Galt's Gulch

Smartphone royalties now equal manufacturing costs

Posted by freedomforall 11 years, 9 months ago to Business
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A new study, performed by two lawyers from intellectual property firm WilmerHale with help from a top Intel legal officer, suggests that the royalties now paid for smartphones rival the phone’s manufacturing costs. This, in turn, suggests that the current manufacturing and royalty systems aren’t sustainable in the long-term.
SOURCE URL: http://www.geek.com/mobile/smartphone-royalties-now-equal-manufacturing-costs-1595343/

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  • Posted by Robbie53024 11 years, 9 months ago
    Perhaps there should be some mechanism like Moore's law regarding royalties for IP technologies. The first generation has full length, second gets half length, third a half of that (1/4), etc. This provides the incentive to develop the initial technology, but subsequent minor refinements are less and less valuable, so that would support new innovation, and reduce the costs for subsequent developments.
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    • Posted by dbhalling 11 years, 9 months ago
      That would actually result in slower adoption and if truly enforced probably be more expensive not to mention a nightmare to implement (actually impossible).

      Royalties for patents are not holding up the development or dissemination of technology. In fact, the exact opposite is happening. A lack of support for patents (strong property rights for inventions) is resulting in severe under-investment in new technologies. This also holds down what engineers get paid.
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  • Posted by dbhalling 11 years, 9 months ago
    I would argue that the IP cost of a smart phone is much higher than that. The raw materials in a smart phone are less than $5 and labor, distribution, etc might add another $15. The rest of the cost is really IP.
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  • Posted by $ MikeMarotta 11 years, 9 months ago
    As with probably all laws, intellectual property laws show evidence of denials of reality and internal contradictions. Nonetheless, it seems that the value of intellectual property within a smartphone demonstrates the power of the marketplace. It would be "I, Smartphone" for Leonard E. Read's "I Pencil."

    One thing that bothers me is that all the applications are bundled. My G5 has a compass and a level. Sometimes a compass is handy, but mostly, I know the sky and streets well enough.

    I cannot imagine using the level in my real daily life - and I have spirit levels in my tool box. On the other hand, the calculator is brainless for brainless people: 4 functions[ plus a % that shifts the decimal two places to the left; and a +/- so that you can subtract in the wrong direction. I prefer one that allows trig and other common math functions, and computer maths (hexadecimal, octal, and binary). No one asked me what I wanted.

    I like the camera, but I do not need the "Photos" app that lets me create folders, etc. I use my computer for that. I do not sit around showing phone pictures to my friends like kids do. I actually manage the images, most often for business in some way.

    The weather button is not the service I want. I prefer AccuWeather; I was given Yahoo - which is not really a weather service.

    And so on...

    But I appreciate the fact that apparently millions of other people are happy with all of that and are willing to pay to get it.

    Cellphone technology could be frozen in 1999 and they would be great phones. But people want more than that. So, the pencil comes with an eraser ... and a barometer...
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