On this week’s Futurum Tech Podcast, we’re diving into Apple, Intel, and Qualcomm, and their ongoing litigation, plus Lyft making a push to get people out of their cars. Google finally shows up to testify, Facebook has a major breach, and Tesla just keeps finding ways to mess things up. That and more on this week’s Futurum Tech Podcast.
Our Main Dive
We hate when the major tech companies fight, but such is life. This time, it’s Apple, Qualcomm, and Intel that just can’t get along anymore. As you might know, Apple used to use Qualcomm’s chips for their phones. In fact, it turns out that Qualcomm paid Apple to continue using their chips instead of any competitors’, which eventually led Apple to sue the company and switch to Intel for phone chips.
Well, fast forward to now, when Qualcomm decided to sue Apple for supposedly sharing confidential information with its competitor, Intel. Court documents allege that Apple has been sharing Qualcomm’s trade secrets for years. Of course, the onus is on Qualcomm to prove this, as Apple denies the accusation. If it turns out Apple really has been sharing another company’s trade secrets with competitors, the tech giant could be in hot water.
Bottom Line: Apple has been involved in legal battles with Qualcomm for a while now, and Qualcomm’s lawsuit is just the latest update. The two companies have a hearing coming up in October, and then a trial in April, so we’ll have to wait until then to find out if Apple is guilty. If it is, we’re guessing it can expect to pay some fines and maybe lose some of the public’s confidence, but still…this probably won’t spell the end for Apple!
Our Fast Five
We dig into this week’s interesting and noteworthy news:
- Lyft recently got in the news for its Ditch Your Car challenge, in which the company set up a drawing for residents of various big cities. What can the entrants win? A handful of people who sell their car and enter the contest can win $300 in Lyft Shared credits, as well as a membership for Zipcar with $100 credit. Plus, they’ll get money toward public transit options and bike share programs. The whole point is to show you don’t always need to own a car to get around, which is an interesting—and often true—point for people in many cities.
- No longer is Slack the small company it once was. It’s now valued at about $7 billion, and it’s preparing for an early 2019 IPO. It just goes to show that this collaboration tool has hit the big leagues now, becoming one of the core solutions in the business world. So good for Slack.
- Recently, Google failed to show up for a house congressional meeting with Facebook and Twitter, presumably because top execs at Google don’t want to be associated with the social networks. They do plan to testify in front of the House Judiciary Committee later this fall, but the fact that they didn’t do it earlier doesn’t look good for them. It’s almost like Google wants special treatment.
- Speaking of Google, it turns out Google Images will start displaying pertinent information on pictures, including the name of the creator and the copyright metadata. That’s definitely a step in the right direction for photographers, artists and really anyone else who wants credit for the images they put online.
- Anyone who uses Facebook—so, most people—may want to check to see if their account was affected by the recent security breach. Facebook just announced that about 50 million accounts have been affected by the hack. Even Zuckerberg’s account was affected, so no one is guaranteed to be spared from it!
Tech Bites
Our winner of this week’s “tech that bites” award is Elon Musk, who now faces fraud charges. Basically, the SEC challenged him about some Twitter comments that may be misleading or altogether untrue. Fortunately for Elon Musk, Tesla’s board members still support him, so there’s that. It’s noteworthy that Tesla was not named in the lawsuit, but still, its stock isn’t stellar right now. And we’ve heard Musk has turned down settlement offers, so we’ll have to wait and see what becomes of this lawsuit—and what it means for him and Tesla.
Crystal Ball: Future-um Predictions and Guesses
Our crystal ball this week is all about the Apple and Qualcomm legal battle. Are these companies going to be scarred by this, or will everyone forget about it pretty fast? We think it’s the latter. Let’s say Apple is found guilty. Their image may be tarnished for a bit, giving their competitors a short-term advantage. Maybe the company will even slowly spiral down as consumers lose faith and interest in it. But what will really make a difference is whether another company can step in and show it makes better products than Apple…and that’s unlikely. Love Apple or hate it…either way, it’s hard to replace. And of course, if Apple is cleared of charges, the legal battle will disappear even faster. So we’re not expecting long-term consequences here, but we’ll definitely keep an eye on this topic as the trial approaches.
