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As a former worker at Blackberry(RIM) cellular chip division (hello fellow RCT-ees), this article explains so much it physically hurts me. RIM pushed hard to d

As a former worker at Blackberry(RIM) cellular chip division (hello fellow RCT-ees), this article explains so much it physically hurts me. RIM pushed hard to develop its own chip 3G/4G chips because Qualcomm absolutely strangled the company with its licensing cost/terms. They pretty much demanded a separate cellular R&D team (QCT) that duplicates half the effort. All CDMA based phones must contain chips from QCT because Qualcomm holds CDMA patents and they won't license them to anyone. Finally, Qualcomm was, while very technically competent, will give you no assistance whatsoever if you deviate from what they want you to do. Basically 'my way or the highway.' Edit: As an aside, my heart goes out to Intel's defunct Infineon-based 5G modem team.

macspoofing 7y ago
Did they really 'strangle the company'? Blackberry had a meteroic rise and they collapsed because of iPhone and (later) Android.
- ansible 7y ago
  That's a good question. Yes, margins are low for most phones, most of the time. And cheaper modem chipsets would help with that. But if everyone had cheaper chipsets... then the phones would be a little cheaper. But I don't think that would have changed the competitive landscape at that time. There was a fundamental change in phone capability and interaction that really shifted the market, and made new winners and losers.
- protomyth 7y ago
  After reading about it particularly "Losing the Signal: The Untold Story Behind the Extraordinary Rise and Spectacular Fall of BlackBerry", I think guardiangod is correct, but also Verizon and, to a much lesser extent, the whole stock dating scandal. If Verizon hadn't been so gun-ho for an iPhone killer, Blackberry would probably of got to something like the Passport a whole lot faster. They needed to stay in their lane for a bit longer. Their market cap actually hit its max a year after the iPhone. I wouldn't call RIM / Blackberry a meteroic rise. They start in the mid 90's and built up the products in a pretty smart way with each following the next until the total shift of the Storm.
  - guardiangod 7y ago
    I can't get into details, but basically I agree with you. The Storm...was a product of many compromises. But it's only the start of a series of decisions that...
    - protomyth 7y ago
      I dearly wish someone would explain the whole idea of why Blackberry built the Playbook. It seems like a product that was so forced with such a confusing development story.
      - frosted-flakes 7y ago
        I've heard that the Playbook was actually in development before Apple's iPad was announced, and after that it got rushed out. I don't remember where I read this (it was a couple of years ago), so I don't know how accurate that is.
      - godzillabrennus 7y ago
        I worked with a VAR when that shipped. They gave us some to try and encourage sales. It was a terribly slow device with poor battery life compared to iPad. I still use the well made power adapter (Micro USB) that came with it to charge devices to this day. Kinda sad seeing that blackberry logo and knowing the tablet was horrible.
      - guardiangod 7y ago
        Not sure how much I can share without giving myself away but... As an active participant in Playbook's entire development from (near) start to end, there were multiple reasons. They weren't good reasons (most of my colleagues had, eh, concerns which got override,) but they somewhat made sense. What happened was that multiple teams (internal and external) screwed up, so much so that the thing's internal was completely redesigned half way through development ie. Switched to a completely different SoC . As another poster noted, their power supplies were great. I still have a couple left around my house. They had to be great partly because of a design oversight....
- _Codemonkeyism 7y ago
  I was a die hard Blackberry (my business phone, using a private iPhone) user, the last one perhaps in the large corporation I've worked for. Then the Passport launched, LOVED the format, best format ever squared and large screen, beautifully fitting everywhere though being larger, loved the TOUCH keyboard, loved the unified messaging but had NO F* network connection ever. Just could't be called or call others. A second Passport the same. Then one got dropped and it totally broke internally, the "steel frame" didn't help in any way, I assume it contributed due to its weight and momentum.
- calyth2018 7y ago
  That's like saying all of the US's problem is Trump. Reality is often a bit more nuanced than that. Patent licensing fees were a big part of the equation, which led to inability to lower costs to compete.
  - macspoofing 7y ago
