horrible lawyer because I would spend my time thinking of how an algorithm could replace a judge. But I do have an understanding of how standards-essential patents and FRAND is supposed to work, and access to the same industry whispers that anyone in my profession will hear.

Qualcomm certainly deserves both praise and money for what they've done with network technology. It's stupendous. But when a company creates something that is so good it becomes part of an industry standard, it has to be fair in the ways its usage is licensed. I'm one of the people who think Qualcomm isn't playing very fair when it comes to these very specific patents.

As much as I hate to see two companies fighting in a courtroom over who gets the pennies from my pocket, I still feel this needs addressed by the persons designated to address it.

Jerry Hildenbrand
Senior Editor — Google Ecosystem

Jerry is an amateur woodworker and struggling shade tree mechanic. There's nothing he can't take apart, but many things he can't reassemble. You'll find him writing and speaking his loud opinion on Android Central and occasionally on Twitter.

  • Problem is if you want exynos in USA it wouldn't happen cause of some type of agreement that Samsung had to sign with Qualcomm. Mostly cause of the Lte bands or something.
  • Which would seem to strengthen the argument that Qualcomm is playing dirty. Unfair FRAND licensing and setting up deals that block access to competitors. At least in my non lawyer hot-take.
  • Exactly. This is something that has irritated me since the S6 series, when the Exynos overtook the equivalent Qualcomm in many areas including performance, the DAC included in the chipset, etc. It didn't make financial sense for Samsung to bring the Exynos to the US and still doesn't.
  • Thank Verizon for that. Too bad that to simplify distribution, the same has extended to Canada as well... I love my Exynos S7Edge, but subsequent Samsung phones have all been Snapdragon.
  • Isn't verizon. Qualcomm wont license certain things, hence why we get stuck with snapdragon in US. 
  • It's partly Verizon sticking to CDMA for so long. Qualcomm owns that too.
  • I think (Daniel can confirm) that many of Qualcomm's patents are needed to use things like carrier aggregation in Canada, too.
  • Good article, you explained the issue in an easy to read manner and made it clear what is going on.
  • Remember when the Snapdragon 810 was so bad that Samsung actually forked out the extra money to use their own SoC in the USA/CDMA models? Imagoine that these patents are supposed to be 'FRAND' but it's literally cheaper to buy their chips than make your own... how is that kind of margin fair? It makes sense for normal patents, but makes zero sense for standards essential patents.
  • Qualcomm didn't invent this pricing model. If everyone is paying about the same percentage, then making that cost part of the bill of materials would be a uniform cost across Qualcomm's customers. In other words, if you don't think Qualcomm's product is worth it, go to a competitor, create your own, or cut your margin. If you can't afford that, raise your price to cover the cost (ask Oneplus).
  • I understand, and agree. But if enough companies are claiming that Qualcomm is charging exorbitant royalties, someone needs to look at the situation to make sure.
  • The problem with charging the same price for every phone sold is that Qualcomm would probably find somewhere in the middle to change for their license which means the lower end phones or smaller companies might end up paying more than the do now, which would not help them. The nice thing about a percentage model is it helps keep the cost down on lower end phones... But since Apple doesn't make much for low end phones I can imagine why they're upset about it... I'm just not sure if it's best for the industry as a whole. Although 5-7% of the cost of the phone seems pretty high to me.
  • Qualcomm's behavior is preventing anyone else from making cell modems for the US market, The only competitor left is Intel and Intel/Apple/etc are all pushing for anti-trust action against Qualcomm.
    https://www.cnet.com/news/intel-accuses-qualcomm-of-trying-to-kill-mobil... Because of the patent monopoly and the way Qualcomm is pricing their patents, it is impossible for a competitor to make money. If Intel exits (they are losing money currently) there will be a single cell modem supplier in the US - Qualcomm. It is not difficult for a company like Intel/Mediatek/etc to make a cell modem, Outside the US there are many companies making cell modems. What is impossible to deal with is Qualcomm selling cell modems for $5 while charging Intel a $7/chip royalty to make them. (Made up numbers, no one knows the real ones).
  • You do grasp that 7% of $1000.00 is a larger amount than 7% of $300.00, right? Oh, and that’s for the EXACT same thing, as well. Qualcomm is having their ass handed to them in courts all over the world, and I’m all for it. If you want the epitome of anti-consumer, take a good look at Qualcomm, especially in the US.
  • I personally have been waiting for this to happen. With the adoption of LTE Qualcomm started to rain supreme because of the modems not their SOC. And the way Qualcomm licensed the modem. It was simply too expensive for other companies to go with anyone but Qualcomm. I remember to times when we had nvidia, Texas Instruments, Samsung and intel fighting for market share in the us. It was interesting and very fun. I for one wish I could get an s8 with an exynos chip on the us.