And there you have it, this week’s Futurum Tech Podcast.
Transcript:
Olivier Blanchard: Welcome to this week’s edition of FTP, the Futurum Tech Podcast. I’m Olivier Blanchard, senior analyst with Futurum Research, and joining me today is my colleague Fred McClimans. Daniel is away doing heavy work somewhere. We don’t know exactly where. So how are you doing today?
Fred McClimans: I’m doing well, Olivier. Glad to be here, and while the cat is away the mice play.
Olivier Blanchard: Yeah, I know. Hopefully he’s listening right now. It’s too bad we’re not live because he could be listening on the plane or something.
Fred McClimans: I’ll pretend we’re live.
Olivier Blanchard: I always pretend we’re live, I forget that we’re not, actually. We’re gonna start today’s show with our main story, which we’re going to unveil in a few moments. Then we’ll share some of our favorite news stories of the week in our Fast Five segments, followed by Tech Bites in which we highlight one of the biggest tech-related fails of the week, and there are several to choose from this week so maybe we’ll cover more than one. And we will end the show as usual with our crystal ball in which we look at some forward-thinking, or forward-looking rather, insights into one of the items.
So before we begin, as always, it goes without saying that this show is intended for informational purposes only, and no advice or insights provided here, however intelligent, smart, and brilliant they may be, should be taken as investment advice. Okay, now that that’s out of the way let’s move to our main topic today, which includes Apple, and unfortunately … Yeah, I know, we’re not gonna be bashing Apple today, there’s no Apple-bashing. Don’t worry, it’s not gonna be about that.
But there was a pretty major bit of news earlier this week that we need to address, and it was a little bit of a bombshell, more so than usual, and in a sense it’s one of the latest chapters in the dispute between Apple and Qualcomm, which we’ve been doing some pretty solid coverage on I think, on our insights blog, following this for the last year and a half or so.
But on the other hand, it’s also a story that kinda stands on its own, and essentially what happened is Qualcomm and Apple have been collaborating on a number of projects for many, many years. Qualcomm was a supplier of cellular modems for Apple, actually still is to this day. A lot of the modems that go into the iPhones are made by Qualcomm, and there’s also a lot of other innovation and intellectual property and technology that Qualcomm either develops or owns the rights to that Apple uses in iPhones and others.
What happened this week is Qualcomm filed an amendment to an earlier complaint against Apple in the Superior Court of California, in San Diego, claiming that Apple had illegally shared some of Qualcomm’s proprietary technologies and software. So before I move to your comments and your reaction, Fred, I just wanna backtrack a little bit and explain what the original case was.
Essentially Qualcomm and Apple, through their partnership, in an attempt, or an effort rather, to help Apple develop really cool iPhones and integrate Qualcomm technologies into iPhones, has worked with Apple with software, with hardware, with essentially a whole panoply of technologies to help Apple really smoothly integrate those components and those elements of cellular connectivity into the iPhones. This is a normal process that takes place. You kinda have to get under the hood a little bit, get the Apple engineers together with the Qualcomm engineers.
And one of the things that Apple does, because its technology stack is so specific, is it usually demands, or requests rather, strongly requests somewhat unlimited access to some of the technologies that they either rent or purchase or get the rights to from their suppliers and their partners. So in this particular case apparently Apple asked for some of the source code, or access to some of the source code, in these cellular modems so that they could best tweak the user experience for products. And as part of this agreement, which is referred to as a master software agreement, or MSA for short, Qualcomm had the right to audit Apple’s security, or at least the way that Apple handled security around this very-
Fred McClimans: Sensitive.
Olivier Blanchard: Sensitive, right, data. You don’t want that source code to get into the wrong hands, you don’t want that source code to be … Especially it can get into the hands of your competitors. And Apple, for some time, some odd reasons, was trying to prevent Qualcomm from conducting such an audit, even went to court to try to argue reasons why Qualcomm shouldn’t be allowed to make the audits.