    >Patent licensing fees were a big part of the equation, which led to inability to lower costs to compete. Yes. OP asserted that too. Like OP, you haven't actually given a reason why. Here's some counter-arguments: 1) BB grew exponentially all the while paying Qualcomm licensing fees - why didn't it affect them then? 2) EVERYONE was paying the same licensing fees to Qualcomm. You couldn't build a smartphone connected to the cellular network and not pay those fees. So are you saying that it affected BB more than it affected Apple, Palm, MS, Samsung, etc. ?
    - calyth2018 7y ago
      BB phones, <= v7, are split between an internal gear without Qualcomm, and the CDMA capable stuff is with Qualcomm. So they would have to pay Qualcomm even for the phone with internal gear. As to #1, around BBOS v5 and v6, when they were pretty much top dog, all the cellphone accounts that wants to use a BB pays a service-access fee, or a BlackBerry Tax that goes to the company. Enterprise companies that want their emails and everything else also pays for the BlackBerry Enterprise Server. They were practically the only game in town. They didn't have problem then, because they were rolling in cash; just like how they didn't have a problem basically buying up Philips st expanding, or keep coming up with phone models even though there's no way that there's enough demand to actually absorb the production. #2 on top of needing to deal with Qualcomm licensing fees, which often applied (as the article stated) on non-qualcomm phones, they basically freaked out after losing that lawsuit to the patent troll, so they end up overpaying for licenses (not sure who's the licenser in this case) to avoid getting hit with more patent trolls. The contracts for those licenses were quite hard to get out of. By the time they were making the BlackBerry Priv, they don't have the SAF to juice their income. Patent licensing, Qualcomm and others, were disproportionally high, compared to other Android providers. They can't renegotiate some of them due to the contract wording. Being 1% of the market means Qualcomm hardly cared to give support, because Qualcomm is far more likely to help Samsung and other android phone, that pushed out far more numbers than BlackBerry did at the end. It ends up being that they end up licensing their brand, because had they manufactured their own phone, they'd have to deal with the patent licensing contracts that they can't get out from. There's probably a reason why OP won't be too forthright in describing why. I'll leave that as an exercise to the reader.
sriram_sun 7y ago
I know one person who works in that team. Said he was driving to lunch and heard the news that Apple and Qualcomm had reached a deal. So he buys a few Qualcomm shares (he sold them at peak!), gets back to work and then this e-mail shows up saying Intel is getting out of the 5G modem business. I'm paraphrasing here: "The sight of a whole floor of heads popping up from their cubes at the same time... what an experience!" So everyone there is hoping that Apple buys them out.
- kyrra 7y ago
  My bet is that Apple buys Intel's modem parents and hires most of the staff from Intel that was doing modem chips. Apple already has a team that is likely working on this. https://9to5mac.com/2019/04/03/apple-modem-iphone-intel/ https://9to5mac.com/2019/04/03/apple-modem-iphone-intel/
  - zelon88 7y ago
    Why would Intel sell that though? Selling toast isn't easy when you let the customer borrow your bread and butter. To put it another way, Apple took their ball and went home. No soup for them!
    - kevin_thibedeau 7y ago
      Intel has a track record of selling off assets that end up being valuable in the future.
      - godzillabrennus 7y ago
        Basically Intel is trying to give away their market share like IBM did. FYI - IBM handed Microsoft and Intel a big chunk of market share because who would ever want a personal computer...
        mannykannot 7y ago
        > IBM handed Microsoft and Intel a big chunk of market share because who would ever want a personal computer... I believe it was because they needed a PC in a hurry. I have heard that Ken Olsen ridiculed the IBM PC for its crude design, but it was the beginning of the end for DEC.
tooltalk 7y ago
> Qualcomm holds CDMA patents and they won't license them to anyone I thought chip-makers weren't required to license QCOM's patents -- QCOM like all other wireless SEP holders only collect licenses at system-level.
aey 7y ago
I don't think Qualcomm strangled RIM with their 3.4% (peak!) licensing fee on the selling price of the phone. If RIMs profit margin was 3.5% they had bigger problems. Here is the thing. If Apple sold a 2G network based iPhone with a non Qualcomm IP modem, and a 4G iPhone at 2x the price with a Qualcomm modem, which one would make more money for Apple?
- mbreese 7y ago
