It's so weird that an oligopolistic industry with the largest barriers to entry (your average CPU factory will cost $5/10+ billions, and that's just the factory) have the lowest margin, by far. Why is that so?
While there are not many competitors, they still do (most times) properly compete due to various factors like pressure from their customer (some very very large with the capabilities to become a competition iff they stop innovating and/or become to expensive), but also factors like political pressure to stay ahead of mainland china.
Through TSMC for example has margin >40%. Which isn't that surprising I mean there is not much competition. Intel doesn't (yet) provide their capabilities to anyone else, and the other competition is behind enough to not be an option for many things, especially high end and/or high efficiency.
What is quite fascinating is that while TSMC is a close to monopoly(/duopoly if you count Intel) in many sectors and takes advantage of it they seem to have successfully resisted the common problem of such companies stopping/slowing innovation and similar problem. I'm not sure if it's related to the additional pressure of them being on of the main lifelines for Taiwan or if they have just pretty good management or if it's because they still competition oligopoly main customers do push them to do so.
i suspect that TSMC doesn't have as big a monopoly as you've made it out to be, not because intel is competing, but because the customers of TSMC are large enough that they "force" the innovation (aka, they "threaten" to not use them if they stop innovating).
Also, TSMC hasn't been around long enough to become the slow behemoths that other big monopolies have become.
TSMC doesn’t have a real monopoly, they’re just a few years ahead of everyone else in integrating ASML’s latest tech. Samsung and Intel aren’t very far behind. The more money TSMC charges the more incentive the others have to catch up but they can only move so fast. GlobalFoundries and STMicroelectronics seem stuck in the double digits.
It makes a big difference to a few competitive customers so TSMC gets paid well for that first mover advantage, but yeah it’s not well secured monopoly.
thinking that TSMC is "just" integrating ASML tech is a common but big misconception
ASML tech is a tool, one essential for new better chips but not sufficient
You also need to have a lot of know how about how to best use the tool, integrate it in workflows etc. where TSMC seems to be somehow ahead of Intel.
Additionally the custom tooling in the steps leading up to the use of ASML tooling are also hugely important and TSMC is quite a bit ahead of intel with that. It turned out having multiple different customers with different needs which all collaborate with TSMC to optimize the tools in their workflows.
I think it's just a matter of 'if you stop innovating, others will catch up quicker than you expect'. It's a continual r&d March, and you don't want to end up like Intel and get stuck on 14nm forever
And Intel was a company that was still shoving billions into r&d, yet still got stuck
So much of the tech industry has Moore's law baked into the supply chain forecasts, so lots of incentive to deliver on it.
It might be that that's not as high of a barrier to entry as it seems. It would cost much more than that to replicate the engineering quality that goes into the Apple system of products for instance.
Also, Apple has lots of products and services to lots of potential buyers it can sell to at lots of price points, whereas a fab owner only has a few buyers and therefore less negotiating power, plus all the buyers are sophisticated and well informed.
I cannot speak to AMD, but for the case of Intel, it is hard to be a fast follower. The billion dollar factory translates to hundreds of millions of dollars of depreciation each year - a fixed cost that means declines in revenue hit the bottom line very hard.
Margins are not determined by how many companies sell certain products, but rather by willing the individual buyer is to consider different products. Both Apple and Microsoft can charge high prices for MacOS and Windows, because most Mac and Windows users will not consider another OS. But most people who currently use a laptop with an Intel chip will consider a laptop with an AMD chip, and vice versa, even speaking of an Intel user or an AMD user feels wrong.
> Margins are not determined by how many companies sell certain products
Rule 1: Margins are as large as a company can get away with them being
Rule 2: The primary thing that brings down prices (thereby shifting consumer demand) is another company competing offering lower prices
Rule 3: Fewer companies are able to maintain a unified front of higher-than-required margins for longer, owing to fewer individuals needing to agree to make the prsioner's-dilemma-esque status quo hold. Any one of them can take business from the others by lowering their prices, but at the cost of reduced margins for everyone (including themselves).
Margin pricing in general is "sticky". When it goes down, its difficult for it to rise. That's why companies jump on inflation as an excuse to raise prices - usually much more than inflation. Similarly, see power prices in Europe after ukraine war - record profits despite attributing price rise to rising supply chain costs.
Yes, this doesn't follow your economics 101. This is economics 102.
