[opendtv] Re: DTV licensing; Was: Mobile DTV test
- From: "Allen Le Roy Limberg" <allimberg@xxxxxxxxxxxx>
- To: <opendtv@xxxxxxxxxxxxx>
- Date: Sun, 11 Apr 2004 14:07:54 -0400
The IP is more likely to be licensed at to the set manufacturer, rather than
at IC foundry. The unlicensed sets fill up warehouses faster than ICs.
Also, it is easier to justify $25 royalties on something that costs hundreds
of dollars, rather than a few dollars.
But IP prices being higher than actual production costs is not so strange.
Look at PC software.
What is really strange is that copyright term on stuff like computer
software is so much longer than patent term.
What is also interesting is that the Zenith royalties flow to Korea, rather
than to the U.S. This may help to counteract just a little the huge flow of
patent royalties from Korea to Japan.
I expect to see the U.S. lose position in the innovation game as well as in
the manufacturing game.
Al Limberg
----- Original Message -----
From: "Eory Frank-p22212" <Frank.Eory@xxxxxxxxxxxx>
To: <opendtv@xxxxxxxxxxxxx>
Sent: Saturday, April 10, 2004 5:07 PM
Subject: [opendtv] Re: Mobile DTV test
> Oops. Sent the last one without typing my reply.
>
> Yes, IP licensing costs are becoming an increasing percentage of chip
costs with each new level of integration. One solution is to make the
license a percentage of the ASP (average selling price), rather than a fixed
dollar amount -- if the IP owners can agree to that. I forget the exact
figure, but at one time the MPEG2 royalty for DVD chips was a fixed dollar
amount which would be ludicrous today, considering you can buy an
DVD-player-on-a-chip -- everything but the drive mechanism itself, for
something in the neighborhood of $10-$15 -- probably less, depending on who
you are and what your volumes are. Suppse the IP royalty was $3/unit. 25-30%
of the ASP to the IP owners of "the standard," while the chipmaker who
invests millions to produce and support the chip (and adds value with his
own IP) gets margins in the single digit percentages? That business model
doesn't fly. That lead to things like we see in China, where they are
developing thier own standards and their own I!
> P, for the simple reason that the cost of licensing the "standard" IP is
too prohibitive.
>
> Now fast forward a few years into the future, when virtually every TV set
sold in the U.S. contains an ATSC receiver/decoder, MPEG2 video decoder,
Dolby audio decoder, NTSC decoder, graphics engine, microprocessor, video
scaling engine, etc. Now imagine that today's $200 TV sets will sell for
$250 at retail (in equivalent 2004 dollars). The WILL sell for that small a
premium, or they won't sell at all. Now back out the retail markup, the TV
mfr markup and the chipmaker's markup. What do you think those chips will be
selling for in 2007? My guess is around $10. How much of that $10 can
possibly (without incurring a loss) be given to the large pool of IP owners?
A few pennies to each of them?
>
> I remember reading once that Zenith/LGE was hoping to get $5/unit for the
8-VSB patents. How much will that royalty really turn out to be when 8-VSB
is a small fraction of the chip area on a $10 chip?
>
> Tom brings up a valid point -- if the licensing cost of a particular IP
block is too prohibitive, it will not be integrated. I would add the
following corollary: whatever is not integrated will not be included in the
product, except for those things that cannot be integrated for technical
reasons (like maybe RF tuners). Regardless of mandates, etc., the end
product will be made affordable. If there are one or two IP blocks that
drive the cost through the roof, they will either find a niche market or
they will disappear entirely.
>
> -- Frank
> -----Original Message-----
> From: Eory Frank-p22212
> Sent: Saturday, April 10, 2004 1:34 PM
> To: 'opendtv@xxxxxxxxxxxxx'
> Subject: RE: [opendtv] Re: Mobile DTV test
>
>
>
>
> [opendtv] Re: Mobile DTV test
>
> * From: Tom Barry <trbarry@xxxxxxxxxxx>
>
> * To: opendtv@xxxxxxxxxxxxx
>
> * Date: Sat, 10 Apr 2004 07:24:43 -0400
>
> Eory Frank-p22212 wrote:
>
> > I wonder if there will be a market for standalone demod/FEC chips
>
> in 2005? There are guys out there who already have DTV-on-a-chip today
>
> -- demod/FEC, MPEG2 video, NTSC video & audio, Dolby audio, graphics,
>
> microprocessor, etc. I don't know what they cost, but clearly the
>
> value of each IP block is dropping fast as the integration level
>
> increases.
>
>
>
> Interesting point. But the incremental cost to add something to a
>
> chip is also determined by the IP licensing cost. If that is
>
> significant then it is less likely a function will be integrated along
>
> with big collections of possibly useful stuff. I'm not sure how that
>
> stacks up here.
>
>
>
> - Tom
>
>
>
>
>
>
>
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