And it was this shady behavior that I think made suspicions arise, and evidently Qualcomm must have held some kind of audit or some kind of forensic investigation because they seem to have pretty solid proof that Apple was misusing their access to that software, to that technology, at least that’s what they alleged, and they claim that they have proof.
And furthermore, they claim that they have proof that Apple wasn’t just doing this on their own, that they were also actively sharing some of this information with a competitor of Qualcomm, Intel, and as you may recall, Apple has decided to move entirely to Intel for its cellular modems on iPhones now, and completely cut out Qualcomm.
So that was a really long intro, let me get your reaction now on this.
Fred McClimans: Sure, it’s an odd day, or an odd week, or an odd year, when we don’t see litigation between Apple and Qualcomm. It’s just become part of the normal course of events within this industry. The two companies clearly do not get along, they do not like each other, they have become antagonistic to each other, and I think that the success that they’re both having is despite this … You would think two big players in the space would figure out that they’re probably stronger working together than apart.
That said, in this day and age with the technology moving as fast as it is, with the ability of so many competitors to move into the space, to replicate software functions, even to spin up hardware to replicate hardware that they’re using today … And that’s only going to get faster by the way … Finding that competitive edge often means finding a way to control your intellectual property so that you can get the best cost, the best availability, the best supply chain infrastructure in place.
And certainly in the case of Apple, they are at the point where they are still a premium, if not the premium, brand out there in the marketplace today, but their margins are challenged. They want to keep the cost basis driving lower and lower, and so that means they’re going to build a lot of their own technology, and they’ve been doing that over the past few years.
It’s not just the main processors that go in, the A10, or the 11. It’s the modems, it’s the small components, it’s the little tiny sensors that go into the phone. The more they can control, the better they are. In this case here, this is one of those perplexing situations where yeah, Apple had access to technology, yeah, Intel is doing some things that might look like they’re leveraging the Qualcomm technology. I think what we really have to do is just kinda step back a little bit, and I think the market is doing this as well because the stock prices for these firms, it’s not moving around on this news at all.
I think we have to wait and see what Qualcomm comes back with. They literally submitted the filing, they had some really strong language in there, looking directly at their filing here, “Apple has engaged in a years-long campaign of false promises, stealth, and subterfuge designed to steal Qualcomm’s confidential information and trade secrets.” That’s pretty strong language.
Apple responded in kind, show it, prove it. You think you’ve got it? Let’s see it. Qualcomm is now going through a bit of discovery, and we’ll see what comes out of this here. But it’s just a messy side of this industry that I really don’t like to see, but it’s part of what we’re all about in here today.
Olivier Blanchard: And the complaint itself is right along … The piece that jumped out at me isn’t so much the “Apple is bad and nothing they do is great”, it’s more the specific allegation, which is Apple has wrongfully acquired, failed to protect, wrongfully used, wrongfully disclosed, and outright stolen Qualcomm’s confidential information. And Apple used that stolen technology to divert Qualcomm-Apple-based business to Intel.
And when I take a step back on this and just remove all the emotion out of it, remove the sense of “How dare you”, right? That Qualcomm or any company might feel when they feel that their secrets have been not only stolen by one of their partners but handed over to their competitor.
It’s that Apple has a lot riding on this partnership with Intel, however short-lived it may be in the next few years.
Fred McClimans: They do.
Olivier Blanchard: We’ve already heard some echoes, they’ve kind of gone all in with Intel, but they’re also talking about getting rid of Intel in 2020, or starting in 2020, and going with a different supplier for the modem chips.
But in the meantime, Apple has decided to go with Intel, and they’ve asked Intel to provide them with a cellular modem that is equal or better to those of Qualcomm. I have to give a lot of props to Intel, they’re really good at a lot of things. They’re really good at node processor technology, they make a lot of really good stuff. But cellular modems, as good as Intel cellular modems are, they haven’t traditionally been able to compete against Qualcomm’s on speed and on reliability and on versatility either.
