Top of the Great Era

Chapter 3191 Separate Talk

Patent pricing is not something that developers can just quote as they wish. The current global patent system is already very complete, with a fixed charging model and a patent fee rate monitoring mechanism. The pricing of patent fees must be linked to costs.

If the cost is low, then the quote is low; if the penetration rate is high, then the quote is also low.

Just like the price of medicine.

When a new drug is launched, if the cost of developing the new drug is very low and if the new drug will be used on a large scale by patients around the world, then the price of the drug will be relatively low. On the contrary, if the cost of developing the new drug is too high and the scope of application is very small and can only treat unpopular and difficult diseases, then the price will be surprisingly high, and all kinds of sky-high priced drugs will appear.

Therefore, when negotiating with patent owners, if you want to reduce fees, there are usually two ideas.

The first is to help patent holders reduce costs.

Costs include not only R&D expenses but also operating expenses.

If the patent holder wants to dismantle all products on the market one by one to study their structure and the technical patents they use, and then use the legal department to determine whether they infringe the patent, then the legal team and negotiation experts will go out to negotiate with the relevant parties and ask for patent fees...

The cost of this process is extremely high.

The wool comes from the sheep, and this part of the cost will ultimately be borne by the party that pays the patent fee.

Therefore, the patent fee Ericsson needs to pay for using Qualcomm chips will be very low.

Because it is a binding clause.

Ericsson no longer needs to incur these additional operating costs and can just sit back and wait to collect the money. With lower costs, the savings can be used to make concessions on patent prices.

On the contrary, if Ericsson does not use Qualcomm chips, it will need to dismantle and study the machines of each company one by one, and then negotiate with each company one by one... and it will have to turn a blind eye to the infringements of those companies that are too small.

These costs will naturally be borne by the party using the patent.

Therefore, in order to reduce patent fees, the best way is not to worry about it, but to actively contact the patent owner and pay the patent fees at the source. This helps the patent owner save costs, and once it runs through the patent pricing model, it can give a more favorable quotation.

This is the reason why Lee Zairong came to us this time to promote cooperation between the world's two largest mobile phone giants.

On the one hand, there is strength in numbers.

On the one hand, it saves costs for Ericsson.

Ericsson should not set up different teams to work with Samsung and Asda separately. Instead, it should negotiate with both companies once. It should actively face the price differences, and then conduct unified negotiations to reach a result in a more efficient way.

However, there is another way to reduce patent costs.

It is to bring down the patent holder.

It's just a matter of life and death.

Many patent wars last five or six years, or even longer. The annual legal fees and public relations fees cost tens of millions of dollars, and the competition is about who has more financial resources.

You want to charge me high patent fees?

Okay, let’s just wait and see!
Just do it!
You can earn $1 million a year by charging me patent fees, so I will fight you head-on and prepare for a war. This will result in your annual "military expenditure" being tens of millions of dollars... Not only will you not earn a penny, but you will also have to pay a huge amount of money every year, which will become a bottomless pit.

What should I do if I can’t keep going anymore and can’t hold on any longer?
Then you can only admit defeat.

never mind!

If you can't afford it, then give in and lower the patent fee. At least you can make money. If you don't agree to a low patent fee, not only will you not make any money every year, but you will also have to spend a lot of money. This is too much of a loss.

The two different strategies led to a disagreement between Lee Jae-yong and Zhou Bu-ki. Samsung wanted a quick settlement.

Estar wants to tough it out.

The reason behind this is that the two companies have different levels of self-developed chips. Samsung's self-developed chips are more powerful and are widely used in mid-range phones. Asda's self-developed chips are still very weak and can only be used in a few experimental models of thousand-yuan phones.

However, Li Zairong made a special trip.

With his status, it would be disrespectful if he made a wasted trip, and it would also be detrimental to the cooperation between Zhou Buqi and Samsung, among the many industries he owns.

Zhou Buqi needs to cooperate with Samsung to a certain extent. "All Asda models priced above $200 can cooperate with Samsung's strategy and actively connect with Ericsson!"

Li Zairong was not stupid. He had studied Esda thoroughly. He smiled bitterly and said, "Models above $200? As far as I know, all Esda models above $200 use Qualcomm chips, even the baseband. There is no need to connect with Ericsson. You can just pay the fees according to the bundling terms."

Zhou Buqi smiled and said, "Just because there wasn't one before doesn't mean there won't be one in the future."

"Oh?"

Li Zairong raised his eyebrows.

Zhou Buqi said: "Qualcomm's solution is so expensive. It is a plunder for mobile phone manufacturers. Abandoning Qualcomm's solution and using self-developed solutions can greatly increase the profit margin of mobile phone manufacturers. Samsung's profit margin is higher than that of Estar. A very important reason is that you use more self-developed chips, leaving the profits for yourself instead of giving them to Qualcomm."

Lee Jae-yong asked, “Will there be one this year?”

Zhou Buqi said: "We can't rush this matter. Samsung has been making chips for decades, and Asda's self-developed chips have just started, and there is still a long way to go. You need to give me some time. As Asda's self-developed chip business matures, more and more models will definitely use self-developed chips."

Li Zairong was immediately disappointed.

Depend on!
It's just a big deal!

Zhou Shaoning explained: "Models priced below $200 are mostly public welfare projects, which are livelihood projects for poor areas and poor people. We do not make money from these projects. We have detailed data to prove this. There should be a clear distinction between public welfare projects and commercial projects."

Li Zairong was amused by him. "So you think that a mobile phone priced at more than 200 US dollars is a commercial project?"

Zhou Shaoning said: "Yes, the vast majority of mobile phones in the world are priced at more than 200 US dollars. Only in some areas like Africa, Latin America, the Indian subcontinent and China, there are some smartphones with extremely low prices. I believe that business must also have ethics. For these regions and people, there needs to be a different positioning."

"So you want to talk separately."

Li Zairong sighed.

What he wants most is cooperation, and then to negotiate together. The world's number one and number two companies cooperate, occupying 60% of the global mobile phone market. This is very powerful and can put great pressure on Ericsson.

Once Astar separated its business, its power would be weakened.

Especially now that Asda's mobile phones priced above US$200 are all equipped with Qualcomm chips, there is no need for it to negotiate with Ericsson at all.

"For models priced below $200, Asda will work with Ericsson alone. There may be a lot of controversy in this process, but don't worry, we will definitely not bring Samsung in just for the sake of a partnership."

Zhou Buqi seems to be still very friendly and still cares about Samsung.

Zhou Shaoning added with a smile: "At present, Asda does not have a self-developed chip model priced at more than US$200. If it is available in the future, it can be paid according to the negotiation standards of this cooperation. I believe this is also a burden for Ericsson."

Li Zairong had no words to express his pain.

I feel like I'm being manipulated by these two Zhou guys.