  • Still hate Qualcomm, hope Apple wins this. No reason Apple has to pay more based on the device price to use the same tech as you mentioned. It's crazy that Qualcomm makes more money on the 256 GB iPhone than 64 GB even though both use the same Qualcomm tech. On top of that I'm tired Android OEMs handcuffed to Qualcomm for many reasons. Would like to see some competition here in North America, pretty much Exynos, Kirin, Apple's A series are all better than Snapdragon in one way or another. With fair licensing I would like to see more competition especially on the Android side pushing each other to get more better.
  • Completely agree with you, and yeah, 2 years of OS update support for Android devices, you can thank Qualcomm for that, at the heart of the matter. New chips in new required phones at the two year mark for current OS versions are a twofold win for them, 1st when they sell the chip, and then when they apply their bullshit sliding scale royalty fees.
  • Let's be clear here Apple is the problem not Qualcomm. The reason you are seeing all of the negative press about Qualcomm is because Apple is using its PR war machine to get as many people as possible to write a negative article about them. Qualcomm has done nothing wrong. They simply are demanding payment from Apple for the licensing agreement Apple signed before the iPhone 7 launched. This all comes back to Apple releasing a software update that intentionally degraded the performance of the Qualcomm powered iPhone 7 so users would not notice some models were fast than others. Thanks for taking in line Android Central did you parents company get a check straight from Apple for this story or were you just duped into contributing to the fake news.
  • Spoken like a good little Qualcomm employee. Gotta try, I guess? This is in no way an Android vs iOS situation. Really lame attempt at spin. Job requirement, no doubt. LMFAO! 😂
  • Yeah, you must be from Fox News yourself.....
  • Sorry if you think this is all about Apple. Qualcomm has been doing this for years and they have forced many companies out of this space. Not because they make the best SOC (they don't not even close). Not because their modems are the best( they pretty much are). Qualcomm is dominant due to the way their pricing structure and licensing agreements are set up. When it's more expensive to license just the modem than the entire SOC there is a problem.
  • Well that's the game for you.
  • Remember when OMAP was the chip of choice for Google because of how good TI made it? Good times for everyone when we had all those companies competing to be in the top tier phones.
  • Apple gave me a $50 gift card (weeknights only) for Applebees. And you're confusing two separate legal matters.
  • This isn't an Apple issue, this is an industry issue. Haha
  • This is total B.S. When Apple's cost to make a 32GB iPhone is $178 but they sell it for $699, and their cost for a 128GB iPhone is $212 but they sell it for $899 -- and there is no other difference between the two devices except memory -- then Apple is doing to its customers what Qualcomm is doing to Apple. I keep my fingers crossed for a 9.2 located somewhere near Cupertino.
  • I won't comment on Apple's pricing structure or the Apple tax( but I agree outrageous) I agree that Qualcomm is doing the same thing as Apple. The difference is you have a choice of not buying an Apple phone. But with Qualcomm there is little to no choice in the U.S. market it's essentially Qualcomm or nothing especially if you want cdma support. Now I won't say that Qualcomm shouldn't make a fair amount off of their patents but when you use your patents and pricing structures to eliminate competition I call foul with that.
  • The iPhone is not a standards-essential patent.
  • I agree with you completely.
  • Snapdragon is trash compared to Apple and Samsung's in house CPU's
  • Yeah, sure... that's why you can have Samsung Galaxy Tab S2 9.7 with either Qualcomm or Exinos CPU at the same price... care to guess which one is 32-bit and which one is 64-bit? And no, neither have LTE modem inside.
  • Are you really comparing a Samsung chip that came out in 2014 in the note4 to a 2016 snapdragon 652. The exynos is so old that it was the first chip to use the a53 and a57. Now if you wanted to compare current chips compare the 835 to the 8895 or the 820 to the 8890 both where used the the galaxy s series devices spoiler they both perform the same with maybe a slight gpu advantage in some test for the 835 but the exynos uses less power.
  • You have missed my point -- both T810 (Exinos) and T813 (Qualcomm) were sold at the same time, at the same price and (at least at one occasion) on the same shelf. There was no way consumer can tell the devices apart except actually reading the model number. In my book that invited the comparison... Back to the original post, I have responded to... "they both perform the same" (you) does not sound like "Qualcomm processors are crap compared to Samsung" (OP).
  • I never said Qualcomm processors are crap. Ive said Qualcomm business practices are crap. But that is two separate things. Qualcomm makes great SOCs. As do others I simply want the business practices to change for the sake of competition.