So here you have Apple trying their best to source a cellular modem from Intel that will be as good as Qualcomm’s, and Intel may not be able to deliver. So on the one hand you have this ask which is nearly impossible, and on the other you have Apple having access to an answer to that problem, and I’m sure … It seems logical, if you understand anything about human behavior and human motivations, that somebody might have been pressured to go, “Look, we have the key to this problem right here, all we have to do is be really quiet about it and not get caught.”
It’s not like Apple is individually bad and different from other companies, industrial espionage and trade secrets, once you’re giving somebody access and they have a motive to misuse it, this is the sort of thing that happens all the time.
Fred McClimans: Yeah, you know there’s a difference, though, between something like this where … As you said, if you just look at the facts, look at the way it’s playing out here, I would have a hard time believing that Apple is intentionally, from a corporate, executive level down, saying, “Let’s take a little bit of this from Qualcomm, and let’s push it over here to the side to Intel.” I just don’t see that taking place.
Unlike situations where … The Uber-Waymo litigation that played out, where somebody went from one shop to another, and they happened to bring a lot of notes along. I don’t see it quite at that level, but it’s certainly possible that you have, because of the intense pressure, you have an employee or a couple of employees that have a lot of access to information from Qualcomm. They know it’s confidential, but they also need that, and they share that with Intel just as part of their ongoing operations and process without realizing, “Oh, this is where this piece of code originally came from.”
Olivier Blanchard: Yeah, I don’t think that’s possible. Not … No, just to have this re-compartmentalized. I think if we can show … If Qualcomm can show, and during the discovery process, evidence that emails were exchanged between Apple employees who were working on that with Intel employees, who were not working on this, in full knowledge and in full view of the MSA agreement, I think that Apple is going to have a lot of answering. But anyway, opinion aside, the hearing to determine whether or not the new information will be admitted into evidence for the case is scheduled for November 3rd, I think. Although I hear that Qualcomm is trying to move up that date and accelerate things a little bit.
I think they have a hearing on October 2nd. So we may find out more about it then. Then the trial is set to begin in April. We’ll see if these new developments push that back, but we’ll one way or another, even if we never have access to all of the forensic evidence because I’m assuming that not all of discovery can be made public because of the sensitive nature of some of the materials.
Fred McClimans: Yeah, that’s a good point.
Olivier Blanchard: Yeah, we’ll have a pretty good idea of what Qualcomm has and how solid the evidence is in the next few months. I don’t think that Apple stock will necessarily take a hit. If anything, stealing really good technology from a company and giving it to another should inflate your stock because you’re going to get better results. So bad behavior could actually be rewarded on the street.
Fred McClimans: Well, let’s see what the penalty is if they’re found guilty of this.
Olivier Blanchard: Yeah, we’ll see. All right. Well, to be continued. Moving on, we are now entering into our Fast Five section of the podcast. It’s just the two of us, so I’ll go ahead and let you do the honors. What’s your first fast five?
Fred McClimans: My first fast five here, three today, so I’m looking forward to this, Lyft. Lyft is stepping up the game a bit and demonstrating to me that they are the anti-Uber out there in the marketplace. They’re getting very creative with some of their marketing, some of their promotions, and they’ve got a really cool one going on in Washington DC, right now where they are having an open drawing. Anybody can apply if you live in the DC area. What they’re going to do is they’re going to select 50 people, and four of those 50 people, they’re going to give them $300 worth of Lyft-shared credits. They’re going to give them a Zipcar membership with $100 credit.
They’re going to give them a one-month Metro pass to the DC metro system and a one-month membership to the Capital Bikeshare Group. The whole idea here is to demonstrate the viability of not owning an automobile. I love the basic premise of this. I think it’s a great approach to generate some interest around Lyft, and Lyft does have some catching up to do. I mean, they’re a second competitor to uber, but they’re nowhere near as expansive. Fortunately for them, nowhere near as controversial either. So this is going to be an interesting one to watch. It’s called the Ditch Your Car Challenge, #ditchyourcar. I’ll be watching this one just to see how it plays out. But I think it’s a smart move on Lyft’s part.
