Licensing as a Business
I'm in San Diego, home to QC, and have been closely watching the company for three decades.
For many reasons, QC consciously and explicitly chose to aggressively balance its fabless physical chip business against its patent portfolio. The mobile market was growing faster than QC could ever handle, and becoming a one-stop-shop for phone IP and premium chipsets would sustain QC's truly enormous R&D expenditures.
QC has created much of what makes today's mobile bleeding-edge possible. Not just the modem technology, but also all the other hardware and software needed to make it all work together as a seamless whole in the customer's hand. QC doesn't just sell parts and license patents, it provides entire solutions that help phone makers get the latest tech to market sooner.
It is important to note that QC pushes prices this hard mainly for its bleeding-edge tech. Their prior-generation and lower-end solutions are competitive enough on a cost basis to keep other players fighting on the margins. The main complaints against QC center on this practice: Charging through the ceiling for the latest tech in order to subsidize the other stuff.
Have you noticed the recent batch of mid-tier phones with QC chips? My own Moto G5 Plus is a splendid example of this, with its Snapdragon 635 providing 80% of the overall performance of a bleeding-edge phone for 1/3 the price. Why pay more?
I'll bet this is what REALLY pisses Apple off. Killing QC, and it's entire approach to business, is the only way for Apple to maintain it's insane margins while also moving into the mid-market.
This is a very intentional business practice on the part of QC, one that would instantly evaporate if their R&D ever fell behind. Every year they bet their entire future on their own continued ability to out-innovate the rest of the planet. And when they gain that edge, they cling to it using every available means.
From one perspective, QC's chip business is simply convenient packaging for their IP, more than it is a desire to sell silicon.
If Apple, or anyone else, was truly upset with QC's aggressive practices, they could, like any good Capitalist, choose to shop elsewhere. MediaTek and others make phone chipsets that are only slightly behind the bleeding-edge set by QC, and have less costly terms. But they are just parts, not complete solutions.
Did you know QC has more Android engineers than Google? QC does major R&D at all levels of phone tech. QC doesn't have more IOS engineers than Apple, but it has plenty of them too.
ALL first-tier phone makers repeatedly choose QC for their flagship phones. Because it's simply the best way to get the latest & greatest phone tech to market soonest.
Apple simply wants to pay less for it. And rather than compete with QC on an R&D basis, they instead attack it on a financial/legal basis.
Apple has made so much money shipping phones with QC chips that it seems insane for it to choose to do otherwise. So it clearly wants to "break" QC. And it needs to do so NOW, before QC IP gets established in 5G, and before the mid-tier hurts them any more.
This is not "really" about FRAND or similar issues: It's about killing QC before 5G. This is a fairly narrow window.
If you review history, this is not a new tactic. It seems QC attracts lawsuits whenever it prepares to roll out new IP. Right after the phone makers have a ton of cash from profits built on selling phones with QC chips.
Strange pattern, that.
QC has repeatedly proven itself to be the best at rapidly developing new phone tech and bringing it to market. Why isn't Apple, with it's QUARTER TRILLION dollars in cash, funding R&D competition itself?
Why doesn't Apple simply buy QC and dictate the terms it wants?
Or, more to the point, why doesn't Apple simply pass on the latest QC tech and stick with older and less expensive solutions?
No, Apple has decided that the courts are the cheapest way for it to improve its bottom line.
It's that simple.
QC is not innocent in any of this: They are aggressive because they have done the R&D needed to stay in front of all competition, to set the bleeding edge. Their practices are illegal in many countries. But those countries don't create phone IP, and they don't make phone chips, so to QC they simply don't matter.
Look at what happened in India when QC chips were (briefly) banned: The entire industry revolted, and the ban quickly was replaced with a fine that was never paid. QC knows how to leverage its tech, its customers, and its entire market.
QC has encountered rough times before, and they've ALWAYS fought their way back by sustaining and leveraging their R&D prowess.
If I were QC, I'd make their next-gen chips available to everyone BUT Apple, and see what happens to Apple's suit.
Sure, QC will play hard in the courts. But they will also double-down on their R&D golden goose to get that next Golden Egg out there and into the hands of all the OTHER top-tier makers, probably right about when the iPhone 8 starts to ship. To make the iPhone 8 obsolete before it ships in volume.
Apple's tactics are strictly short-term: QC has the better long-term vision, if they can survive the short-term squeeze.