Core patents, can really affect the future development of millet?

"Focus on what you are good at, do not understand what we do not", recently lei this sentence let me have a new understanding. Because it involves a very deep problem: professional division and vertical integration, these two models which will be more suitable for the smart phone industry.

such as Lei Millet, has grown into a domestic market share first, the third (controversial) global share, it seems that the professional division of labor than vertical integration more adapt to this era. However, it was pointed out that millet can now become the boss in the market share, is because Huawei initiative to go up, cut in the low-end models, in the domestic to the growth of millet space. Even Huawei is aware of the empty shell spell low price is no future, millet "home door first", parasitic in China's special market environment, can not explain any problems.

and millet global share third, the next step will seek the international market outbreak, also cannot withstand scrutiny and textual research. The main industry is still the Lenovo of the PC just to buy a Motorola, not how to exert, so that the global share of smartphones and millet is equal. And Millet has not dared to enter the European and American markets, only in a few developing countries and regions "test water" internationalization, intellectual property Short Board, core supply chain manufacturers weak control, software and hardware design of the "Same", will inevitably bring foreign patent litigation risks, difficult to open the European and American markets.

Many people think that the internationalization of millet, the world's share of the first dream, in the absence of real strength, just empty talk. But they seem to ignore such a possibility, millet is focused on the low-end market, the product roadmap is to go low, continue to go low, from small meters to red rice, and then to peripheral accessories and intelligent hardware, it is to do the price of the butcher. The internationalization of millet is aimed at the third World countries, developing regions, where the demand for low-cost smartphones is not yet widespread, there is not so much discipline in the market. Will millet from the beginning, did not want to enter Europe and the United States such as low-end machine capacity and potential of the market is not big?

Lei may look very long: In the future, the value of smartphone hardware to users is not going to be trivial. With the development of the technology industry chain of maturity, extremely inexpensive entry-level smartphones, can be very good to carry out a number of basic skills to meet the needs of users, high premium products in the high-end market where the value? By then, will the mobile Internet services, content, and smart hardware built on smartphones become a competitive point in determining market position? And these are the things that lei and his millet are laying out.

Millet in the right place exerting force, such as marketing, such as system and ecological differentiation, supply chain management, investment in mobile Internet content, service start-up companies, the incorporation of intelligent hardware team. On the hardware, millet is slow to do vertical integration, enjoy the benefits of professional division of labor.

The benefits of professional Division of labor in fact at a glance. Take the processor, the handset manufacturer simply buys the ready-made chip to the Qualcomm, then pays Qualcomm a patent fee, can obtain the high integration high-performance high reliability The processor immediately, has saved the research and Development Fund and the precious time, but also can improve the product technical level, thus makes own product more competitive. In sharp contrast with this, choose to make their own chips, it is too difficult. IC design level, to get arm's authorization, communication technology patent independent accumulation or cross authorization, supporting ISP module, graphics chip, memory controller, each must have dabbling and accumulation, if the integration of stable and band cover complete baseband, the need to break the technical barriers are higher. Has the first-class IC design is one thing, the chip manufacture stratification plane, if can not get to the TSMC first-class process in time large-scale produces the film also is useless, in other words needs to have the long-term investment to the supply chain. No matter IC design or chip production, no one can easily handle.

Without their own chips, the biggest problem at the moment is not intellectual property. Using Qualcomm's chips, Qualcomm provides partners with a "one-stop" solution that includes chip products and related portfolio patents. The patent portfolio here includes not only the patents developed by Qualcomm itself, but also the high quality patents that Qualcomm's IP team incorporates into its proprietary portfolio through cross licensing. Qualcomm has a "free anti-license" policy when signing deals with Chinese companies. Mobile phone manufacturers want to use Qualcomm chip, must sign a patent licensing agreement with Qualcomm, the mobile phone companies to authorize the relevant patents to Qualcomm, and not to use these patents to prosecute Qualcomm's other customers.

Without their own chips, there is no obvious downside. and make their own chips, the biggest advantage is more efficient inventory management, leading new product development and timely large-scale listing of new products. These can effectively reduce costs and improve profitability. And really to achieve this effect, the premise or make their own chips, inputs and outputs do not lose the third party giants, to make products with the same competitiveness.

If this is not done, vertical integration, and even vertical integration of the entire hardware chain, such as Samsung, is beginning to say the company is about to follow in the footsteps of Motorola and Nokia, the hardware giant.

What's the use of your own invention patents? Can you lead a market segment in all key areas at the same time? Hardware vertical integration, in fact, is only the difference between the hardware, when the difference made products than professional division of the formation of the homogeneity of the product, the hardware differential loss of fundamental value. Or, gradually will be powerless. Samsung, for example, started using Qualcomm's high-end chips from the Galaxy S4, and is afraid that Samsung is not doing a good job with the baseband, and the SOC integration is not high. With their own chips and other people's baseband, with Qualcomm's chip to pay a finished factory price 5% royalties, who is the better option, Samsung has been "forced" to make a partial choice.

Of course, professional division of labor and vertical integration is superior to the inferior, there is no absolute judgment, must be based on their own circumstances to distinguish. Apple in the system and ecology, is completely closed and vertical integration, hardware, but there is a choice to focus on differentiated vertical integration, such as the impact of performance of the key Soc is to do their own, leading the future trend of TouchID fingerprint identification/mobile payment is to do their own, most of the others rely on supply chain manufacturers. In addition, dependence is not "true dependence", but the active investment in supply chain manufacturers, testing new pricing new hardware technology research and development, together with the quality control, quality inspection, expansion of capacity, a you have me in your state.

Many people say that Millet does not have the core technology, is a shell company, I think, before saying this, we still have to think about the article at the beginning of the question: professional division and vertical integration, these two models which will be more suitable for the smart phone industry? Also, smart phone hardware in the future will be in the value chain which position, you really see it?