Olivier Blanchard: It is cool. They do a lot of smart things. They’re trying to catch up to Uber, and so, it forces them to be more of a challenger mode than incumbent mode, and that’s always a good thing.
Fred McClimans: Yeah, and I think they’re a lot more focused than Uber as well. I mean, Uber has their tentacles into all sorts of development efforts, and that tends to defocus. And certainly, the cultural issues that Uber has in the company and the executive team has had in the past, it’s weighing them down. So I think Lyft is in a great position here in the next 12 to 18 months to really make some strong gains in this space.
Olivier Blanchard: Yeah, I agree. All right, so mine, number two today in our Fast Five is Slack. Slack is preparing for reportedly … preparing for an early 2019 IPO, and the company is currently valued at seven billion, I think. So why this strikes me as being relevant is that we talk a lot about digital transformation and all the technologies that go into it, the changes in the workforce. I think that the type of collaboration, kind of device agnostic, ubiquitous, instinctive collaboration that applications like Slack really unleashed on the workforce really is the way to the future. Wherever it leads, I don’t know yet.
But the fact that slack might be preparing for an IPO just tells me that this is serious now. It’s not just kind of like these little companies trying to break into email and enterprise-class type solutions. They are becoming the core solutions, and I think it’s a good thing.
Fred McClimans: Yeah, no. I agree, I agree. Their last fundraise had all the signs of, “Let’s bank some money. Let’s get ready for an IPO.” So, I’m with you there. My second fast five, Google. We covered Google the other day with the … actually covered the absence of Google when we talked about the congressional testimony that involved Facebook, Twitter, and an empty chair where Google had been invited.
Olivier Blanchard: Right, yeah.
Fred McClimans: So today, actually, and we’re recording this on Friday, the 28th of September, and today, Sundar Pichai is actually meeting with the House Judiciary Committee. That is … Actually, I take that back. He’s supposed to meet with them after the election. Right now, he’s in a private meeting in McCarthy’s office, a bunch of individuals there, very exclusive invite list, and this is the makeup for not showing up during the house congressional meetings earlier this month. To me, if I had to describe it in one word, it would be hubris.
Google does not like to be seen alongside Facebook, alongside Twitter. There’s this sense that they feel they’re a little bit above the fray in that, and I can see … Actually, I can’t see why they think that. It’s just a tough one. But definitely, when Google did not show up for the testimony, it hurt them, and I think they’re in a situation right now where regulation of some type, especially regarding data privacy and transparency is probably more than likely on the horizon. So yeah, they need to meet. They need to talk, but it’s disappointing when you see a company like Google that feels they deserve a little bit special treatment there.
Olivier Blanchard: Yeah, I mean, it’s definitely an interesting perspective. I hadn’t even thought of it that way. But yeah, maybe. Well, we’ll see. At least, it’s forward progress, right? We’ll see where this goes.
Fred McClimans: Indeed.
Olivier Blanchard: Well, actually, I’m going to stick with Google for my next and final fast five before we wrap it up with the fifth one. So, Google actually did something right this week, and they do something right a lot. It’s not always. It’s kind of a mixed bag. But this as a former professional photographer or semi-professional photographer, I should say. This makes me happy. So Google Images been announced will now display creator and copyright metadata, and this has been a contentious issue for a long time and even for users of Google Images, right?
I’m always fishing for images on the internet or illustrations to go with my blog post and my articles, and it really helps to know if an image … what the copyright is on the image, who the owner is, and all of that information. Google Images is now displaying creator and copyright metadata, as a matter of fact, I think is helpful for everybody, and it’s the right-
Fred McClimans: You are the photographer. No, but you’re right. I use Google Image Search all the time. You try and go to that Creative Commons tag. Make sure you’re using things that are open, but it’s a challenge. So, I think this is a good step. I’m curious though if you know how they are actually going to acquire that data because there are a lot of images that are posted that you simply don’t have that kind of information, and not everybody tags their images that they capture with their iPhone or whatnot with all of that data.
Olivier Blanchard: Yeah, I don’t know how retroactive it can be. But I’m assuming that all photos that will be uploaded through Google Images in order to qualify either, in order to show up will have to have some kind of [inaudible 00:20:00].
