Providing a Template to Challenge Apple

By LIN YANG

TAIPEI — In the China smartphone market, Apple has seen better days.

Despite having reported record sales of the iPhone 5, the U.S. technology giant’s presence on the mainland flagged in 2012; it was pushed out of the top five smartphone makers in that market during the third quarter, with just 8 percent of the market, according to the research firm Canalys.

As Coolpad, Huawei, Lenovo, Samsung and ZTE surged ahead of Apple, a major force behind their success was MediaTek, a Taiwanese chip maker whose products have drastically reduced the cost for manufacturers of getting new phones to market.

The company entered the smartphone business late, introducing its first chipset in 2011 inside a Lenovo phone. But within a year and a half, analysts say, MediaTek has taken 50 percent of China’s market for smartphone chips.

That success has come with the adoption of what MediaTek calls a “turnkey solution.” Rather than simply provide a chip, the company also offers instructions on how to build a phone, the software architecture to run it and dedicated consultants to advise phone makers through the production process. MediaTek’s chief financial officer, David Ku, describes this as a franchise model in which all the clients have to do is “turn on the burner.”

Peter Liao, an analyst at Nomura Securities who covers the industry, said MediaTek saved phone makers the often prohibitive cost of research and development.

“It typically takes a lot of money and time to develop a new handset model, but MediaTek comes in and provides a total solution,” Mr. Liao said.

The company has proved wildly popular among Chinese phone makers. Besides supplying Huawei, Lenovo and ZTE, MediaTek also supports lesser-known manufacturers, including those that make so-called bandit phones that imitate premium models from Apple, Samsung and HTC.

TCL Communication Technology Holdings, a Chinese phone maker that sells phones primarily in Europe and Latin America, uses MediaTek’s chips. Its chief operating officer, Wang Jiyang, said that when his company works with MediaTek, its only major design tasks are to make the software more user-friendly and to tailor the look and feel of the phone.

“In general, with MediaTek’s help, we’re able to achieve almost twice as fast time to market, compared to other solutions,” Mr. Wang said.

MediaTek was founded in 1997. It started out making chips for home entertainment electronics like DVD players and televisions before moving into components for CD and DVD-ROM devices. In 2004, it began making chips for small mobile phones.

MediaTek estimates that it will lead the Chinese market by selling 110 million smartphone chips in 2012, up from 10 million chips a year ago.

By comparison, Qualcomm, the global leader in smartphone chips, is expected to finish 2012 in second place in China with 82 million chips shipped, according to the research firm DigiTimes.

MediaTek has been powered by consumers like Zhang Ying, 31, who want to try the latest technology but not pay a premium for it. Mr. Zhang, a Shanghai resident, bought a knockoff HTC phone last year. “Every person has a price point,” he said. “At a time when some of my friends were buying Samsung or iPhone, I wanted to show that I can keep up with them. A lot of domestic phones are cheap and of fairly good quality.”

People who think like Mr. Zhang are dominating sales, especially among first-time smartphone buyers. In a September report, McKinsey, the global consulting firm, estimated that 69 percent of all smartphones sold in China would cost less than 1,500 renminbi, or about $240, by the second half of 2013.

And MediaTek is taking its business model to other emerging markets. The company’s products support features that are popular in developing countries, like noise-reducing speakers and slots for two SIM cards.

In India, local brands like Spice and Micromax are rolling out lower-priced smartphone models using MediaTek parts. In Brazil, phones by Motorola Mobility, as well as local brands like Gradiente and Multilaser, will also have MediaTek chips.

“The markets we target have 5.8 billion people, whereas the U.S. and Europe have less than one billion,” said Mr. Ku of MediaTek. “I need to aim at a global market, not just developed countries.”

MediaTek also released a chip last year for building basic smartphones that work in regions without mobile data networks. Users of these phones rely on Wi-Fi connections to download multimedia. These phones can cost as little as $50, or 312 renminbi.

Those chips now account for 40 percent of MediaTek’s smartphone chip sales, according to the company.

Mark Hung, an analyst at the research firm Gartner, calls the network-less chip one of the “fastest-growing smartphone segments,” as many consumers are looking to switch from their simple mobile phones to basic, low-cost smartphones.

“This is a fairly new phenomenon, and as you can expect, mostly in emerging markets, including China,” Mr. Hung said.

For now, Apple has signaled that it has no intention of competing on price. The iPhone 5, released in China on Dec. 14, cost 300 renminbi more than the two previous models, the iPhone 4S and 4, on their release days. More than two million units of the iPhone 5 were sold during its first weekend.

By contrast, Coolpad, Huawei, Lenovo, Samsung and ZTE have rolled out new phones with similar performance at a third of the iPhone 5’s price of 5,288 renminbi, and sometimes less.

“We believe that emerging countries should also be able to enjoy the use of information technology with the same computing power,” said Tsai Ming-kai, chief executive of MediaTek.

As the world’s largest market for smartphones, China is quickly becoming a bellwether for the progress of sales wars globally. The Chinese experience may show that any leading market position can be fickle, and new brands can appear seemingly out of nowhere to capture significant market shares.

Apple remains No. 2 in smartphone shipments worldwide after Samsung, but its position could be threatened as the competition expands to more consumers and more price points.

“Emerging economies are getting stronger,” Mr. Tsai said. “The industry dynamic is always evolving. Anything can happen.”

iPhone不吃香 都因大陸聯發科？

紐約時報報導，去年第三季，蘋果iPhone掉出中國大陸智慧手機市占率前五名，聯想、酷派（Coolpad）、華為、中興等大陸本土品牌主宰市場，幕後重要推手是台灣晶片大廠聯發科，因為聯發科的產品大幅降低大陸製造商推出新機的成本。

聯發科進入智慧手機市場的時間相當晚，直到2011年才推出第一個智慧手機晶片組，被聯想採用，短短一年半後，聯發科卻已吃下大陸智慧手機晶片五成的市占率。關鍵在於聯發科採用統包解決方案，不僅提供晶片，還指導組裝手機的方法、支援軟體，並在手機製造的整個過程中，為製造商提供諮詢。

野村控股分析師彼德‧廖指出，「研發一款手機往往要投入很多時間和金錢，聯發科卻能提供整套解決方案」，為製造商省下大筆研發經費。

聯發科估計，2012年該公司將以1億1000萬片智慧手機晶片銷量拿下大陸市占率第一；反觀全球智慧手機晶片領導品牌高通，根據台灣「電子時報」估計，2012年在大陸將以8200萬片的出貨量落居第二。

聯發科亮麗的銷售成績來自想要「用小錢買新科技」的消費者。去年買了一支山寨hTC智慧手機的31歲上海市民張英說：「有的朋友不是買了三星智慧手機，就是有iPhone，我想跟上潮流，不過每個人都有預算上限。」

聯發科正把這套成功模式複製到印度等其他新興市場，去年推出能在沒有手機網路的區域運作的智慧手機晶片，手機的用戶藉著Wi-Fi連線下載多媒體。

原文參照：
http://www.nytimes.com/2013/01/07/technology/07iht-mediatek07.html

紐約時報中文版翻譯：
http://cn.nytimes.com/article/business/2013/01/09/c09mediatek/zh-hk/

2013-01-08．聯合報．A14．國際．編譯李京倫