The Hidden Tax on Every Smartphone and Tablet You Buy

Almost everything you've ever bought in your life has some kind of patent "tax" involved. Even raw foodstuffs involve tools and machinery that are built using patents. Certainly there are reforms needed in today's patent regime, which allows patents to be issued for tiny details and for ideas that cannot yet be implemented. But the important advancements in technology deserve recompense for the work to develop them.

It's funny that you paint Apple as a victim when Steve Jobs was a big part of starting the latest patent wars.

There is NOTHING produced or manufactured by US Companies that is FREE. Nothing,yes you got the phone for free because you signed up for a 2 year contract and that certainly isn't free. These companies are right in line with everything else. Its the American way. Profit

Yes, of course a hidden tax... Oh my! Why am I not surprised. Why is everything is always so hidden? The land of the Free just isnt is it?

Whether it be true or not, royalty fee or tax, to me it is unethical and unfair that the powers that be whether be in the companies or government would do stuff like this. I am sure I had it happen to me when I bought my two cellphones and I am sure they did the same thing with the Tracphone that I bought. Bottom line is that till we clean out the current crop of incumbent Senators, Congressmen, whats in the White House and demand more transparency and fairness out of the corporations that do business here, your only going to see more of this. Besides, $5. aint really nuttin and I rather see my money goto the American Corporations than the foreign corporations. Call it what it is, but it is what it is and no one saids it would be a perfect country. Only one way to resolve this problem, do not buy any of the products, and you have that money in your wallet. I did away with the service of AT&T because I do not like their practices of how I been treated over the years. The gadgets are snazzy and nice, but they come at a price and the fact their not made here tells you something. What the people need to do in this country is find more software engineers, and hardware engineers and all American manufacturing to be done here and then find the right kind of politicians to create laws that are fair and balanced. Apple, Microsoft, Oracle and many other companies are clear examples of industries that were created in an environment during the Reagan-Bush years, and the policies over the years were there to benefit the corporations and encourage them to send our production and so forth overseas. Protesting and so forth is not really going to make a world of difference, but what will is play these companies at their own games and develop new products that simply compete like how the Japanese did to us, and then if companies like Apple and Microsoft do not adapt, you take em over and change em and their culture. I hope to see one day that new companies rise up and give the traditional tech companies a run for their money. I know the East Coast here could use a "Silicon Valley" of their own. I know in Albany their trying to do something like that, but it takes time for industries to develop. Interesting story so far though.

It isn't a "tax", but a royalty "fee". But since you brought it up, some derelict senator is currently writing up a new tax on smartphones. Way to go......DA!!

Never trade your old phone in for a new one.... They give you nothing and sell for greater profits... That phone is yours to keep even if they make it sound like you must trade it in...Just say no i will keep it.....

Hello! Your phone was NOT free. You are paying for it every month in your bill; it's just not itemized. Try dropping your service before the contract ends and you'll see very quickly that they want you to pay for the phone (cancellation fee).

its called greed, thanks

The article says "if you bought an Android smartphone in the last year or so, odds are you paid Microsoft $5 for the privilege of using Android" but that isn't true. Phone maker HTC settled a lawsuit with Microsoft, not any of the other dozen or so makers. HTC doesn't have half of the Android phone market, so the odds are if you bought an Android phone in the past year you DID NOT have anything to do with paying Microsoft $5.

The author of the story seems to be suggesting companies shouldn't be allowed to patent things they invent. Why would a company invest their money developing something if every other company could just steal it? You can't patent "a button you click on to buy stuff," but you can patent the technology that goes on behind the scenes to make that happen. Someone spent their time and money to make it happen and they should be rewarded for their work.

#$%$ - A company develops a technology they are entitled to royalties from those who use it. This is a poor attempt by some Liberal who thinks he has the collective brain cell today but does not to liken private sector activity to the governemnt stealing and wasting our money. Only the government can levy a tax. If you don't like it go live in communist China.

Todays Techno yuppies, are just as greedy as were their elders a few years ago!! Forget peace, love, and pot, love is gone, peace never was, and all efforts to legalize Canabis Seteva, are greatly underattack!! Dont be surprised, these "captains of industries" learned very well from their greed driven colleges, and business schools!!

Dibs on thought controlled devices. Send me money!!!!

How did they get $5 when my phone was free? Another idiot writer on yahell.

To produce any new and innovative gadgets such as smartphone companies must spend billions of dollars for Research and Development in addition to the per unit manufacturing costs. Companies use patent licensing to recover these research related costs. Without patent licensing it would be impossible for companies to fund research needed to develop new technologies. The author therefore is unfairly demonizing these technology companies by mislabelling patent licensing fees as a hidden tax.

I knew it, Obama strikes again!

What an uneducated "commentary". Google is buying (they have not completed it, so they do not exercise any control over Motorola or its lawsuits) Motorola so they can have the patent portfolio to PROTECT them from Apple & Microsoft's lawsuits and extortion.

Meanwhile, the cost of licensing? 5 measly dollars? Apple profits about $300-400 PER iPhone. Analysts have demonstrated the cost of parts is about $190. About a further $17 for assembly (a- Foxconn workers are CHEAP, and b- automation is cheaper). Yet, the price is over $600-700. You don't pay that, because you instead pay $199-$299 and then pay Verizon, Sprint or AT&T $30/mo for 24 months - and the carriers pay Apple a further $300-$400 off the $720 you pay them for "data" over 2 years. Note, in Europe, data costs a mere $10/mo, because people must pay the entire cost of the phone themselves.

So, Apple profits at least $300 per iPhone. A mere $5 in licensing seems like nothing - but Apple is suing everybody because they want to rape and hoard every last penny they can.

Despite the recession in America, Apple now has over $100 BILLION in cash. In 2007, they had a mere $8 billion. That means that while we were losing jobs and having our houses foreclosed, Apple pocketed about $100 billion profit.

To put it in other numbers - they just released their Q4 2011 finances. They earned so much, that it is the equivalent of every person (adult & child) in America writing a check to Apple for $131. Yes, per person - and just for 1/4 of the year. That is how bad Apple is raping America.

I do not use a cell phone or tablet. So why should I give a crap about it?

And this is why we can't have nice things!