Fred McClimans: That’s interesting. So this might act as a filter for content actually being uploaded by people?
Olivier Blanchard: Yeah, and from what I read, Google’s partnering with several organizations to pull this off. One of them is what’s called the Center of Picture Industry, I think. CPIC or something like that. They have a kind of cool acronym. That organization represents hundreds of photo agencies and photo libraries all over Europe. So, the issue here isn’t even just that … We tend to think of problems like this as being kind of like North American-centric. But the complexity of this is that how do you actually manage this across continents, across different countries and regional zones. So I think Google is actually taking the right approach with this.
I don’t think it’s going to be an overnight fix of, “From now on, this is what’s going to happen.” But at least it’s moving in the right direction. They made the commitments to make this happen. So now, we’ll have to see how well and how fast it actually happens.
Fred McClimans: That’s great. So my final fast five here, final fast five is Facebook. This is just breaking news here, today, so we don’t have a lot of details on it. But Facebook earlier today announced what they’re calling a major security breach that impacted … they’re saying around 50 million Facebook user accounts. If somebody found an exploit baked into Facebook’s code where it involves how you view a page. So within Facebook, if you have multiple pages, there are ways that you can view different pages that you might control within that, and apparently, they got inside that and have been able to take over user accounts.
This is pretty big news, here, I think for this. Facebook’s stock today is taking a bit of a hit. You know, nothing drastic. They’re down two-and-a-half points or so. But this is big. I think in this day and age, the reality is every piece of user data out there at some point is going to be hacked, and as we develop more and more complex systems and that involves blending new code with old code, exploits are going to unintentionally crop up. The reality here is that somebody like Facebook or any major company, they have to be right in protecting their data 100% of the time. But a hacker only has to be right once.
There are so many hackers out there continuously pouring through the sites, pouring through the code that these type of things are inevitable. We’ll see how this plays out, and maybe follow up next week on it.
Olivier Blanchard: All right, well, that was a good wrap up on a busy week, at the end of a busy week. It’s interesting. Now, we’re getting to Tech Bites, in which we talk about the misses or at least the one main miss this week. I feel that this particular one, the Facebook story that just broke today and that you talked about, which apparently affected me, because I had a hard reboot today for Facebook. So I guess I was in the list of hacked or possibly hacked accounts. It could’ve easily qualified to be a Tech Bites, any kind of major security breach always kind of raises a huge red flag for that.
However, I thought that another story was even I think more relevant to our Tech Bites section this week, and it was the fight between the SEC and Elon Musk, who apparently is facing charges of fraud essentially. At least the SEC is challenging him on comments he made on Twitter that they consider false and misleading. What’s interesting about this is on the one hand you have this battle between Elon Musk and the SEC, and he’s going to have to answer to that tweet and whatever behaviors.
On the other hand, there is the fact that Tesla’s board is backing up Elon Musk. They’re not dropping him. They’re not being silent. They’re not being coy. They’re actually putting their support behind him, and it should be said by the way that the SEC suit against Elon Musk doesn’t actually mention Tesla, as far as I could tell. Tesla wasn’t named in the suit, mentioned. And part of the news that’s kind of developing around this is that Musk actually said no to a settlement.
The SEC came to him and actually offered him a way out of this, and allegedly, or at least according to CNBC’s reporting, the agreement would have required Musk to not admit or deny culpability. So he could of just not have to admit anything as a condition of his settlement, so that would have been good for him, but it would have barred him from being chairman for two years, would have required any company that he chairs to new independent directors, and it would have also fined Elon Musk personally or [inaudible 00:24:51]. So he said no to that, and he’s basically just standing his ground saying, “Bring it.”
So comments, reflections on that?
Fred McClimans: Anybody that didn’t see this coming wasn’t tracking the news because when Musk tweeted out that he had secured funding for taking Tesla private at $420 a share, there was instant reaction in the marketplace. It was huge news. And the stock took a major hit. Coming off that, when it was revealed that, yeah, he really didn’t quite have the funding, and in fact, funds were a lot less … even part of the funding … he just really didn’t have any of the funding for that. So this has to be expected here.
