Author: Jack Gold / Source: VentureBeat
Now that Apple and Qualcomm have settled their dispute, people are trying to pick winners and losers of this extended battle. The market has picked Qualcomm as the primary winner judging by its stock price, and that may be true, but it’s also too simplistic. Below is my analysis.
Apple – Apple both lost (to Qualcomm) and won (because of Qualcomm). My view is that Apple was trying to strong-arm Qualcomm into selling it products (and royalty licenses) on the cheap so Apple could increase its own already high margins. In this effort it lost. But including Qualcomm chips in its next generation of smartphones means that it will have industry leading performance. That’s something its users have grown to expect from Apple. In this case, it won, and this is a more important result than potentially achieving some cost savings by going after Qualcomm sales practices. It ultimately will offer a far greater reward and better leverage in the market.
Qualcomm – The big winner here is Qualcomm, on multiple fronts. First, it was willing to take on an industry giant like Apple and not be cowed into submission. Second, it showed that its technology, especially relating to 5G, is mission critical. Third, and perhaps most importantly, it showed that its implementation of 5G in its modems is industry leading – both in performance and time to market. As it currently stands, Qualcomm has no equal in supplying 5G modems to the major (and minor) OEMs of 5G smartphones. While Huawei claims it is shipping it own 5G modem, it is a captive supply to its own devices, and therefore it’s hard to see the company as a threat. It’s also not possible to truly compare the performance to shipping devices with Qualcomm modems, as real devices are not yet in full production and not yet connected to production 5G networks. A this point, Qualcomm has achieved a near monopoly in the commodity market for 5G modems – at least in mid- to high-end devices.
Intel – Intel announced, the same day as the Apple/Qualcomm settlement, that it was getting out of the 5G modem business as relates to phones. It did not say it was abandoning the 5G modem business altogether, as some have interpreted the announcement. Many have speculated that Intel got out because it could not be a credible alternative to Qualcomm 5G chips for Apple, its largest 4G modem customer, and that is the main reason Apple settled on such favorable terms to Qualcomm. But Intel’s decision is more strategic than that. One could argue that in buying Infineon…
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