As soon as there is an "excuse", companies make massive profits and margins rise. This will also cut into demand as price-sensitive consumers drop out. This is seen as fine. Sometimes, it is better to make more money from less work than grow less efficiently.
it explains why typically markets with fewer players have higher margins. This is why competition is good (and also why the government has whole departments to consider whether mergers in sparse markets will hurt consumers)
Do you happen to know if it has always been this way, or is this the result of a gradual squeeze to a limit due to megahertz wars, increasingly shortened product cycles, and each companies product line structured in a way that tends to cannibalize their own sales before creating fresh profit.
And the decreasing return, in practical terms, for their customer base when upgrading since most basic computation tasks have long been solved and it's only exotic high-end workloads (plus constant bloat scaling factor that is largely a consequence of the added performance, rather than it's target) that benefit from added performance.
In short, was Intel making percent, or even single digit margins back in the 80s or even early '90s?
Thats a great question; I'd have to dig into their statements to see more. It's hard to get reliable data from that long ago for free. From what I remember as a consumer, MSFT + INTC (Wintel) absolutely cleaned up in the 90s until AMD started the CPU price & MHz wars, and Apple started making MacBooks.
For Intel, it looks like they kept one dollar out of every four until the recent crash. I don't know the reason for the decline, but I know I wouldn't want to compete against Apple.
Having margins because no one can legally compete with you is pretty remarkable in the chip industry. No one else has carved out such a large market like this.
The other bit that blows me away is that sometimes it feels like Qualcomm's perpetual inability to integrate chips is a vast submarine point no one using Qualcomm sees coming, but which forever works out in Qualcomm's favor. I don't know how many chips a MediaTek cellular modem takes, but iPhone 15 pro has 6+ chips dedicated to cellular, probably more. Modem, two transceivers, an envelope tracker, and probably a bunch of in this case non-qualcomm power supplies but most probably use Qualcomm pmics, maybe plural. https://www.ifixit.com/Guide/iPhone+15+Pro+Max+Chip+ID/16532... . There's also separate but non-Qualcomm solutions for wifi & bt too, where-as again I rather expect a company like MediaTek has much more working together.
I'm really interested to see chip identifications of the upcoming desktop/server class Qualcomm Oryon, supposedly by the Nuvia team (one of the strongest possible cases for anti-trust I have ever seen). https://www.semiaccurate.com/2023/09/26/whats-going-on-with-... is not partial journalism, but this cavalcade of ridiculousness is entirely the sort of poorly integrated Qualcomm solution I'd expect, that both builds terrible terrible products but which also lets Qualcomm fail upwards by requiring 5x more board components than is reasonable. Terrible for consumers, OEMs are in tears, but oh sorry, your design is late hot over priced and seemed reasonable but you're going to have to add a bunch more pmic's to get to market because we are Qualcomm and we spend more on lawyers than design.
> Qualcomm’s licensing business is best-in-class and an example many companies can learn from.
The last thing this world needs is more Qualcomm. I'd rather see the entire patent system go down in flames than this utter crap continuing.
Qualcomm has been a vampire on technology for years now, it's time for this company to end once and for all. We have to get technology under the people's control again - it is ridiculous and stifling progress that governments legally prescribe standards that are not open to everyone to implement. And especially it's ridiculous how few notable manufacturers of mobile phone SoCs remain - it's either Qualcomm or Mediatek.
> it is ridiculous and stifling progress that governments legally prescribe standards that are not open to everyone to implement
Standards-essential patents are required to be licensed this way. It's called "RAND licensing": reasonable and non-discriminatory. Everyone who participates in, say, ISO or the ITU, is required to fill out a form documenting if they own part of the standard and what terms they agree to license it on. If they refuse RAND licensing, their inventions get ripped out of the standard[0].
What you want is royalty-free RAND licensing. There are a few standards bodies that insist on royalty-free licensing, notably the W3C[1] and Khronos Group[2], but it's uncommon. Most standards bodies are in fields of endeavor that don't actually require free redistribution - in fact, they don't want it. They pay the people doing research for the standards on a "for exposure" basis[3]: they get their patented inventions in the standard, and as payment for their work, they get to charge a $2/unit royalty on every user, which they can then pour into research that yields more patents.
I'm going to be honest, royalty-bearing RAND (as in, pay up or don't implement) is probably the right fit for a lot of industries. We hate it because it steps on our (FOSS) toes, and if we can develop the software as a community, why can't we invent the underlying technology too? This is the idea behind royalty-free video codecs like AV1 - it turns out a community of amateurs can do video codec research after all[4]. But at the same time, cellular radio technology is quite possibly the worst thing to leave to amateur[5] software development. There's a lot of very expensive lab tests you need to do to make sure the technology works, to ensure hundreds of devices can communicate with the towers without jamming each other, and to ensure each one of those devices isn't pumping the user with shittons of radiation. There's a lot of boring research and regulation needed to make radio work at all, it's not something that can be hacked together in a weekend and collaborated on over time.