  Why should the price of the phone matter to Qualcomm? Did they have anything to do with the CPU, screen, memory or battery?
  - tooltalk 7y ago
    > Did they have anything to do with the CPU, screen, memory or battery? Sure, without QCOM's IP, other non-wireless parts of the phone won't add/contribute as much value or drive market demand for the phone.
    - Analemma_ 7y ago
      But they're adding a fixed amount of value regardless of the phone, and so they should get a fixed sum per phone. This business where they get a percentage of the retail price is ridiculous. Consider the 64 GB iPhone XS selling for $1000 vs the 512 GB one for $1349. Is Qualcomm adding any extra value to the second phone as compared to the first one? Obviously not, so why should they capture any of the extra purchase price?
      - cwilkes 7y ago
        If they just charged a flat rate then no low end phones would use their tech as it would eat more heavily into their profit.
      - aey 7y ago
        Yes, because the value of the 512gb without the qualcomm modem is lower than the 64GB version. Free market pricing is based on demand of the feature not the cost to make it. Qualcomm should be pricing the part at the point where the phone without the qualcomm part is equal value per dollar.
systemBuilder 7y ago
Qualcomm charges the same 4-5% patents price to license to EVERY manufacturer. You have no idea what you are talking about. They did a 3%(domestic sales) - 7%(exports) deal in China because it was a poor country in the early 2000's and they demanded it but Chinese makers later switched back to the 4-5% deal.
vkaku 7y ago
I'd say Intel should just spin out it's 5G modem team and let a neutral (!Apple) vendor develop it. Samsung should start selling 5G modems in NA as well. I know this stuff isn't going to work in the short term, but this is the sort of choices we need.
- hajile 7y ago
  Semiaccurate has a rather interesting take here. TL;DR is that modems are very hard to make. Intel's modems were much slower and used much more power for last generation. They ran into issues and don't seem to even have a shippable 5g chip. https://www.semiaccurate.com/2019/04/16/qualcomm-just-beat-apple-into-sumbission/ https://www.semiaccurate.com/2019/04/16/qualcomm-just-beat-a... https://www.semiaccurate.com/2019/04/18/why-did-intel-kill-of-their-modem-program/ https://www.semiaccurate.com/2019/04/18/why-did-intel-kill-o...
  - ksec 7y ago
    Semiaccurate also said Intel's 10nm is dead. And Nokia was going bankrupt. So please, please, stop bringing up SemiAccurate on HN.
    - wtallis 7y ago
      Intel's 10nm was a failure. Cannonlake was a mostly broken chip. It's taken them a year and a half from shipping Cannonlake to starting to ship Ice Lake. The 10nm process Ice Lake is fabbed with is not the same process Cannonlake was fabbed with; Intel has disclosed a few of the changes that were made in order to produce a viable chip, but we won't know the full extent of the changes until TechInsights gets their hands on an Ice Lake chip.
      - ksec 7y ago
        Icelake was never meant for the 10nm used in Cannonlake, it was a 10nm+ part. 2nd the shrink is there, at least according to what just announced ( or picture shown ) in Computex by counting how many die on Wafers. 3rd They are shipping it, we don't know yield but we know they are shipping it at least in decent quantities. And 4th, 10nm is not dead, Intel is not skipping it for 7nm. Nokia is not dead either. And it doesn't matter how anyone spin it, SemiAccruate is like tabloid of Tech Report, and to ensure the quality of news I personally believe it should serve no role on HN.
kevin_thibedeau 7y ago
> They pretty much demanded a separate cellular R&D team (QCT) that duplicates half the effort. They could have formed a joint venture with other manufacturers to split the development costs.
ngold 7y ago
>Qualcomm's first weapon against competitors: patent licensing terms requiring customers to pay a royalty on every phone sold—not just phones that contained Qualcomm's wireless chips. This gave Qualcomm an inherent advantage in competition with other chipmakers. If another chipmaker tried to undercut Qualcomm's chips on price, Qualcomm could easily afford to cut the price of its own chips, knowing that the customer would still be paying Qualcomm a hefty patent licensing fee on every phone. And that was just the start. Fantastic article. Qualcomm, man, just evil business practices that worked for a decade and may continue depending on appeals.
- ksec 7y ago
  And if Ericsson, Huawei, Samsung, or ZTE had offer a modern modem, it would be the same.
calyth2018 7y ago
Yup. And I remember how quickly all the press panned subsequent attempts, saying BlackBerry overcharged. This is one big piece of that puzzle. I'd still kill to have a vertical slider for a phone...

