While Apple’s new iPhones will have significant upgrades, perhaps the biggest crowd pleaser is going to be their lower prices. But don’t expect that to last for long…
Picked up by VentureBeat, this week Nokia joined Ericsson and Qualcomm in finalising the licensing costs for 5G technology. And it looks set to hit Apple and iPhones harder than any other handset.
What Nokia announced was a flat-rate €3 ($3.49) per-device cost for the licence of its 5G patents. Coupled with fellow 5G patent owner’s Ericsson and Qualcomm’s decisions – the former charging up to $5 and the latter 2.275% of a device’s cost (up to a maximum of $400) – this is expected to add approximately $21 to Apple’s costs of making every iPhone.
And iPhone buyers will have to pay a lot more.
Why? Because Apple prides itself on maintaining the largest profit margins in the smartphone market. For example, the biggest factor behind the iPhone X’s $999 price tag was its move to OLED panels ($35) which were $20 more than LCD. Yes, that’s about the same fee as 5G licensing.
In addition, while Nokia, Ericsson and Qualcomm decided their costs in accordance with FRAND(Fair, Reasonable and Non-discriminatory) terms, other minority 5G licensees could yet cause trouble. Most notable is Huawei, which is both ambitious in its own right and locked in a battle with the US – of which Apple is the country’s smartphone standard bearer.
What’s more, Apple cannot duck out of this for long.
The company’s controversial decision to rely solely on historically interior Intel modems in all new iPhones means the upcoming generation is highly unlikely to support 5G. But with Samsung’s Galaxy S10 recently confirmed as being 5G compatible, Apple will have to step up and bite the licensing bullet as soon as next year.
So yes, this could get a lot uglier and a lot more expensive yet…