For All SNS Members:

As you likely have heard, Qualcomm and Apple have just announced a settlement to their years-long global legal battle. The causes and pressures behind this settlement are likely as interesting and important as the results. There is every reason to believe that this may be the most important strategic technology event of the year.

Here are some of the most interesting causes and pressures behind this settlement:

1. Apple’s Tim Cook came to the belated and correct conclusion that his strategy of using China’s market as his key to global success was not only misguided, but also suicidal for the company.
    
2. The rollout of 5G was catching Apple without the fastest chips, and thereby likely to lose increasing share to Samsung and other Android phone makers, including those already eating Apple’s lunch in China.
    
3. Qualcomm could ill afford to continue operating without its most important customer, Apple.
    
4. Without that customer, Qualcomm’s dominant role in 5G was threatened by Huawei, now a chipmaker as well as a phone maker.
    
5. The outcome of the trial, no matter the winner, would have made losers of both companies.

And here are some of the primary results of the settlement:

1. Qualcomm gets a one-time payment of an estimated $2.5B, plus a renewed six-year agreement with Apple.  
    
2. Qualcomm gets to keep its business licensing model intact, surprising almost everyone, even if the fees are somewhat less than before. Stock immediately went up 23%.
    
3. China loses its effort to split the top two US players in the mobile market, as it pushes Huawei into their combined roles.
    
4.  The Chinese manufacturers that egged Apple into this mess will now also have to pay arrears. No telling how Apple will feel or deal with them in the future.
    
5. Apple gets to be a 5G player, just in the nick of time.
    
6. Intel is out of not only the 5G market (its brightest new shot at a return), but also of the entire mobile market. Wow. Intel, the server company.

Summary: Everyone wins in this settlement, except: a) China; and b) Intel.

That makes for interesting bedfellows, no?

We should all be pleased and excited by this settlement, and look forward to not only Apple and Qualcomm prospering by taking the right step, but also to the entire global technology ecosystem around mobile and 5G.


Your comments are always welcome,

Mark Anderson

CEO
Strategic News Service