macspoofing 7y ago

Did they really 'strangle the company'? Blackberry had a meteroic rise and they collapsed because of iPhone and (later) Android.

ansible 7y ago
That's a good question. Yes, margins are low for most phones, most of the time. And cheaper modem chipsets would help with that. But if everyone had cheaper chipsets... then the phones would be a little cheaper. But I don't think that would have changed the competitive landscape at that time. There was a fundamental change in phone capability and interaction that really shifted the market, and made new winners and losers.
protomyth 7y ago
After reading about it particularly "Losing the Signal: The Untold Story Behind the Extraordinary Rise and Spectacular Fall of BlackBerry", I think guardiangod is correct, but also Verizon and, to a much lesser extent, the whole stock dating scandal. If Verizon hadn't been so gun-ho for an iPhone killer, Blackberry would probably of got to something like the Passport a whole lot faster. They needed to stay in their lane for a bit longer. Their market cap actually hit its max a year after the iPhone. I wouldn't call RIM / Blackberry a meteroic rise. They start in the mid 90's and built up the products in a pretty smart way with each following the next until the total shift of the Storm.
- guardiangod 7y ago
  I can't get into details, but basically I agree with you. The Storm...was a product of many compromises. But it's only the start of a series of decisions that...
  - protomyth 7y ago
    I dearly wish someone would explain the whole idea of why Blackberry built the Playbook. It seems like a product that was so forced with such a confusing development story.
    - frosted-flakes 7y ago
      I've heard that the Playbook was actually in development before Apple's iPad was announced, and after that it got rushed out. I don't remember where I read this (it was a couple of years ago), so I don't know how accurate that is.
    - godzillabrennus 7y ago
      I worked with a VAR when that shipped. They gave us some to try and encourage sales. It was a terribly slow device with poor battery life compared to iPad. I still use the well made power adapter (Micro USB) that came with it to charge devices to this day. Kinda sad seeing that blackberry logo and knowing the tablet was horrible.
    - guardiangod 7y ago
      Not sure how much I can share without giving myself away but... As an active participant in Playbook's entire development from (near) start to end, there were multiple reasons. They weren't good reasons (most of my colleagues had, eh, concerns which got override,) but they somewhat made sense. What happened was that multiple teams (internal and external) screwed up, so much so that the thing's internal was completely redesigned half way through development ie. Switched to a completely different SoC . As another poster noted, their power supplies were great. I still have a couple left around my house. They had to be great partly because of a design oversight....
_Codemonkeyism 7y ago
I was a die hard Blackberry (my business phone, using a private iPhone) user, the last one perhaps in the large corporation I've worked for. Then the Passport launched, LOVED the format, best format ever squared and large screen, beautifully fitting everywhere though being larger, loved the TOUCH keyboard, loved the unified messaging but had NO F* network connection ever. Just could't be called or call others. A second Passport the same. Then one got dropped and it totally broke internally, the "steel frame" didn't help in any way, I assume it contributed due to its weight and momentum.
calyth2018 7y ago
That's like saying all of the US's problem is Trump. Reality is often a bit more nuanced than that. Patent licensing fees were a big part of the equation, which led to inability to lower costs to compete.
- macspoofing 7y ago
  >Patent licensing fees were a big part of the equation, which led to inability to lower costs to compete. Yes. OP asserted that too. Like OP, you haven't actually given a reason why. Here's some counter-arguments: 1) BB grew exponentially all the while paying Qualcomm licensing fees - why didn't it affect them then? 2) EVERYONE was paying the same licensing fees to Qualcomm. You couldn't build a smartphone connected to the cellular network and not pay those fees. So are you saying that it affected BB more than it affected Apple, Palm, MS, Samsung, etc. ?
  - calyth2018 7y ago
    BB phones, <= v7, are split between an internal gear without Qualcomm, and the CDMA capable stuff is with Qualcomm. So they would have to pay Qualcomm even for the phone with internal gear. As to #1, around BBOS v5 and v6, when they were pretty much top dog, all the cellphone accounts that wants to use a BB pays a service-access fee, or a BlackBerry Tax that goes to the company. Enterprise companies that want their emails and everything else also pays for the BlackBerry Enterprise Server. They were practically the only game in town. They didn't have problem then, because they were rolling in cash; just like how they didn't have a problem basically buying up Philips st expanding, or keep coming up with phone models even though there's no way that there's enough demand to actually absorb the production. #2 on top of needing to deal with Qualcomm licensing fees, which often applied (as the article stated) on non-qualcomm phones, they basically freaked out after losing that lawsuit to the patent troll, so they end up overpaying for licenses (not sure who's the licenser in this case) to avoid getting hit with more patent trolls. The contracts for those licenses were quite hard to get out of. By the time they were making the BlackBerry Priv, they don't have the SAF to juice their income. Patent licensing, Qualcomm and others, were disproportionally high, compared to other Android providers. They can't renegotiate some of them due to the contract wording. Being 1% of the market means Qualcomm hardly cared to give support, because Qualcomm is far more likely to help Samsung and other android phone, that pushed out far more numbers than BlackBerry did at the end. It ends up being that they end up licensing their brand, because had they manufactured their own phone, they'd have to deal with the patent licensing contracts that they can't get out from. There's probably a reason why OP won't be too forthright in describing why. I'll leave that as an exercise to the reader.

