Apple-Qualcomm Lawsuits End With Sudden Settlement: ‘A Win-Win’

Solution providers say Apple and Qualcomm's sudden settlement to end all litigation against each other is a 'win-win' for the tech giants and consumers and will allow both companies to forge ahead in the market: 'It must have been a major distraction for all of them.'

Solution providers said Apple and Qualcomm's Tuesday settlement to drop all litigation against each other is a "win-win" for the tech giants and consumers, allowing both companies to forge ahead in the market, free of expensive, legal distractions.

The settlement was announced as court proceedings began this week over a lawsuit filed by Apple in 2017 that accused Qualcomm of using its dominant position in the smartphone modem market to charge high licensing fees for use of its modems in iPhones. The lawsuit had triggered multiple legal disputes, including accusations by Qualcomm last year that Apple stole Qualcomm's trade secrets.

[Related: Apple Infringes Qualcomm Patent, Federal Judge Says]

Qualcomm's stock price was up roughly 22.55 percent to $70.09 per share late Tuesday afternoon while Apple's stock price was only up 0.18 percent to $199.55 per share.

In the settlement, the companies said Apple will make a one-time payment of an undisclosed amount to Qualcomm. They have also reached a six-year patent license agreement that begins this month and includes a two-year option to extend and a multi-year chipset supply agreement.

"It seems like Qualcomm is getting out with a license agreement, so that they can keep creating great technology, and everyone gets back the business," Michael Goldstein, CEO of LAN Infotech, a Fort Lauderdale, Fla.-based solution provider, told CRN.

Goldstein said it felt like the legal disputes between Cupertino, Calif.-based Apple and Qualcomm had been going on forever, serving as distractions from their core businesses.

"A long-term commitment works out for everyone, and we get the technology," he said.

Doug Grosfield, CEO of Five Nines IT Solutions, a Kitchener, Ontario-based solution provider, agreed.

"They came to an agreement that's palatable for everybody, and that's a risk management thing," he said. "It allows everyone to get back to business. It must have been a major distraction for all of them."

Before Tuesday's settlement, Apple was reportedly looking into developing its own modems for the iPhone. The company had started to switch to using Intel modems in 2016 before full moving to Intel as the main modem supply for the new iPhone XS iPhone XS Max.

In a one-page slide filed with the U.S. Securities and Exchange Commission, San Diego, Calif.-based Qualcomm said that the settlement "contributes to increased stability" for its licensing business while also reflecting the "value of strength of its intellectual property. The company expects an incremental earnings per share of roughly $2 as product shipments ramp up as a result of the new agreement.

"I think this makes the runway a little bit longer," Grosfield said of Qualcomm's side of the deal.

Grosfield said the settlement should lay to rest the accusation that Qualcomm was abusing its position in the market to charge higher fees for its modems.

"I think if you're going to buy premium high-quality components to build a premium device, everyone in that food chain is going to enjoy the wealth," he said.