Apple's decision to hang back on 5G could be partly based on licensing fees

Apple's decision to hang back on 5G could be partly based on licensing fees
We are certain to see 5G connectivity on Android phones before the next-gen wireless service is available on the Apple iPhone. We already know that the Moto Z3 will support 5G once Verizon flips the switch and a Moto Z3 user attaches the 5G Moto Mod to the back of the phone (for an additional cost, of course). LG is expected to offer the first true 5G handset in the U.S. via Sprint early next year.

The first 5G compatible iPhones are likely to be unveiled in September 2020. And those models could feature Apple's own 5G modems, based on a letter that Apple allegedly sent to Intel. According to T-Mobile, 5G speeds initially will be 25% to 50% faster than 4G LTE speeds. Eventually, 5G download speeds are expected to be 10 to 20 times faster than those currently available with 4G.

So why would Apple delay its first 5G iPhone until 2020? You might think that it has to do with the company wanting to wait for 5G to be working perfectly, running at peak speeds and available everywhere before it allows its precious handset anywhere near 5G airwaves. That would fit perfectly with Apple's MO. However, a fresh report suggests that Apple's decision to wait until 2020 to turn out 5G compatible iPhones, could be at least partly based on financial matters.

According to Venture Beat, licensing the technology needed for a 5G phone could cost manufacturers as much as $21 per unit. That compares to $9.60 in licensing costs for a 4G phone. And that doesn't include the pricier components required for the next gen wireless service. The longer it can hold out producing 5G enabled iPhone models, the wider Apple's profit margins will be.

Apple obviously doesn't think that it will be hurt in the long term if Android handsets are the first out of the gate with 5G. First, not everyone will be ready to pay more for 5G service, and at launch, the faster speeds won't be available everywhere. This is a repeat of Apple's strategy with 4G LTE. The first handset to run on the current generation wireless technology was the HTC ThunderBolt (a phone so bad that eventually an HTC employee felt compelled to apologize for it). Apple's first 4G LTE handset was the iPhone 5, which was warmly embraced at the time by consumers.

For 18 months, Android had a head start over iOS when it came to 4G LTE. But instead of turning consumers against the iPhone, the delay actually proved beneficial for Apple as a huge number of iOS users awaited the first 4G LTE iPhone. When the iPhone 5 was launched, the pent-up demand helped make it a huge hit.

source: VentureBeat

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20 Comments

1. cmdacos

Posts: 4333; Member since: Nov 01, 2016

$21 cost increase is the perfect reasoning to raise the retail by $150

4. Atechguy0

Posts: 918; Member since: Aug 03, 2018

It's called Apple has to pay Qualcomm, but Apple is still in legal battles with Qualcomm. Ultimately Apple owes Qualcomm, and will ultimately have to pay. But I guess Apple figured it would be a while till 5G is in operation.

10. Finalflash

Posts: 4063; Member since: Jul 23, 2013

In the US sure, but most of Asia and Europe should be well into 5G by next year. The decision is all about money, I like how iPA tried to spin it as Apple giving a damn about the maturity of the technology. We all know how "mature" Face ID was when it was released.

8. Phullofphil

Posts: 1832; Member since: Feb 10, 2009

Before everybody gets all stupid remember this whole scenario maybe wrong. They sell the iPhone for what they think they can get for it. Well they get what they get. Every company is doing the Sam so if you think your favorite company would not your fooling yourself.

18. strategic_developer

Posts: 1627; Member since: Jul 17, 2018

The difference is, Apple who is notoriously known for overcharging for their products, complaining about an OEM it buys parts from; is charging too much for there stuff. Qualcomm has a right as the technology owner to charge what they feel it's worth. If Apple had an issue with it, they shouldn't have signed a deal. You don't sign a lease, and then take you landlord to court saying the rent is too high. Do you? Well that is what Apple is doing and its wrong. The court should not be deciding what QC should sell its tech for, or how much Apple has to pay for it. PERIOD!!!

2. Soundjudgment

Posts: 370; Member since: Oct 10, 2016

Apple will just skip over 5G to instead embrace 6G in the middle of the next decade.

