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Site Meter Justice Department Investigating Nortel Patent
- Thread starter BUTCH1
- Start date
It's unlikely that the sale will have much of any impact. First of all, many of the companies involved in the smartphone market should already have existing licensing deals, so they're fine. Also, since the patents are part of the 4G standard, the holders will be required to license them under FRAND terms, so there's no way to lock anyone out of the market with these patents.
There was never any evidence of this, merely a lot of baseless speculation by bloggers and tech journalists looking for more page views.
YoungGun21
Platinum Member
So who bought it then?
True, it's still relevant though, sadly, if anyone who makes a tablet or phone has to pay MS it might kill Android..
Based on my understanding of how the deal worked out, Microsoft just owns a license to those patents and can't use them in any lawsuits, even if they wanted to do so. The patents with which Microsoft has either sued other companies or threatened litigation have nothing to do with those that they bid on in the Nortel auction.
Really, then why did MS, Apple, and RIM shell out 5+ BILLION for them when they were valued at less then 1 billion?
Bateluer
Lifer
Open source software and consumer choice are cancers that must be exterminated, no matter the cost.
because they then share the patents which can become a standard. i remember in the 1990's qualcomm's patents meant huge licensing fees
Owning these patents probably makes the cost for each company to incorporate 4G technologies in any of their products a lot cheaper.
In a few years, Apple will probably be selling well over a quarter billion iOS devices each year. If owning these patents saves them a few dollars in licensing costs for each device, it pays for itself over time. Similarly, Microsoft could bake the patents in to their Windows Phone 7 licenses to save the handset manufacturers some money and make WP7 a more attractive platform.
The fact that they went for over $5 billion suggests that they were initially undervalued by a large amount. Go look at almost any eBay bid that starts at a dollar, but ends much higher. Would you naively suggest that the items were only worth a dollar?
It's been pointed out that these patents would not be good lawsuit material. Many of the companies that Apple/Microsoft might want to sue should have already been licensing these patents for their existing 4G products. Also, these patents are a necessary part of the LTE standard, and as such courts would require that the owners license them under FRAND terms.
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YoungGun21
Platinum Member
250 million per year? Are you kidding?
Nope.
The iPhone has been selling something like 20 Million per quarter now and they've been growing nearly 100% year over year. Obviously that rate can't continue forever, but smart phones still aren't the majority of the phone market so there's plenty of room for growth. Apple's overall market share has remained stable for several years and most of Android's growth has come at the expense of RIM and Nokia, so there's no reason to assume Apple will fall off the map.
Additionally, there are going to be a decent number of 4G capable iPads sold in the future, and Apple may also provide 4G connectivity in their notebooks. They've been doing well in both of those markets and non-phone devices could easily contribute 50 million to that number within 3-5 years. This also doesn't include any other products which may also be released in the future.
It may also indicate a move towards Apple putting together a design team to make their own baseband hardware. Qualcomm is already starting to move 4G onto the SoC, so it's logical that Apple may also be heading in that direction. Having a massive patent portfolio would give them the ability to cross-license other necessary patents that they would need to do this while avoiding lawsuits.
YoungGun21
Platinum Member
They just now have passed 250 million total. That's since 2007.
What you say is completely true, but what part of "the market is growing like crazy" are you not understanding?
There are currently somewhere between 4 and 5 billion mobile phone subscribers. Eventually almost all of them will be using smart phones. 250 Million sales per amounts to around 10% of the market assuming that people upgrade roughly every 2 years.
And that's just phones.
theeedude
Lifer
The DOJ is also conducting an anti-trust investigation of Google. Seems to me that they investigate a lot of deals, but rarely get in the way. Let's not pretend that a DOJ investigation has much actual meaning.
YoungGun21
Platinum Member
Considering the growth of Android, the introduction of WP7, the cost of owning an iPhone/iPad, and the 2 year contract cycle in the US which is Apples biggest market, there is no way they will sell 250 million per year. Major changes would have to take place in the market for this to happen. And even if they did it one time (still not likely), it isn't sustainable. 250 million a year means that (obviously) after 2 years they have half a billion new product on the market which wasn't there two years ago. People would just begin buying used (a trend I think we will begin to see more often in mobile devices relatively soon), which would cut sales tremendously.
Number of cell subscriptions worldwide: ~5 billion
Purchase frequency of new phone: ~4 years
Apple's share of the market: ~25%
Under those conditions, Apple would sell about 250 million new devices each year. Four years is a fairly long time and accounts for people using phones longer or some people getting a hand-me-down instead of immediately upgrading.
It also doesn't take into account iPads sold with 4G or any other products that apple adds 4G wireless capabilities into in future. Within 5 years, the will easily be selling 250 million 4G capable devices per year.
You could claim that Android will eat into their market share, but the numbers really don't support that conclusion. Apple has stayed stable over several years and if you look at the recent numbers, they usually gain some small percentage overall. Android growth has come predominantly at the expense of Nokia, RIM, and other platforms.
theeedude
Lifer
It has meaning that they are investigating potential collusion. Keeps the consortium in check.
Fire&Blood
Platinum Member
No, no one can into the iOS market share. What Android can do is eat into the iOS market share growth with products at different price points, form factor and size variety. Existing iOS users are tied into the ecosystem tightly and very difficult to sway away from iOS. But there is a significant growth in new smartphone users and those abandoning the RIM, Winmo and Symbian platforms. The battle for those who are yet to be tied into an ecosystem is an all year round business across the world and Apple's prices in most emerging markets present Android as a viable alternative.
iOS is growing and will continue so. No other single OEM can beat Apple's numbers but combined they can present new activation numbers that outpace Apple. Past numbers are not necessarily indicative of market trends now, Apple remained unchallenged at top for a long time while other platforms, including Android looked like they were stuck in some kind of beta stage.
Apple's market share is secured with it's ecosystem, the ties to keep the users in are stronger than Android or WP7. If Android can direct the majority of new smartphone users it's way, between Apple's product cycles iOS remains unharmed, it's big enough to sustain itself and temporarily revitalize the growth rate.
When they investigate everyone for pretty much anything and never really prevent any sales or mergers, a DOJ investigation becomes less sinister and just business as usual.
I doubt that they'll prevent the deal, probably because the parties involved will explain to them why these patents aren't good for lawsuits, for the reasons that have already been laid out here and elsewhere.
My assumptions for why Apple can easily sell 250 million 4G enabled devices per year already takes into account that Apple's market share probably won't increase drastically or change much at all. They don't need need more than 25% of the market to hit those numbers so it doesn't matter at all if Android expands to fill that other 75%.
Apple selling 250 million units in one year doesn't preclude other companies or platforms from selling just as many if not more devices.