sriram_sun 7y ago

I know one person who works in that team. Said he was driving to lunch and heard the news that Apple and Qualcomm had reached a deal. So he buys a few Qualcomm shares (he sold them at peak!), gets back to work and then this e-mail shows up saying Intel is getting out of the 5G modem business. I'm paraphrasing here: "The sight of a whole floor of heads popping up from their cubes at the same time... what an experience!" So everyone there is hoping that Apple buys them out.

kyrra 7y ago
My bet is that Apple buys Intel's modem parents and hires most of the staff from Intel that was doing modem chips. Apple already has a team that is likely working on this. https://9to5mac.com/2019/04/03/apple-modem-iphone-intel/ https://9to5mac.com/2019/04/03/apple-modem-iphone-intel/
- zelon88 7y ago
  Why would Intel sell that though? Selling toast isn't easy when you let the customer borrow your bread and butter. To put it another way, Apple took their ball and went home. No soup for them!
  - kevin_thibedeau 7y ago
    Intel has a track record of selling off assets that end up being valuable in the future.
    - godzillabrennus 7y ago
      Basically Intel is trying to give away their market share like IBM did. FYI - IBM handed Microsoft and Intel a big chunk of market share because who would ever want a personal computer...
      - mannykannot 7y ago
        > IBM handed Microsoft and Intel a big chunk of market share because who would ever want a personal computer... I believe it was because they needed a PC in a hurry. I have heard that Ken Olsen ridiculed the IBM PC for its crude design, but it was the beginning of the end for DEC.

tooltalk 7y ago

> Qualcomm holds CDMA patents and they won't license them to anyone I thought chip-makers weren't required to license QCOM's patents -- QCOM like all other wireless SEP holders only collect licenses at system-level.

aey 7y ago

I don't think Qualcomm strangled RIM with their 3.4% (peak!) licensing fee on the selling price of the phone. If RIMs profit margin was 3.5% they had bigger problems. Here is the thing. If Apple sold a 2G network based iPhone with a non Qualcomm IP modem, and a 4G iPhone at 2x the price with a Qualcomm modem, which one would make more money for Apple?