The real problem with RAND is that a lot of the licensing bodies that require it don't actually enforce that requirement all that well. For example, 4G and 5G cellular technology has a RAND requirement. If you want to put a 5G modem in a cellphone, there's a defined fee structure you pay that's the same deal everyone else gets. BUT, if you want to put a 5G modem in a laptop, that's not covered by the RAND promise, so Qualcomm reserves the right to charge whatever price it wants to each individual licensee, or even just not license it. This is why laptops with cellular modems in them are rare[6] and hideously expensive.
[0] For the record, most standards bodies do NOT have a means to do this to people who refuse royalty-free licensing, which is why ISO has failed to create a royalty-free video standard. Every time they try someone says "I own this, here's your royalty bearing RAND license", and the standard is dead in the water. In fact, not only did they fail to make the standard, they kicked Leonardo Chiariglione, co-founder of MPEG, out of MPEG for making too much of a fuss about it.
[1] Specifically as a reaction to the University of Minnesota trying to charge licensing fees for Gopher
[2] Which has resulted in a number of "ubiquitous" OpenGL extensions that aren't in the standard solely because they cost money to license, but can be accessed through de-facto standard extension names
[4] To be more accurate, AOM AV1 was only partially done by the community. Xiph.org contributed their work on Daala, but Google also included what would have become VP10. So there's still a lot of Google monopoly money in there. Furthermore, there's at least two companies claiming patent ownership on AV1 anyway, but I've yet to hear of any enforcement actions.
[5] Amateur as in ham radio, not amateur as in unskilled layman
[6] Apple doesn't sell a laptop with a cellular modem in it, and why the only Surface tablet Microsoft sells is the Qualcomm ARM version, not the x86 version. Qualcomm wants cellular capability to be a selling point of their ARM processors, so they (refuse to) license appropriately.
Thank you for your very thorough response to my rant, appreciate the insight - particularly the explanation why it is so rare to see mobile data modems in laptops (which to be honest leaves me even more enraged at the patent model).
However, I do disagree on some points:
> They pay the people doing research for the standards on a "for exposure" basis[3]: they get their patented inventions in the standard, and as payment for their work, they get to charge a $2/unit royalty on every user, which they can then pour into research that yields more patents.
The problem at the core IMHO is that Western nations removed themselves from R&D financing following the end of the Cold War, and instead large corporations and foreign nations moved in that had other interests in mind than the common good.
> Every time they try someone says "I own this, here's your royalty bearing RAND license", and the standard is dead in the water.
There used to be at least three competing patent pools for h264 and HEVC (until Velos Media disbanded). That even the largest commercial standardization enterprises like MPEG could not make sure that there was at least exactly one consolidated license shop just shows to me how nuts the entire patent situation has become.
> But at the same time, cellular radio technology is quite possibly the worst thing to leave to amateur[5] software development. There's a lot of very expensive lab tests you need to do to make sure the technology works, to ensure hundreds of devices can communicate with the towers without jamming each other, and to ensure each one of those devices isn't pumping the user with shittons of radiation. There's a lot of boring research and regulation needed to make radio work at all, it's not something that can be hacked together in a weekend and collaborated on over time.
Actually it can. Fabrice Bellard (yes, the same person as ffmpeg and qemu...) wrote an entire 4G/5G tower implementation that he currently sells via his own company, there's a FOSS project implementing the core services for a 5G network [2] and I think Osmocom has also made some progress in getting some sort of client side support.
Yes, the interop and jamming concerns are still valid, but those with enough brains to work in this field in the first place generally tend to know WTF they're doing - and commercial efforts definitely have the resources to properly work without endangering anyone.
The telling thing for me is that there is virtually only Qualcomm and Mediatek around who sell high performance modems, in addition to Samsung who mostly keep their stuff reserved for their own phones. Where's Apple? Where's Broadcom? Where's anyone to compete with Qualcomm's extortion tactics and Mediatek's IMHO embarassing code quality (just look at one of their Android BSP packages and the kernel patches they do)? For me, this state of the market shows that there is something seriously broken, and given that Apple has more cash on hand than entire countries' GDP and some of the most capable semiconductor engineers in the world managing to kick the arses of behemoths like Intel, the only explanation is the patent minefield.
