The status quo of mobile phone licensing today is that royalties are levied for access to patents that are essential to the mobile standard being incorporated in each device. For a multimode WCDMA and GSM device, the average cumulative royalty rate is 12.2%. As the relative value of new components such as advanced displays and, more importantly, software, increases in the average device, many companies are questioning the fairness of current licensing models. This issue will only become more pressing once MIDs and connected consumer electronics become more commonplace.
According to ABI Research vice president Stuart Carlaw, “The average selling price of many mobile devices is being kept fairly stable not through advances in wireless technology but by the addition of more complex and advanced features that are outside of the innovations covered by many current mobile patent licenses.”
“When you use an ASP from a voice-centric device as the base to calculate royalty rates rather than the artificial higher value,” Carlaw adds, “the indications are that royalty rates should be closer to 5.8%.”
As well as challenges from the perceived value of the wireless component of a device, the current intellectual property licensing regime will also be pressured into change from the notion that declared essentiality in the ETSI standardization process is somewhat flawed.
A new ABI Research study, “Mobile Device Royalties” provides in-depth analysis of the royalty issues relating to all major cellular technologies, and offers exhaustive qualitative analysis on average royalty rates.
It forms part of the firm’s Mobile Devices Research Service, which also includes other Research Report, Research Briefs, Market Data, an Online Database, ABI Insights, ABI Vendor Matrices, and analyst inquiry support.
ABI Research is a leading market research firm focused on the impact of emerging technologies on global consumer and business markets. Utilizing a unique blend of market intelligence, primary research, and expert assessment from its worldwide team of industry analysts, ABI Research assists hundreds of clients each year with their strategic growth initiatives. For information, call +1.516.624.2500.