Qualcomm pain of monopoly: regression of China’s smartphone industry

this paper hunting contribute yong-jie sun cloud network readers

quiet moment comes from the end of last year and early this year on China’s national development and reform commission for qualcomm use patent monopoly in the Chinese market survey recently because the media reports, the national development and reform commission has determined qualcomm’s monopoly facts, once again become the focus of the industry. Relevant patent is actually hinder the industry (such as smart phones) innovation and profit argument is not only in China, in the world are focus on topic. Before such as a paper called “The Smartphone Royalty Stack: Surveying Royalty Demands for Components Within Modern Smartphones,” The report shows that many times The cost of The patent license in The field of mobile phones is far higher than The cost of hardware manufacturing also sparked controversy in The industry.

back recently continuous fermentation qualcomm is based on the investigation of the patent monopoly there in China. Although the industry from many angles, such as qualcomm high licensing fees to make its net profit margin is higher than the current apple even; Qualcomm alleged violation of the several provisions of Chinese anti-monopoly law, etc. But we think the final development and reform commission, a public statement (note that not certain media news from insiders say) is to determine the qualcomm exists monopoly the DE facto standard in China. We are more concerned about is that by qualcomm in China encounter antitrust investigation on intelligent mobile phone industry for China development itself is the common sense of thinking (not what the so-called professionals).

at this point, we said, we first understanding of the enterprise net profit margin. Affect the net profit margin of an enterprise of high and low is not only the enterprise’s products (including software, hardware and services, etc.) itself, also involves the industry, the industry development in different periods, the enterprise’s own creativity (commercial), cost, management, and many other factors. So judging an enterprise net profit margin of discretion should be a fairly complex professional problem, only through open just draw a simple earnings and addition, subtraction, multiplication, and division profit margins, even compared with other enterprise of high and low to avoid biased and unfair.

the most obvious example is that of the global fortune 500 issued recently, under the same market position, in the sale of hardware technology companies than providing software services or network value-added services companies make more money, such as with giant for intelligent mobile terminal market or software market, samsung and apple’s revenue and profitability is higher than Microsoft, Google, amazon, and oracle. But before the Wintel and Google dominance in the PC industry’s traditional Internet boom period, Microsoft and Google’s profit margin is much higher than that of apple and samsung, which undoubtedly and ahead of us in this paper, the factors are closely related.

we are not here for qualcomm may exist in China’s monopoly, but view should be comprehensive, objective, at least in accordance with the least common sense. This leads to the smartphone industry widespread lower margins (very low profitability), is also our qualcomm monopoly industry alliance and companies to submit to the national development and reform commission investigation main motivation problem. Whatever the final result, to explore how to improve China’s smartphone industry profitability is the core.

here we might as well assume that qualcomm monopoly fact in China, qualcomm patent authorization policy for this change in the Chinese market, we obtained satisfactory smartphone industry related manufacturers as a result, China’s smartphone industry competitiveness and profitability will be significantly increased? Believe that familiar with the Chinese smartphone industry law of development of the industry most will give no answer. What is the reason?

the first is our ability to innovate. This is not only a smart mobile phone industry in China, to say the industry of China has been unresolved problem. But the real innovation to enhance the capacity of premium brand and related products. To measure creativity and impossible to avoid patent, especially the accumulation of basic patents. Specific to the communication and intelligent mobile phone related patents. According to Taiwan “the being” sorting out data, by the end of 2013, the United States has the largest 4 g standard essential patents, a total of 1661, China ranks second, 1247, is the third of Korea 1062. 4 g era in the network side, Chinese manufacturers such as huawei, zte to have mastered the strong advantage of patent.

this, maybe someone will say, since Chinese patent accumulation is not very backward, why will so passive? To be sure, China institute of this report is according to the European telecommunications standards institute (ETSI) statistical data integration, and ETSI only accept patent submission and published, whether does not review these patents for standard essential patents. Do you think of this, we also exist on patent accumulation “big but not strong” problems? , but in terms of quantity, in addition to China’s huawei, zte, few other Chinese companies can be called a substantial accumulation of patent, it is to point to in quantity.

followed by China’s smartphone industry competition. From China in the smartphone industry the rise of the so-called “Chinese cool league”, low price is low profit is still the main way we relies for survival and development. This in addition to the related to the innovation, the inherent thinking and way of the Chinese enterprises is the most fundamental reason. See the cluster, and then in cut-throat price war, this from we the hundreds of mobile phone companies and fledgling 4 g smartphones have already dropped to one thousand yuan in fact is verified.

in the end, also is our most worried about is in addition to the above hinder our smartphone industry really strong reasons (improve) profitability, and the spread of excessive in the smartphone industry marketing may let us intelligence industry development in the future, the way of doing things in more walk more far. Take a look at our mobile phones today new product release, not the big blow what the industry first, is the new business model, and even up to “feelings”. But mobile phones or, like the crab, again how to fry, it is also of eggplant. Sink so how to settle the product itself well to do real, true to the market and users really need of mobile phone is the fundamental. And the result of the excessive marketing is not picked up the “hammer” smashed his own feet, is to make the “plate” burn yourself. Samsung the industry recognized as the king of marketing (whether from input or creative) several consecutive quarter of a sharp drop in is the best proof of abundance marketing negative impact. Importantly, excessive behind marketing, reflects our industry of quick buck and impetuous, so, when we really grow the disadvantages of the preceding block industry can change, even to the next new industries, we still have no chance to become bigger and stronger.

what has been discussed above, we think, qualcomm, the existence of monopoly in China, is our only the surface of the smartphone industry big but not strong reasons, we (include a company) inherent in industry and the new way of thinking and development is the fundamental. So-called severely, according to the internal cause is the development, external cause just changing conditions. So we strongly support the national development and reform commission investigate qualcomm monopoly at the same time, more hope our industries and businesses can reflect on yourself. After all qualcomm monopoly pain compared with regression of China mobile phone industry, which bring harm to our industry.