And I'd like to address this as well:
> Which has resulted in a number of "ubiquitous" OpenGL extensions that aren't in the standard solely because they cost money to license, but can be accessed through de-facto standard extension names
Yet another very fine example how the patent system that was supposed to further innovation actually stifles it.
In the west, Qualcomm won. There's basically no one else even trying to make medium or high end chips. The patent encumbrance seems total.
Even the mega giant Apple is reportedly just giving up on trying. And at huge real world impact, as well as market drive. Apple designs tend to use a third or more of their phone motherboard's real estate supporting Qualcomm's forest of different parts required for cellular. It's been stubbornly hard to integrate well, forever.
The other IT field I'd cite is GPUs, where it's not at all a secret that companies would love to make more open hardware & stop using so many firmware blobs, but those blobs are the obfuscation layer that gets them legal protection, by making it unclear how the hardware works.
In these regards, it's just a miracle wifi and bluetooth and consumer GPUs exist. That anyone can build any chips, given our shitty onerous forsaken legal IP system, seems like a miracle. Qualcomm feels like the dark world hell nightmare we can never escape from but miraculously nightmare-shit-world is in only one key part of information technology, not all of IT. Somehow. Thank the stars.
I get technology is always advancing, but I do wonder what the landscape will look like in 10 years when a lot of these patents start to expire. As a consumer, it feels like we have been hitting diminishing returns for a while now.
Sure, they will have released 11G, and all of the ads will tell me how vital it is the government can track me with millimeter precision, but I think all of my needs were already met with a five+ year old device.
I have a lot of hope the open core movement is going to help, but right now it's still bonkers hard and expensive & special to attach a good modern bus to a chip. Having ram or USB3+ or PCIe or soon CXL - much less BT or wifi! - is a totally different kind of feat that open silicon seems far off from. The LiteX folks come to mind as deserving as big nod here but I think mainly fpga not basic targeting. A connected computer still feels so far off.
It's pretty interesting seeing some plateau forming commercially. The new Intel n100 - n30p chips look awesome. But they compete with mini-pc systems built around 20-65W desktop chips from 3-10 years ago that have a huge cheap second hand market. And they are a bit more power efficient but not vastly, producing similar power. But, good news, Intel & oems can have new systems using these chips on the market for competitive prices. Being able to compete with your own secondary market is a great sign to me.
MediaTek consistently offers far more value/$, which makes them seem less concerning. For a while they were second tier offerings, but increasingly, they're just fantastic pieces of equipment. The Retroid Pocket 4+ was announced today with the Dimensity 1100 processor - 4x A78 cores, 9 GPU cores - and it looks like a super tight mini-Deck; $200.
Beyond a value assessment, if you look at who licenses whose patents, it's MediaTek paying handsomely to license a ton of Qualcomm patents. That happened in November 2009. I wonder how many new patents MediaTek has had to license to keep going, versus how many they're 3/4 of the way to done having to license.
I truly like your point! I think a reversal of perspective is totally due here. But so far, MediaTek has been winning marketshare imho by playing a hella competitive game, where-as Qualcomm seems to be ultra expensive chips that consistently under-deliver on their promises. MediaTek also seems to be available in a wider range of systems, where-as Qualcomm chips seem to only be available on a very limited range of products. I wish Qualcomm was at least more competitive; the 8cx series could have been a value chip, but was hot and systems were still far too expensive.
It’s kind of an untold story, but I grew up near San Diego. My dad knew a bunch of early Qualcomm employees (in the first 50). Many of them had most of their equity clawed back through unethical legal agreements
Patents, inscrutable tools for working with low-level firmware, and a completely separate kernel line for each SoC based on an old kernel not even remotely upstreamed, ...
The chip is the most important part of a computer, but most chip companies do not capture much of the value created with the computer. An OEM pays about as much for an intel i3 chip as they pay of a windows license, and intel actually has to produce the chip.
This is why Apple has been so successful with Apple Silicon: Apple is able to capture way more of the value created with Apple devices, which is why they're able to invest more in chips then Intel/AMD and yes, even Qualcomm.
Oh, is Qualcomm the reason why adding cellular to an iPad is so expensive? I never understood how such a relatively small feature would cost that much. The alternative is that Apple just makes more money when setting prices like that. Would be curious how much of the price difference is extra license fees for Qualcomm.
I'm not sure why you're inclined to pin the blame on qualcomm, when the pricing is set by a company that charges $200 for 256GB of nvme storage[1]. For that price you can get a high end pcie 4.0 2TB nvme drive.