16. Atechguy0

Posts: 918; Member since: Aug 03, 2018

So Apple will skip on speeds that could be 10 to 20 times faster than the current 4G. Okay, gotcha. Makes total sence. \S

3. Dr.Phil

Posts: 2488; Member since: Feb 14, 2011

It makes sense considering the first Android devices to feature the tech will be with Qualcomm chipsets which cuts out $13 of that $21 amount in licensing fees. However, who knows what could happen between now and then. Qualcomm could be bought out or there could be an FTC suit filed for whatever reason. It could even prove to be a reason for Apple to make a move and buy QC.

5. Atechguy0

Posts: 918; Member since: Aug 03, 2018

Apple buying Qualcomm would never happen. Because that would mean Apple would have the vast majority of Mobile SoCs on the market. The governing bodies would not allow a majority to happen. Also that would mean Apple would hold the vast majority of patients related to mobile telecommunications for 3g, 4g and 5g for mobiles. I can't see that happening. Even the USA, EU, China, and the world would stop that from going through. Also Apple would now be selling to its Android competitors. Apple has always been about Apple and keeping a closed wall garden.

7. Dr.Phil

Posts: 2488; Member since: Feb 14, 2011

Bigger mergers have been greenlit before. I do agree it’s more plausible that a company like Intel make a play for QC, but stranger things have happened. I think regardless we could see QC being bought out or merged. The time is ripe for M&A’s in the world. And Apple is more than likely going to make some kind of chipset related acquisition over the next few years as they go with more of their in-house designed chipsets.

11. Finalflash

Posts: 4063; Member since: Jul 23, 2013

I doubt Apple would buy QC seeing as how QC is worth $100 billion in todays prices and with a premium for purchase it would be a well over $120 billion price tag. Apple's biggest purchase to date is $3 billion for Beats and that is it. With all the money they're giving in dividends these days (which their fans probably think will trickle all over them), I doubt they'd foot the bill for that purchase.

12. Dr.Phil

Posts: 2488; Member since: Feb 14, 2011

Well, again, as I said I think it’s far more likely Intel would buy QC but I merely propositioned that it’s possible for Apple to purchase QC if they so desired. It’s not completely implausible, I think I should have stated. Are the chances high? Certainly not. It’s probably a < 5% chance at this point. But my real point was that when a company is faced with increasing costs, they normally will find a way to reduce those costs which sometimes it’s cheaper to acquire a company than to just keep paying for usage of their assets. I wasn’t seriously suggesting an acquisition of QC by Apple was going to happen, but more so that I can see a justification happening for an M&A or even a licensing deal to reduce those costs.

14. Marcwand3l

Posts: 461; Member since: May 08, 2017

That acquisition will never get approved. At this point I don't think Apple will ever try to buy Qualcomm.

6. torr310

Posts: 1707; Member since: Oct 27, 2011

Apple was late to the 4G as well.

9. Supah

Posts: 692; Member since: Mar 08, 2017

N 3G as well.

13. RoboticEngi

Posts: 1251; Member since: Dec 03, 2014

They could give their customers the best, but they will always try and get the most profit out of it, down to the last cent....I mean they got so much money, they could easily put this in their phones....

15. tedkord

Posts: 17480; Member since: Jun 17, 2009

Like it'll make a difference. I had more than one iPhone 4G owner insist that their phone had 4G, because it was in the name.

17. monkeyb

Posts: 414; Member since: Jan 17, 2018

People(Android users) are upset that Apple is planning to release their own modems a year later than other? 5G next year will be so premature that even if your phobe claims to have it, you will not be actually using it till 2020-21. For goodness sake, Verizon just announced they made a 5G call in a moving vehicle last week. LTE Advanced is still going to rule the market for the next few years till 5G kicks in. I still cannot understand how 5G will take over Lte as their spectrum frequency is so large that they wont penetrate or travel long distances. The infrastructure needed for true 5G is massive. So Apple can easily take a break for a year.

19. tedkord

Posts: 17480; Member since: Jun 17, 2009

The same thing we heard with 4G. Yet, I was enjoying 4G speed from day one with my HTC Thunderbolt, and my iPhone friends were asking me to download things for them,or to use my phone to watch a video without constant buffering.

23. monkeyb

Posts: 414; Member since: Jan 17, 2018

You would be correct if LTE Advanced is not very big. My phone's LTE is giving me about 40mbps which is very close to my home broadband connection which is awesome to watch HD video without buffering. I have no idea what you were downloading and giving to your friends but we are currently living in the world of streaming and LTE (Hitting 2gbps next year) is amazing already. All I am saying is Apple can easily take a break for a year and not take any negative press for not getting 5G immediately.

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