Now, the interesting thing I see in all of this is that clearly Musk does not want Tesla to be a publicly traded company right now. And I think that that kind of control that he’s looking far within the company and the challenges that they have, Tesla’s probably must better suited to be a private company. And he may get his wish. If this flows through, he could theoretically be banned from running a publicly traded company. So maybe it’s sort of a self-fulfilling prophecy in this year, but I’ve got to think, at this point, that if there was an easy way out that achieved everybody’s goals, yeah, he may have taken it. But the fact that they didn’t take it tells me that maybe they really do want this kind of to play out in this particular way.
It’s a confusing one. All I can say is when I hear stories like this I get flashbacks to John DeLorean and so forth. And I just hope it doesn’t play out like that, and I’m not suggesting there’s anything to that. It was just sort of a, “Oh, yes. This memory kind of cropped up there.” But it’s a perplexing one. I hope they can resolve this because I think the company has a bright future ahead of it, if they can get Musk under control.
And also, just sort of a side point here, from the board’s perspective, I’m not surprised that they’re backing him at all because without Musk, there is no Tesla. I mean, it’s that simple. The company does not continue one day without Elon Musk at the helm right now.
Olivier Blanchard: That’s possible.
Fred McClimans: It might change, but it’s not there yet.
Olivier Blanchard: Having said that, since the news broke, Tesla stock isn’t doing super-well. On the news earlier today, it said it was down 10 percent. It’s actually … I’m looking at it right now … down 14.5 percent. So it’s currently trading at 262 dollars and cents. So it’s down 44 bucks from this time yesterday. So we’ll see how that progresses in the next few days.
But anyway, that was our tech bites for the week. Now we move to the crystal ball, and we’ve had debates about this because typically we focus on one topic for the crystal ball. And in the interest of keeping the show under 30 minutes, so we’re going to keep it super-short.
But my crystal ball question to you, Fred, today is with regard to … actually, with regard to Apple and the Qualcomm disputes. I have to make a decision here and not go down a rabbit hole of, “Let’s talk about all the things.” What do you think happens … not overall in all the different cases and complaints between Apple and Qualcomm because it’s a really complex web of disputes and sub-disputes, but specifically when it comes to this allegation that Apple stole and misappropriated technology from Qualcomm to hand it over to Intel … what do you think the ultimate impact of this case, should Apple be found guilty of this, what will be the impact on Apple and what will be the impact on Intel in the next, say, 12 to 24 months?
Fred McClimans: When I look at this particular case, I don’t think it goes all the way. I think this is something that gets settled. I mean, if anything really comes out of this that looks damaging, my guess here is that there’s a settlement of some sort. They’ve had a number of them going on throughout the years. Realistically, Apple isn’t going to be using Intel forever. And this is the type of situation I can see where Qualcomm is trying to advance it and move it through relatively quickly, but I think the impact of this long term is probably pretty negligible. I just don’t see any significant hit to Apple. And I’ve got to expect that Intel knows, yeah, they’re not going to be the provider of technology forever. So, yeah, long term, major impact, I just don’t see it at this point.
Olivier Blanchard: Actually, I kind of agree with you, but I have a slightly different take on this. I think that from an investor standpoint, from a market standpoint, there’s not really going to be any penalty paid by any of these companies … any of this really matters to investors all that much. However, I think that should Apple be found guilty of this, it will further tarnish their image, which is something that they’re starting to have to deal with from a user standpoint, from a device ownership standpoint. People aren’t as enthused and as impressed with what Apple’s pumping out as they used to be. The magic of the Job’s era seems to have faded and seems to be fading more and more each year.
Now we have this implication that perhaps Apple isn’t able to source the type of innovation that it used to, and that the Android ecosystem, which is heavily reliant of Qualcomm, is actually taking over and becoming what Apple used to be, or at least allowing companies like Samsung and perhaps Google through Pixels become what Apple used to be in terms of innovation, and superior performance, and quality.
