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Tech Roundup: AAPL-QCOM Fight, YHOO Ends, E3, Toshiba Unit Sale

The top news stories from last week are about Apple’s AAPL ongoing legal dispute with Qualcomm QCOM, Verizon’s VZ acquisition of Yahoo and Toshiba choosing a buyer for its chip making unit.

Apple Attacks Qualcomm Again

Apple has opened up a new line of attack against Qualcomm, as it continues to squeeze suppliers to eke out the maximum profit from its products. So it’s now citing a Supreme Court ruling in the case of Lexmark versus Impression Products. In this case, Impression collected used printer cartridges sold by Lexmark LXK, refurbishing and then selling them to end customers, thus impacting Lexmark’s cartridge sales. The court held that once the company sells a product, it is deemed to have received the full consideration for its patents and can’t claim damages/royalties/payments from any resales.

Qualcomm sells chips that include its technology and also separately licenses its technology to companies that want to use it in their chips. So it doesn’t appear to be collecting double royalties as Apple claims.

What really is at issue here is the amount Qualcomm is charging, given the fair and reasonable rate it is required to charge for its standard essential technology. Apple’s claims that Qualcomm is charging it for its own innovations may not hold water unless it is able to show that Qualcomm charges it more than it charges other customers. Apple is also trying to suppress Qualcomm’s comments that the only competing chips (from Intel, Apple’s second source) were of inferior capability and that Apple deliberately curbed the performance of Qualcomm’s products to ensure that all iPhones performed similarly.

In the broader context however, Qualcomm has already been found guilty of abusing its dominant position to overcharge: in China, its anti-competitive practices led to a fine of $975 million while in South Korea it was forced to settle for $865 million. The U.S. FTC is also investigating Qualcomm.

Verizon Completes Yahoo Acquisition

The end of Yahoo is here as Verizon assimilates the once erstwhile Internet company into a subsidiary called Oath, encompassing more than 50 brands including HuffPost, Yahoo Sports, AOL.com, MAKERS, Tumblr, Yahoo Finance and Yahoo Mail. Former AOL CEO Tim Armstrong has been overseeing the acquisition and now assumes the role of CEO at the new subsidiary. The rest of Yahoo, which is basically its investments in Asian companies (mainly Alibaba), is trading as a separate company called Altaba (AABA) from Jun 19.

Electronic Entertainment Expo (E3)

At the annual video game how, there were a large number of game releases, release date announcements, gameplay sequences showcased and some details about Microsoft’s MSFT new game console to be released this year.

Microsoft officially announced that Project Scorpio is basically Xbox One X, a more powerful version of the One, supporting 4K gameplay and technology that makes 1080p TV graphics look better, with backwards compatibility and steep pricing of $499, £449, €499, AUD$649 or CAD$599, depending on where you want to buy it. It’s again pricier that Sony’s PS4 Pro. This pricing strategy hasn’t done well in the past, so let’s see how it goes. Microsoft also announced that the shooter game Crackdown 3 will hit the market on Nov 7, Assassins Creed Origins on Oct 27, Forza 7 (with 700 cars this time) on Oct 3 and Anthem some time in 2018.

Sony SNE had fewer surprises: but there was The Lost Legacy, a new version of Uncharted; the zombie survival game Days Gone; the HD remake of Shadow of the Colossus to be released in 2018; God of War (showcased at the 2016 E3) to release in early 2018; a new trailer for the action game Detroit: Become Human with no release date; and a Spider-man game, also for release next year.

Nintendo is intent on building on the success of its new game console Switch, so most of its announcements were related to its hot console: up first is Xenoblade Chronicles 2 for release this holiday season; a Kirby game for Switch; a Pokemon that may not release over the next year; Metroid Prime 4; a Yoshi game; the first Zelda DLC on Jun 30 and the second in the 2017 holiday season; Rocket League to release on the Switch in time for the holidays; and Super Mario Odyssey for release on Oct 27.

Toshiba Chooses Government-backed Consortium, Sues WDC

Toshiba has chosen a consortium of Japanese corporate investors, the Japanese government and other investors like s k Hynix to sell the 51% stake it has in its JV with Western Digital. This means the rejection of a higher bid by Broadcom, which was therefore disappointing for investors. Toshiba has said that it chose the offer because it was likely to get quick approval (since the government is a party), it would keep key chip-making technology within Japan and would provide for its existing employees. The Japanese chipmaker needs to sell the business quickly to offset the losses made by its U.S. nuclear business operations and avoid delisting.

Western Digital is however proving difficult as the company has said that Toshiba is under an obligation to invite preferred bids from Western Digital in case the business was put up on sale. The Japanese consortium that Toshiba ultimately chose has said that it needs to fix the problem with Western Digital and Toshiba said it was willing to talk to Western. But WDC took a tough stand, after which Toshiba sued it for a billion dollars.

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