Juha Saarinen: Smile on Qualcomm's dial at Apple truce

Apple needs a 5G iPhone sooner rather than later now that competitors have announced smartphones with the go-faster wireless tech. Photo / Supplied

COMMENT:

Just before Easter, tech journalists were in "here-we-go-again" mode as another episode in the Apple vs Qualcomm legal battle started in a United States courtroom.

The two had been lobbing legal hand grenades at each other for the last few years over wireless modem licensing, and the trial was expected to be a long, protracted affair. As such, it might offer some interesting glimpses into Silicon Valley intrigues, but it was guaranteed to be excruciatingly complex to follow as well.

For a very long time too: mega-rich tech companies with Big Expensive Lawyers have liked engaging in wars of attrition against one another. Apple took Samsung to court over patent infringement in multiple countries, and won after seven years; Oracle vs Google lasted a year longer and there are many other cases that have taken ages to resolve.

You can't but feel for jurors trying to get their heads around arguments around arcane licensing agreements and whether software can be copyrighted, for months on end.
To everyone's surprise and collective relief, the jurors were spared the lengthy agony. Apple got as far as comparing Qualcomm's business model to a punter wanting KFC and instead of just buying a bucket of chicken, having to go to another counter and buy a licence to buy the food; then the legal cage fight was called off.

A terse media release said Apple and Qualcomm had agreed to can all the ongoing litigation and that the two had entered into a six-year deal to license modem tech, with an option to extend.

Yes, Apple would have to pay Qualcomm, with estimates of the cost being in the US$6-7 billion ($9-10.5b) range based on US$11-13 per iDevice.

What happened? Well, the tiny wireless electronic modems in smartphones and tablets are amazing wonders of technology. Not only do they support a large range of vastly different frequency ranges — remember that 5G will use normal cellphone bands as well as very high-frequency millimetre wave ones, but they also work seamlessly with existing 4G LTE and older tech such as 2G and 4G.

Qualcomm was the original modem supplier to Apple, but the relationship soured. To cut out Qualcomm, Apple asked Intel to develop cellular modems for iPhones and iPads.

Nice idea, except that Intel wireless modems were never as good as Qualcomm parts. Apple reportedly spoke to rival Samsung, Taiwan's MediaTek as well, and even pondered the politically impossible with Huawei's Balong 5000 chip set in iPhones.

Then Intel told Apple in February that it would not have 5G modems ready until next year some time. That delay would be a disaster for Apple which needs a 5G iPhone sooner rather than later now that competitors have announced smartphones with the go-faster wireless tech.

In fact, promising the chips by 2020 seems to have been unrealistic by Intel. Shortly after the Apple-Qualcomm settlement was announced, Intel said it was getting out of the 5G modem business altogether; it wasn't profitable.

For Qualcomm this must have been like a double Lotto win, and the company's share price shot up. It is tough for Apple to swallow and the company is said to be working on in-house modem technology, meaning Qualcomm investors' joy over the win might only last a year or two.

Oddly enough, Intel's share price went up as well, apparently due to investors thinking the company would never get the modems right and it was better to get out now instead of failing later. Cost savings from the modem business being shut down also appealed and Intel could focus on its bread and butter x86 processor business.

The latter will be one to watch if Apple wants utu for the modem fiasco. Intel processors populate the motherboards of MacBooks and iMacs currently. Apple designs its own processors, however, and they're getting faster and faster while being very energy-efficient with each iteration.

Apple's latest A12X Bionic in the new iPads is up there with speedy x86 processors, and nobody would be surprised if Apple launches a laptop without Intel inside, but with a Qualcomm 5G modem next.