  • Sorry, the OP said "trash", not "crap"... and no, you are not the OP, Carraser23 is. I was responding to the specific post when you barged in. I know, the treading on this site is not the easiest to follow, but, with some effort, it is possible.
  • Thanks very much for this useful info.
  • Which is better Qualcomm or Snapdragon ?
  • Qualcomm makes snapdragon
  • Peter Venkmin, here here!!! Spoken like someone who is seeing the WHOLE PICTURE! Apple pulls this all the time, Samsung also, to an extent. Apple is just getting a piece of their own medicine. Although that doesn't make either of them right. Hopefully they won't continue their money grabbing tactics, but I'm not holding my breath
  • I now see the problem that these companies have with Qualcomm. These companies made bad deals and are trying to renegotiate. FRAND royalties should have never been negotiated on a percentage basis. The companies that made percentage based deals did so willingly, and weren't smart. Qualcomm should have set a base price (not a percentage rate) for their tech patents and then built SoCs with the base price included in, then sold sold those in house SoCs at a reduced price.
    With this model there is no way Apple or any other company can come and say that Qualcomm isn't playing fair. I see both sides making bad deals in this equation. Neither party should have agreed to a percentage based deal. The problem with deals made on percentages is nobody sells their goods for the same price as others. In my personal opinion this is like going to the store and buying dinnerware. You can mix and match branded items at their original price or you can buy a branded box set at a cheaper price.
    You just have to decide how you want to spend your money. And in that sense I think these companies need to quit looking for a Price Match Guarantee, this ain't Best Buy.
  • These companies are not looking to buy dinnerware. They need one small phone and they're being gouged by the only company that sells it.
  • I'm not privy to how the deal was made between Apple and Qualcomm. But I know Apple can not build a phone that works with Verizon or Sprint without using Qualcomm's SEPs. Maybe an alternative would be to strip these patents away from Qualcomm and make them public domain so that Qualcomm doesn't try to manipulate the market through bad deals? Or, Qualcomm could charge a nominal fee like every other company, including Apple, does for SEPs
  • You might very well be right in your thoughts of how this should be handled.
    As I stated previously, I believe the deals were bad on both sides of the equation.
  • So, you and everyone, who agrees with you and lives in US, should call their house representative and their senator and tell them that you think that eminent domain needs to be applied to Qualcomm patents. I am being neither sarcastic, no facetious -- I do think it would get you much farther than the discussion on this site. Me, personally, I do not believe this is the right way to go, but the tools are there for those who do.
  • I'm fine with letting legal experts suss it out. It's possible Qualcomm has a valid response to any accusations and they are saving them for the right venue. I just think any technology that the future of LTE will depend on should be watched closely so that nobody can abuse an advantage.
  • Normally I'm not on Apple's side in these FRAND issues because of how they didn't pay Samsung for some of their modem related patents. But they're totally right here. Qualcomm is using their market share to push other companies out. I really wish we could get back to the days of seeing how OMAP, Exynos, and Snapdragon chips were duking it out for top dog.
  • ... and than the lawyers will step in and tell "top dog" to share with others... wait, what? We already have that :)
  • this licensing thing seems dodgy, like saying you paid 50 dollar for a brake pedal but to use that brake pedal since you didn’t get the engine from these guys as well you have to pay another 5% on the cost of the car for license to use. pity those who buy the 6.2L version of the car compared to those who go for the V6, no wonder things are so expensive, they have to make up the profit margin to pay these guys.
  • I see your meaning, but the V6 engine was made by the brake pedal manufacturer and 6.2L engine was was made by another.
    So are you saying that the brake pedal manufacturer can't wholesale it's brake\engine combination for less than the original retail price of the brake pedal alone?
  • It means. If you use the parts from the same guys, one you get the wholesale price. Two you don’t have to pay a license to use the parts if you only get the brakes from these guys.
  • Ignorance
  • I hate them because they are one of the main reasons we are stuck with only two years of updates with Android. They won't release the drivers.
  • I think it's funny that Apple can say it's wrong for Qualcomm to make mmm money off of something they didn't create. That's how Apple makes all of their money LOL! And Qualcomm did create some of the tech themselves, so I don't see the problem. Apple charges top dollar for outdated hardware and software while lying about how new and advanced it is, Qualcomm charges top dollar for top of the line tech that actually is new and advanced... While I'm not a fan of Qualcomm, I'm a fan of what they make and what they do. Apple is just a bunch of stuck up douchebags that are living in the past and hating on anyone that looks toward the future.