And so I think, on the one hand, from a general perspective, this hurts Apple’s image and raises questions as to whether or not the Apple of the next few years may just still be kind of either flat or on a downward trend as opposed to what it’s been.
The other aspect of this, I think, is that from an industry standpoint, Apple’s behavior towards its partners, which it seems to view more as mere suppliers than partners, the double-crossing, the fact that a company like Intel, which really bent over backwards to help Apple, is maybe tainted by this case, whether or not they had anything active to do with it. The fact that they might actually kind of get dumped or pushed aside, like Apple pushed aside Qualcomm when a better deal came up, may give a lot of tech companies pause.
And I think it was an Intel CEO … I can’t remember which one … some years ago, who allegedly said something like, “You don’t partner with Apple twice.” And I wish I remembered who said that, but that may actually be ultimately the most significant impact of this case should it end up looking really bad for Apple. That company has basically said, “You know what? No, thanks. It’s tempting, but we don’t want to expose ourselves to this.”
Fred McClimans: Yeah. Apple has a history of dumping chip suppliers, and there have been a few that literally had gone from well-established companies to ready to liquidate once suspicions come out that Apple might be dumping them here.
I think from a financial perspective and a street perspective, the one area where Apple is vulnerable here … and this is one of the reasons why I think it would go to a settlement because Apple has a ton of cash, more than all the way through … is if there’s anything that happens that delays Apple’s ability to get chips from Intel into their product. I mean, for them, that’s the key thing. They’ve got to have their regular supply, predictable of chips to meet demand. And when they miss demand by a week, the street takes notice. So I think that’s the only real area that I think is majorly at risk.
But I agree, their image, it is faded from what it once was, and others have been able to take advantage of that and move in, but I don’t see anybody really showing the early Apple levels of innovation to kind of take that crown from them at this point, but we will see.
Olivier Blanchard: And as an end note … you still have the last word, but I’m going to just add one little thing to it-
Fred McClimans: I’m done.
Olivier Blanchard: Since you brought it up and it was actually pretty astute. Right now, even though Apple has announced that Intel would be providing all the cellular modems for the iPhone, Qualcomm still provides some of them because Intel has not been able to entirely replace, or at least fulfill, the orders that Apple’s placed. So I think Intel right now provides about 70 to 80 percent of the cellular modems, but Qualcomm still has to provide some of them in order to meet Apple’s demand. So there is that.
All right. Cool. Well, that was a pretty full edition of FTP, but unfortunately, we’re out of time. So that does it for us. Thank you for tuning in to the FTP, the Futurum Tech Podcast. You can catch us next week, same time, same channel, as they say. And don’t forget to, of course, subscribe so you can listen to this anytime you want and as soon as it comes out. All right. That’s it. Have a great week.
There will be plenty of more tech topics and tech conversations right here on the Futurum Tech Podcast, FTP. Hit that subscribe button. Join us. Become part of our community. We would love to hear from you. Check us out, futurumresearch.com or futurumtechpodcast, Daniel Newman, Fred McClimans, Olivier Blanchard. We’ll see you later.
Author Information
Fred is an experienced analyst and advisor, bringing over 30 years of knowledge and expertise in the digital and technology markets.
Prior to joining The Futurum Group, Fred worked with Samadhi Partners, launching the Digital Trust practice at HfS Research, Current Analysis, Decisys, and the Aurelian Group. He has also worked at both Gartner, E&Y, Newbridge Networks’ Advanced Technology Group (now Alcatel) and DTECH LABS (now part of Cubic Corporation).
Fred studied engineering and music at Syracuse University. A frequent author and speaker, Fred has served as a guest lecturer at the George Mason University School of Business (Porter: Information Systems and Operations Management), keynoted the Colombian Associación Nacional De Empressarios Sourcing Summit, served as an executive committee member of the Intellifest International Conference on Reasoning (AI) Technologies, and has spoken at #SxSW on trust in the digital economy.
His analysis and commentary have appeared through venues such as Cheddar TV, Adotas, CNN, Social Media Today, Seeking Alpha, Talk Markets, and Network World (IDG).