No, that's apple marketing, eg. apple upselling 32 or 64 GB phones or ipads to 256 or 512 etc gives them huge margins on the SDDs they resell by a $100s. If that was its own business it would be larger than 3M.
I question who this article is for - having worked at Qualcomm, they beat you over the head on how their business is built on patents and how they were going to go belly up some 20 years ago had they not pivoted to this model. I can't imagine a single analyst or anyone interested in the company not aware of their business model in the same way it doesn't take long to figure out that Apple is in the business of selling iPhones, mac books, etc.
I think this is valuable for those outside of Qualcomm to understand why they have the role that they do in the mobile space. Having worked there as well I have two observations:
- So much of that wall of patents was undergrad level CS concepts with ", for mobile device" tacked on the end. Paraphrasing, don't sue me (kidding..), but that was the gist of it.
- Their actual development process was pretty bad. I submitted a bug fix within the first few weeks I was there. Due to their CI process being entirely manual and very broken I was informed nearly a year later that my fix did not work. This tied in pretty well with my department being told they had a "budget"[1] of lines of code they could change and that budget being pretty limited.
Overall I left with an impression that they were mostly there to license very old technology and make money from patents. Maybe their hardware team was better, I couldn't say.
[1] Most of the effort of our team was spent debugging crash dumps determined to be in "our" part of the code. Nearly all of these were caused by other teams calling into an API we maintained with a null function pointer that "our" code would call. When I asked if we could refactor the API to return an error code if the function pointer was null I learned about the "code budget" and how it would cost too much to refactor.
About a decade ago I had to help with due diligence on a potential acquirer in the San Diego area. Qualcomm was the largest tech employer there and from the developers I talked to they seemed to have a terrible reputation at least among software folks.
Around the turn of the century I was working for a web development company there and we had done clients Qualcomm was approaching for J2ME apps - the kind of stuff we take for granted now, but clearly potentially of interest. I took a look at their developer docs and it looked pretty gruesome – far behind even the 90s web on almost everything – but it was the only game in town for a lot of phones.
One of our sales guys was working with a now-famous brewery & they were interested in a mobile friendly store locator since they had far less distribution back then. I tossed together a basic PoC using a crude geolocation system which worked well enough and we were thinking it might be worth trying. A while later they started to respond to our questions on pricing – which started at $50k per carrier for the privilege of being offered for sale, plus over half of the sale price, and that was the floor: they wanted to see the corporate balance sheet so they could decide on an acceptable percentage of their TOTAL revenue, even if most of it had nothing to do with mobile sales. Everyone said “haha, no!”, and dropped it.
I got one patent while I was a Qualcomm for some fairly inconsequential software thing. I was awarded $3k USD. Had the patent been filed in other countries and awarded, I would have been awarded I think 1.5k USD per country. This is/was the standard deal at Qualcomm when I was there (2013-2021). I would not be surprised if core researchers are awarded more for stronger and more applicable patents.
The headline doesn't cover the main thrust of the article, which is:
> "...like other semiconductor majors, the San Diego-based company also protects its inventions with intellectual property. But Qualcomm has a unique model at the heart of the way it uses those patents"
When was that? They had naming rights to a Major League Baseball & football stadium from ‘97 to 2017. Maybe good for recruitment but seemingly pointless on the consumer side to maintain the contract:
>Also in 1997, the facility was renamed Qualcomm Stadium after Qualcomm Corporation paid $18 million for the naming rights.[8] The naming rights belonged to Qualcomm until 2017, after which the rights were purchased by San Diego County Credit Union.
Surprisingly cheap! Not that I think it is a good use of money, but less ostentatious than I expected.
Pretty sure most sponsors would include an exit clause just in case. Sure there would be penalties, but if the stadium can re-lease for more, they should play ball.
IANAL but the patent system seems to be based upon outmoded thinking that a theoretical monopoly: (A) can be established (B) can be practically guaranteed or enforced by a single government authority (C) is a desirable 'deal' for the inventors vs. the nontrivial fees, disclosures and temporal inputs required on their part. Essentially the inventor is asked to invest in the commercialization of their idea before the viability is known. This greatly favors larger corporations as it is a resource vs. risk question.
In fact you need deep pockets to litigate, and you get ~zero protection until that is done save threatening C&D letters. Most patents are garbage (eg. clear prior art exists, they are obvious and non-inventive, or they are poorly structured and easily sidestepped - but make the governments and lawyers money) and most alleged infractions are settled out of court (possibly largely because most patents are garbage, but invalidating their claims in court costs too much money).