  • What do you mean by outdated hardware? Just because it's a dual core doesn't automatically mean outdated
  • A. Apple doesn't lie about their tech. Most in the industry agree that Apple's chips are advanced. B. Nothing Apple charges for is essential. Nobody is required to buy Apple hardware for their smartphones. C. It's not that Qualcomm is charging for their tech/equipment, it's how it's charging for it. FRAND means that they have to charge a fair price; not charge for the equipment based on device price then charge a licensing fee on top of that. Fair use would be charging a company one rate to use Qualcomm's equipment/tech across the board. Charging one thing for a less expensive device and more for a more expensive device doesn't make sense. Doesn't matter if it's Apple, Samsung, HTC, etc.
  • It does make sense if that is what Apple agreed to in the contract.
    What doesn't make sense is why Apple would agree to Qualcomm's percentage terms if they already knew that another company could, and probably would, get those same terms and produce a cheaper device. Thus, having to pay Qualcomm less in licencing fees. These are FRAND patents Apple and these companies are suing over. If the licensing deals have the same percentage and licensing fees for all, Apple can't get mad because someone else makes a cheaper phones and pays less fees because they chose to use Qualcomm's in-house SoC.
  • Imagine Apple selling you an iPhone with the price being based on your income? If you make 50K you pay more than the guy who makes 40K. I don't think that's right. The price should be consistent for everyone and your income should be irrelevant. Imagine Apple is only manufacturer of smartphones because of patents. If you want a smartphone you're stuck with whatever pricing model Apple comes up with based on your income. This is essentially what Qualcomm is doing.
  • I've imagined all that you have asked me too and my answer is I wouldn't buy a Apple device if that was the case.
    And the part about Qualcomm being the only chip maker is wrong (Intel, Mediatek, NVIDIA, etc...).
    The only thing that these companies are mad about is that that using Qualcomm's chips is cheaper than using competitors and licensing the essential patents, and that a company that makes a cheaper device pays less by the terms of the agreement that all these companies signed.
  • Welcome to the world of a near-monopoly. Where you have to get stuff from one company and that company will charge you quite a number than if there were other companies selling the same thing
  • This reminds me of the MS days in the 90's when you couldn't get a dual boot computer from companies that sold Windows PC's. Qualcomm is using their patents to actively push people out of the market. At least Google isn't suing people to shut down other search engines.
  • Thank you very much for this informative article. It explains so much. Typically I am typically anti-Apple when they are involved in a lawsuit. Looking at this case in a vacuum, I do see Apple's point of view here and agree. Well, as much as one can sympathize with Apple anyway. It is also now clear to me why the US/North American market is extremely difficult if you are not Samsung or Apple.
  • I miss Texas Instruments. Those TI chips were great little overclockers.
  • I miss them also
  • Well we know where this will go... Let's say in 3 years when this case has been settled and the ruling is, Qualcomm can and will do one thing... Jack up the cost of their products to close the gap on the difference. I happens all the time and because things are necessity, we pay it... Perfect example is fuel. How many times have we seen fuel prices continue to fluctuate over the last decade? Supply and demand and right now Qualcomm owns both.
  • It's not only what the article states, but Qualcomm is also double charging it's customers. It charges for the modems, then charges a licensing fee on top of that to use said modems. If a company buys the hardware from Qualcomm, then that company should be allowed to use the tech without paying an additional fee. It would be like buying a blender, then getting charged a fee to be able to power it.
  • This could promote removable CPUs - you buy the CPU card separate from the phone and plug it in. Qualcomm gets their vig on the card and not the entire phone. I'm sure qualcomm would move to block that, but would be good to see an OEM try it and pitch it as upgradeable.
  • To me, it appears that the only company violating the law here is Apple by withholding payments to a company they promised to make. Apple is well known for their negotiating tactics that attempt to extract every penny for the promise of their business. Apple has some of the most adept negotiators working in tech. These are adults who made a deal and are now renigging. Raise your hand if you think the price of an iPhone will go down should Apple prevail. And before you call me an employee of Qualcomm, know that I have been retired, probably longer than most of you have been alive. Nor do I hold any Qualcomm stock.
  • I agree. Apple, and every other mega company in fact, has an army of attorneys for contract negotiations. See no reason for the "We don't want to pay what we said we would" tactics. If companies are upset at QCOM for their business terms, then don't enter into contact with them.
  • I just want to see more Huawei chips going beast mode in phones from LG, HTC, Lenovorola, etc. Their Kirin 960 runs better than anything out of QC I've used to date, including the newer 835.
  • And if Huawei can make money after building it and paying for the US LTE/CDMA patents, we just might. Thankfully, many see that this is not an Apple issue :)