mbreese 7y ago
Why should the price of the phone matter to Qualcomm? Did they have anything to do with the CPU, screen, memory or battery?
- tooltalk 7y ago
  > Did they have anything to do with the CPU, screen, memory or battery? Sure, without QCOM's IP, other non-wireless parts of the phone won't add/contribute as much value or drive market demand for the phone.
  - Analemma_ 7y ago
    But they're adding a fixed amount of value regardless of the phone, and so they should get a fixed sum per phone. This business where they get a percentage of the retail price is ridiculous. Consider the 64 GB iPhone XS selling for $1000 vs the 512 GB one for $1349. Is Qualcomm adding any extra value to the second phone as compared to the first one? Obviously not, so why should they capture any of the extra purchase price?
    - cwilkes 7y ago
      If they just charged a flat rate then no low end phones would use their tech as it would eat more heavily into their profit.
    - aey 7y ago
      Yes, because the value of the 512gb without the qualcomm modem is lower than the 64GB version. Free market pricing is based on demand of the feature not the cost to make it. Qualcomm should be pricing the part at the point where the phone without the qualcomm part is equal value per dollar.

systemBuilder 7y ago

Qualcomm charges the same 4-5% patents price to license to EVERY manufacturer. You have no idea what you are talking about. They did a 3%(domestic sales) - 7%(exports) deal in China because it was a poor country in the early 2000's and they demanded it but Chinese makers later switched back to the 4-5% deal.

vkaku 7y ago

I'd say Intel should just spin out it's 5G modem team and let a neutral (!Apple) vendor develop it. Samsung should start selling 5G modems in NA as well. I know this stuff isn't going to work in the short term, but this is the sort of choices we need.

hajile 7y ago
Semiaccurate has a rather interesting take here. TL;DR is that modems are very hard to make. Intel's modems were much slower and used much more power for last generation. They ran into issues and don't seem to even have a shippable 5g chip. https://www.semiaccurate.com/2019/04/16/qualcomm-just-beat-apple-into-sumbission/ https://www.semiaccurate.com/2019/04/16/qualcomm-just-beat-a... https://www.semiaccurate.com/2019/04/18/why-did-intel-kill-of-their-modem-program/ https://www.semiaccurate.com/2019/04/18/why-did-intel-kill-o...
- ksec 7y ago
  Semiaccurate also said Intel's 10nm is dead. And Nokia was going bankrupt. So please, please, stop bringing up SemiAccurate on HN.
  - wtallis 7y ago
    Intel's 10nm was a failure. Cannonlake was a mostly broken chip. It's taken them a year and a half from shipping Cannonlake to starting to ship Ice Lake. The 10nm process Ice Lake is fabbed with is not the same process Cannonlake was fabbed with; Intel has disclosed a few of the changes that were made in order to produce a viable chip, but we won't know the full extent of the changes until TechInsights gets their hands on an Ice Lake chip.
    - ksec 7y ago
      Icelake was never meant for the 10nm used in Cannonlake, it was a 10nm+ part. 2nd the shrink is there, at least according to what just announced ( or picture shown ) in Computex by counting how many die on Wafers. 3rd They are shipping it, we don't know yield but we know they are shipping it at least in decent quantities. And 4th, 10nm is not dead, Intel is not skipping it for 7nm. Nokia is not dead either. And it doesn't matter how anyone spin it, SemiAccruate is like tabloid of Tech Report, and to ensure the quality of news I personally believe it should serve no role on HN.

kevin_thibedeau 7y ago

> They pretty much demanded a separate cellular R&D team (QCT) that duplicates half the effort. They could have formed a joint venture with other manufacturers to split the development costs.

ngold 7y ago

>Qualcomm's first weapon against competitors: patent licensing terms requiring customers to pay a royalty on every phone sold—not just phones that contained Qualcomm's wireless chips. This gave Qualcomm an inherent advantage in competition with other chipmakers. If another chipmaker tried to undercut Qualcomm's chips on price, Qualcomm could easily afford to cut the price of its own chips, knowing that the customer would still be paying Qualcomm a hefty patent licensing fee on every phone. And that was just the start. Fantastic article. Qualcomm, man, just evil business practices that worked for a decade and may continue depending on appeals.

ksec 7y ago
And if Ericsson, Huawei, Samsung, or ZTE had offer a modern modem, it would be the same.

calyth2018 7y ago

Yup. And I remember how quickly all the press panned subsequent attempts, saying BlackBerry overcharged. This is one big piece of that puzzle. I'd still kill to have a vertical slider for a phone...