In the recent words of a prominent university law professor, "IP law is the field of law in which I have witnessed the most inconsistent results during my career" ... ie. great firms sometimes yield crap results, and crap firms sometimes yield great results - it's a relative shit show.
In an ideal world it would be great to see either a deconstructed patent system or a revised patent system with lower fees, more boolean logic, less jurisdiction-specific human language verbiage, and a more structured character to the claims and description text. Realistically, that isn't going to happen because vast investments in the status quo exist.
(Source: Spoke with four IP law firms across two countries and some prominent law professors in the last month, currently spending ~100% time on patent theory, drafting and review - 'tis the season to be lawyery!)
This is the patent system working as intended. Protection for technology development.
You may say it limits innovation. But it also protects smaller players from investing in innovation, by de-risking that a big customer might copy them and destroy their business. Which is mostly this scenario.
I think the bigger problem with the patent system is the patent trolls. Please someone solve that problem.
We like to talk about the specific effects of the patent system (protects the little guy, etc), but we rarely talk about the cumulative effects of it.
The more I look at the small innovators, they are all hungry to improve upon things the big companies are sitting on for 20+ years with a big moat to protect them, and I really get to thinking that in aggregate we are doing more harm than good.
A response I hear is "then no one would invest" and I think that's false. The investment landscape would change from a small number of big investments to a larger number of smaller investments - investing in tooling to help you beat the competition next year, but not necessarily giving you a 10 year investment for your big dream. And I think that's fine - people still want to innovate and the market already rewards innovators. It is not clear to me that government mandated restrictions on innovation are a good idea at all, and none of the common talking points really engage with the facts as I see them.
Take a look at FDM 3D printers. They went from $50k to $25k in the 13 years they were for sale and under patent protection, and then 10 years after patent protection ended they were $250 and sold by a wide variety of companies all over the world.
How many of today's patented goods could be made for 100x cheaper without patents and what is the cumulative effect of manufacturing machinery, medical equipment, washing machines, computers, and more being 100x cheaper? Is our world really better without that?
We have already run the experiment nearly 100 years ago shortly after WW2 (and prior to the Bahl Dole act) on what happens when people have idea requiring capital investments that aren't protected by risk mitigation IP.
People don't invest because of first mover disadvantage in game theory.
Genuinely curious for my own research, can you give me more information? What exactly happened? What projects failed to gain investment? What projects subsequently were only funded due to IP restriction grants?
LCD drawing tablets were another victim - Wacom sitting on their EMR patents, selling only overpriced pro gear cost the world a couple generations of digital artists!
Patents don't protect smaller players -- enforcement is cost-prohibitive.
The only sector that could plausibly justify patents is biotech... but even there, the vast majority of early R&D is publicly-funded, and thus should negate protection.
A Government-mandated monopoly on ideas may have made sense at some point, but it's antiquated today. Today they serve to stifle innovation, extract rent and act as yet another form of regulatory capture -- e.g. when they become standards.
(Coming from someone who has 20+ patents to their name.)
In fact they have the opposite effect on smaller players. The big players all have a few thousand (junk) patents and they make deals with each other to exclude the smaller players, who can't afford to file thousands of patents to join the club.
Everyone always says this. In fact, I was in Google's patent litigation division, and I can tell you firsthand that there is WAY less of this than you think. A cross-licensing deal is incredibly hard to negotiate.
So if you could back this up with some links, it'd be appreciated. Otherwise it's just an urban myth.
Google literally bought Motorola for their patent portfolio -- or at least, that's the only "asset" they retained when divesting of the company years later. And I readily admit: Google is a "be less evil" player in this respect. (But not all: See wage fixing collusion verdicts.)
At some point, we have to acknowledge that patents are pursued purely in the spirit of mutually-assured destruction from other litigious players. This manifests as a tax on everyone -- the only people that win are attorneys.
So now you're moving the goal posts. Now it's MAD (which I don't deny). I think we're done here. You're also bringing up irrelevancies like wage fixing: true, but not patents.
the claim was "they cross-license." As I said if you read, the myth is "plausible" but not "confirmed."
yes, there are some cross-licenses. No, they are not universal. I gave examples of obvious ones that nevertheless don't exist.
On Motorola: I'm afraid I have to claim superior knowledge on that one. At the time, Google was actually hiring patent acquisition people, and in fact, I was interviewing them. They probably fell for the myth that you fell for.
They stopped that pretty quickly, when it became clear that most of Motorola's patents were worthless. I've looked them over myself. They were worth less than nothing: it meant that suits against Motorola now had to be defended. In other words, it was a big mistake that they undid.
