4G Royalties Set to Quadruple over the Next Five Years -- Apple Exposed

Published on: 2nd Oct 2012

­Royalties raised from 4G cellular technologies in 2017 will be quadruple that of 2012, reaching over $6B in 2017. This correlates with the growth of 4G devices and is dominated by handsets. Just as the market for 4G royalties is taking off, Apple is entering the 4G market in a bigger way with its LTE-enabled iPhone 5. After being on the offensive with design and software patents, Apple may have to defend itself.

"Samsung, Apple's prime target because of its market share, is strong in 4G patents and will look to use that against Apple," notes ABI Research director Phil Solis. "The only problem is that mobile technology patents for LTE are subject to FRAND rules."

Handsets are vital to 4G royalties paid to patent holders because of a decreasing share of 4G royalties for data devices over the forecast period. There are a few reasons for this. While non-smartphone devices are still set to grow during the forecast period, handsets with LTE will grow much faster. Another reason is the difference in the way 4G royalties are applied to handsets and negotiated versus data devices. Finally, there are some gating factors holding back the growth of data devices.

One limiting factor holding back non-handset mobile devices is the extra monthly fees to add devices to data share plans, though ABI Research expects those to be reduced or eliminated while mobile operators focus on the size of the data plan sold.

Another has to do with the additional costs to add mobile to a data device such as a consumer electronics device. "There are the component costs and then also the mobile technology royalties," said Solis. "Two hopeful things for mobile CE devices though are that the attach point of the device is calculated differently than the traditional way done for handsets, and the promise of 4G-only devices will eliminate 2G and 3G royalties."