Qualcomm Transforms Business Model: Giant's Fear

The infighting of Chinese companies will make people feel that the world is theirs. Spreadtrum and MediaTek (Weibo) have struggled in the feature machine market in the past two years and once felt that the mobile phone processor industry has become a “two-person transfer”.

However, a few days ago, after Qualcomm launched the QRD program, the author believes that in the global 3G market, China's two major processor companies, and even its global competitors, are unlikely to really shake Qualcomm’s position.

QRD is an ecological strategy that is not uncommon in the business world. But it is unusual for Qualcomm. As the global mobile phone processor giant, the business model adopted by Gao has been relatively single. It mainly focuses on selling single-chip products. QRD integrates other contents of the industry chain, especially software applications and even operators. In layman's terms, it is now that it has begun selling so-called "holistic solutions."

Why did Qualcomm do it? In the era of functional machines, it was completely "south-facing," and there was no need to bow to people, simply sell products, and take advantage of high profits, especially in the high-end market. You know, the world’s top mobile phone giants outside of Apple are all its customers.

Behind the change in the giant business model is the change in the rules of the game. In the era of 3G smart phones, users have not simply used mobile phones as their answering tools, but they expect more experience applications. Mobile phones must adapt to the market demands of the mobile Internet. It's no wonder that Qualcomm has pushed a QRD, specifically pulling in many local Internet application developers such as Sina and Tencent.

Why do you say this move will pose a great threat to competitors such as MediaTek? Because, in the mobile phone processor industry, Qualcomm's actions can be called MediaTek to counter MediaTek. The core secret of the rise of MediaTek is the innovation of the business model. A few years ago, the "turnkey" model it pioneered has almost become the driving force behind the explosive growth of the global mobile phone market.

The core of turnkey is also the concept of an overall solution. MediaTek has changed the model that rivals such as Qualcomm sell hardware products solely in the functional machine field, which has reduced barriers to entry in the global mobile phone industry and has thus far become a big climate. Taking China as an example, 90% of domestic mobile phones use the MediaTek platform in the mid- to low-end functional machine market.

To some extent, in the past few years, giants such as Motorola and Nokia have declined from glory to decline, and behind them MediaTek's "credits."

However, Qualcomm now learns this and extends it to the global 3G smartphone market. Wang Xiang, president of Qualcomm China, told the author that QRD covers all high-end, low-end products. It seems that the days of MediaTek are not very good in the short term, although they are also launching their own smartphone solutions.

Yang Haifeng, a well-known communications industry research expert, said that the value QRD brings to Qualcomm is to narrow the distance between the company and small and medium-sized OEM companies in the past years. In the past it was high above and now it is close to the people.

However, Yang Haifeng believes that the model change is only a superficial threat to Qualcomm, and the real threat lies in patents. The reason why MediaTek is leading the 2G market is indeed related to the fact that the original patent has expired. But now is the era of 3G, MediaTek and other companies can not bypass the Qualcomm blockade, even if the introduction of smart machine program, at any time may also be blocked.

Because Qualcomm holds 10% to 20% of the core patents of global CDMA, they penetrate the bottom layer of all 3G communication standards. Nowadays, with the help of QRD to lower the figure, Qualcomm is expected to eat the global market. As of now, only in China, Qualcomm has at least 80 customers.

So, can Qualcomm once and for all? MediaTek clearly does not agree.

MediaTek's Beijingers frankly told the author that Qualcomm’s launch of QRD is indeed a good thing, but one selling hardware suddenly resells the overall solution. This is not an overnight event. MediaTek has accumulated over the past 10 years, especially for local customers’ technical support. Qualcomm can compare.

Qualcomm is clearly aware of this and it is prepared. On the day of the launch of the QRD strategy, Qualcomm revealed that it has already held hands with the company's famous Android core technology and solution provider, Kechuang. Both parties will each invest in more than 100 teams to jointly develop, support and even establish laboratories. In this way, the Qualcomm platform mobile phone will pass the test even in a month and a half.

The above-mentioned MediaTek sources believe that Qualcomm’s actions show that it lacks sufficient technical and industrial cooperation strength. Even though the model has been settled, there will be many market difficulties to meet it. It is not easy to satisfy the increasingly stringent demands of local mobile phone companies.

MediaTek expressed its concern about Qualcomm’s patent-based access to high-end, low-end markets. However, the person emphasized that if Qualcomm uses patents to bully the weak, it will only damage consumers and the market is unlikely to allow one to eat.

He admitted that Qualcomm's patent barriers are difficult to circumvent, but industrialists have long been aware of the high concentration of patent risks, and are accelerating their efforts to circumvent barriers by deploying 4G services. In particular, operators are very active in the LTE field. The reason behind this is the 4G patent pool. It is much more dispersed than the 3G patent pool.

It seems that rather than relying on QRD to attack MediaTek, Qualcomm is better known as a defensive move through business model changes. The 3G smart phone market is not only an opportunity for giants, but it also means that the crisis is coming.

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