It's not a myth, I've been involved in these sort of negotiations. The particular industry was maybe 10 years older than Google, but the number of patents, rather than their quality was the key factor.
Or worse, a small player developing something and then finding out after the fact that a junk patent prevents them from even selling the thing to begin with.
See, this to me is the stupidest part of the whole system. Its essentially saying that 'first movers advantage' of an idea is something that can be protected for the life of a patent.
You can be tripped over by patents you don't even know existed in unrelated fields, owned by people who didnt even work with the patent. So stupid.
I'm really interested in the "does it limit innovation" question. Is this a case where Qualcomm is really innovating and coming up with novel ideas, or are they just some of the first people to encounter particular problems and are simply solving them in fairly obvious ways that would occur to anyone else who encountered those problems? And if it's the latter, is it that they are doing those investigations because of the potential for patents? Would the pace of innovation be slower if those incentives didn't exist, or would they be faster because everybody else independently figuring those things out later wouldn't need to pay Qualcomm for decades? Is there some sort form of technology economy scholarship that could answer those questions?
If I had to guess, I'd guess that Qualcomm's patents over stuff like Wi-Fi and CDMA were probably more harmful than beneficial, but I'd love to know how one would analyze that.
Unless I misunderstand, they are codifying their patents into open standards like 5G.
So you can't implement 5G without their patents. Add that to encouraging complexity (10,000+ pages of spec to do something outwardly similar to WiFi), and they have a really effective moat around an "open" standard.
The entire protocol space is somewhat arbitrary. This is a bit like patenting a strategy in a board game you created, and that everyone is required to play.
I've been saying for years that patents and copyrights should be ruled out in communication protocols and communication formats, including file formats, file systems, languages, APIs and even fonts.
Getting your patents into standards is the fundamental business model of many patent holders. Not just for big business either, I’m friends with a bunch of PhDs/researchers who all have patents in their respective fields, they all know that they’ll only get paid for the patents that end up in standards, and devote a non-trivial amount of effort to pursuing that outcome.
> they are codifying their patents into open standards like 5G.
What do you mean by open standard? I don't think 5G is patent-free by any means, nor is 802.11/Wi-Fi for that matter!
That's just how most hardware standards are developed, as far as I know. The best thing you can hope for is a consortium maintaining a FRAND patent pool, like for the MPEG family of codecs (and even there you can't be sure that there aren't any patent trolls lurking outside the pool).
> I think the bigger problem with the patent system is the patent trolls.
This is almost a no true scotsman argument.
The patent trolls are a direct result of incentives the patent system creates, getting rid of them necessarily involves seriously reforming the system.
> You may say it limits innovation. But it also protects smaller players from investing in innovation, by de-risking that a big customer might copy them and destroy their business. Which is mostly this scenario.
Who is the "smaller player" in this scenario? $150 billion QCOM?
The amount of heavy lifting that the word “may” is doing in this FUD encoded legalese SEC disclosure is impressive. It also ignores that first order effects reducing profits due to open sourcing may be eclipsed by second order effects in the market possibly selecting for rather than against open source software/firmware/drivers for their products.
> Our use of open source software may harm our business.
> Certain of our software and our suppliers’ software may contain or may be derived from “open source” software, and we have seen, and believe that we will continue to see, customers request that we develop products, including software associated with our integrated circuit products, that incorporate open source software elements and operate in an open source environment, which, under certain open source licenses, may offer accessibility to a portion of our products’ source code and may expose our related intellectual property to adverse licensing conditions. Licensing of such software may impose certain obligations on us if we were to distribute derivative works of that software. For example, these obligations may require us to make source code for the derivative works available to our customers in a manner that allows them to make such source code available to their customers or license such derivative works under a particular type of license that is different than what we customarily use to license our software. Furthermore, in the course of product development, we may make contributions to third-party open source projects that could subject our intellectual property to adverse licensing conditions. For example, to encourage the growth of a software ecosystem that is interoperable with our products, we may need to contribute certain implementations under the open source licensing terms that govern such projects, which may adversely impact our associated intellectual property. Developing open source products, while adequately protecting the intellectual property upon which our licensing programs depends, may prove burdensome and time-consuming under certain circumstances, thereby placing us at a competitive disadvantage, and we may not adequately protect our intellectual property. Also, our use and our customers’ use of open source software may subject our products and our customers’ products to governmental and third-party scrutiny and delays in product certification, which could cause customers to view our products as less desirable than our competitors’ products.
If you're serious about "reforming" software and standards patents, you should first carve off that area from pharma and bio patents. Make software just plain not patentable.
Why? Strategically, you don't want those drug people as enemies. They have an extremely powerful lobby in D.C. and many "reforms" that make sense in software would get them up in arms. Choose your battles.
I'm not convinced that pharma or bio patents are justified, either.
>Strategically, you don't want those drug people as enemies.
Oh, actually, yes, can we please ream the m*****f*****s already? To talk about a group of people like that, suggests that they wield far too much power. It gets worse when you learn about what they actually do. Enough already.
An "extremely powerful lobby" is not so scary when you outlaw the type of corporate lobbying they engage in. And the American people don't have to let you have a business.
Without drug patents drug discovery would completely stop.
I'm not averse to looking at alternative models for providing revenue to the drug discovery and testing infrastructure (the current model of patents is flawed as hell), but if you like new medications like the COVID vaccines then you have to respect the important of protecting the incentive to create them.
The whole premise is flawed. Drug research is a public good and should be publicly funded. Private funding horribly distorts incentives (only drugs that are lucrative enough to recoup R&D costs are funded).
>Without drug patents drug discovery would completely stop.
I don't believe that, but I won't convince you. Instead, I invite you to try to convince yourself. Imagine a world where drug discovery happens without patents. Talk it out, falsify your propositions as you go, see if you can come up with something workable.
I don't doubt that a workable alternative could be invented (and could improve on the deep flaws in the drug patent system), but it would be absolutely necessary to implement that alternative before removing the drug patent system.
"Remove the drug patent system" = Upset Kanye
"Replace the drug patent system with a new way to encourage drug discovery besides the honor system" = Smiling Kanye
You can use an intermediary and (quickly) transition. I'm not concerned about preserving economic value or whatever, just research and expertise. It would be nice to get this done before a crisis that tests the system (again).
Pessimists don't have a monopoly on reality, and society isn't obligated to limit itself to your low expectations just so that you can feel good about being right.
Face the reality that the status quo is unsustainable. Throw off your wishful thinking that things can go on like this without repercussion.
rather than me wasting even more time responding, why don't you go forth and pursue your all-encompassing patent solution, and report back on how it went?
And so we circle back around to the character of the status quo, where powerful lobbying groups have made it untenable to do anything without just straight-up murking them first. I suppose your suggestion was right: it truly is "100% or nothing." I appreciate your endorsement for the campaign to completely wreck these people's livelihoods for the greater good of society. Hope to see you on the front lines.
Pharma and bio patents are a troubling issue on their own. We're already seeing this with the patent issues surrounding the Covid vaccines in pharma and with Monsanto and their accomplices monopolizing the agricultural high-yield seed markets. They need to be broken as well.
Not only that, but the patent system is 100% essential to pharma research. Pharma takes a crapload of time from patent to market because of the many layers or trial safety. There are drugs that just plain miss their deadline -- setbacks during the testing process for enough time and then the patent expires and a medication with useful applications get lost to history.
If you substantially screwed with that without a very careful and thorough knowledge of the consequences, drug discovery could grind to a halt.
Remember, this is an industry that's more than happy to just stop making drugs and let all the sufferers die if it's not profitable enough.
I think mRNA vaccines provide a pretty strong counter-argument. And do you know how many heart patients are alive today thanks to apixaban? Before that drug people were taking literal rat-poison as an anticoagulant.
> Before that drug people were taking literal anticoagulant as an anticoagulant.
and now they are taking a different literal anticoagulant as anticoagulant.
w00t!
Quick question- will a massive dose of apixaban kill a rat the same as a massive dose of an anticoagulant will?
mRNA's are novel, on this we can agree, and I have no issue with their use.
Other sectors of the drug market are less novel and more about slightly different for the purposes of starting the clock on drug copyrights and licencing again.
Patents as a driver for drug discovery has problems too. The most obvious is it means there is very little incentive to research and get FDA approval for treatments that aren't patentable, even if those might lead to better outcomes than patented treatments.
Motorola makes 18% [https://valustox.com/MSI]
Broadcom, Nvidia, and even Texas Instruments are around 40%! [https://valustox.com/AVGO, https://valustox.com/NVDA, https://valustox.com/TXN].
Intel and AMD bring up the rear with 1.8% and 0.5%. [https://valustox.com/INTC, https://valustox.com/AMD]
For reference, Apple is at 25% and Tesla is at 11%. https://valustox.com/AAPL, https://valustox.com/TSLA]