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The (said to be) contra MediaTek play of Tsinghua Unigroup with attempted merger of Spreadtrum and RDA

锐迪科并购陷僵局:清华系基金与上海资本恩怨凸显 (RDA’s acquisition deadlock: Tsinghua University unit and Shanghai Capital Fund scores highlights) [April 15, 2014]

… In September of last year, Shanghai Pudong [上海浦东] branch cast M&A of RDA, then Unigroup stepped that up by paying higher prices. But because of “fait accompli”, procedurally irregular for National Development and Reform Commission, it was halted [by the commission]. …

According to the official website of Unigroup  announced the news, Spreadtrum is expected to be over one billion U.S. dollars in 2013 sales revenue. But this order of magnitude, in the chip market waves of mobile terminals are likely to stir even afford. The first quarter of 2014, MediaTek revenues had reached $ 1.3 billion, more than a full year is expected to reach $ 4.5 billion, while the leader Qualcomm first-quarter revenue has exceeded $ 6.5 billion, the annual $ 20 billion is expected to be up above.

Leaving the above, rather raw translation by Google and Bing (with a little edit of mine besides the merger of two), it is better to give quotes from:

… over the last few months, the proposed deal has triggered raw emotions and turmoil among RDA employees who object to it. Chairman and CEO Vincent Tai, who reportedly resisted the Tsinghua Unigroup’s acquisition plan, was fired by the RDA board late last year.

One senior executive at RDA told EE Times Thursday, “We want Vincent back.” Clearly, he isn’t alone with that sentiment.

Several sources in the industry — both inside and outside RDA — point out that the huge cultural differences between RDA and Spreadtrum will make it tough to run the merged company effectively. And they say that Tsinghua Unigroup, whose purpose in acquiring the two companies is to make money by quickly making the consolidated entity go public in China, should know better.

Cultural difference
Compared to the more agile and free-spirited RDA, Spreadtrum is a much bigger corporation where engineers are known to be highly regimented, working in a modern “feeding” machine-like environment. RDA is China’s RF IC leader, while Spreadtrum has grown big by leading China’s home-grown TD-SCDMA baseband market.

Also brewing behind the scenes is an on-going feud between Shanghai and Beijing, according to several local sources. Shanghai, a much richer city than Beijing, pays a heavy tax levy to China’s central government.

It was originally the Shanghai Pudong Science and Technology Investment Co. that proposed, last September, to buy RDA. The deal, however, fizzled when Tsinghua Unigroup barged in and proposed to buy RDA at a higher price.

It was a huge blow to the Shanghai-based investment firm. It had to watch the Beijing-based company come into its own backyard to sweep up the two most successful fabless companies in Shanghai.

No pre-clearance
Several industry sources in Shanghai pointed out that Tsinghua Unigroup acquired RDA without a permit from China’s central government. More specifically, Tsinghua Unigroup, at this point, still lacks pre-clearance for the merger from the National Development and Reform Commission of China.

The RDA senior executive told EE Times, “Without pre-clearance from the government, this deal is not done.” He acknowledged that uncertainty about the future is doing damage to customers and to the morale of employees.

Merger Pits Mysterious Tsinghua Unigroup vs. MediaTek [EE Times, Nov 14, 2013]


Through Tsinghua Unigroup’s initiative to acquire the leading TD-SCDMA baseband chip vendor Spreadtrum Communications (announced in July) and now China’s RF IC leader RDA Microelectronics (disclosed earlier this week), hopes are running high in China that its domestic electronics industry might finally get a consolidated entity powerful enough to compete with Taiwan’s MediaTek, if not quite an equivalent to Qualcomm in the United States.

While many Chinese industry sources see the recent development positively, opinions differ about what comes next. Some Chinese executives view Tsinghua Unigroup’s move as “a pure financial play,” while others put more stock in a behind-the-scenes ploy by the Chinese government to strengthen China’s electronics industry. Others even go further, predicting a doomsday scenario for other Chinese fabless companies such as Allwinner and Rockchip.

Here are the basics. Tsinghua Unigroup is 51 percent owned by Tsinghua Holdings, a 100 percent state-owned limited liability corporation funded by Tsinghua University in China. Forty-nine percent of Tsinghua Unigroup is owned by private entity — Jiankun Investment Group Co., Ltd. — controlled by Zhao Weiguo.

Weiguo serves as Chairman and Chief Executive Officer of Tsinghua Unigroup.

According to one Chinese electronics industry executive, Weiguo is “playing the whole game by leveraging Tsinghua resources and getting enough bank loans for supporting this deal.” He called Weiguo “a real businessman and understands China economics/complicated politics and capital market very well.” In short, Weiguo is “somebody who can smell blood from thousands miles away.” He is set to make money investing in the high-tech sector, rather than the real-estate business, which isn’t looking good right now in China.

… Chinese industry source said, “The notable thing about Tsinghua Unigroup is that it has a market cap of $820 million, less than what they proposed to RDA.” He suspects that the real buyer of RDA is “not Unigroup, but a $2-$3 billion fund which is related to Unigroup.” He then added, “That’s the beauty of China’s state-owned public companies: there is nothing transparent.”

Those who see Tsinghua Unigroup’s acquisitions as “a pure financial play” pose a three-step scenario. First, the consolidation of China’s two leading fabless chip companies (Spreadtrum and RDA are currently both public companies traded in Nasdaq) will help them both survive before the two companies get clobbered by MediaTek. Second, by going private again under the umbrella of Tsinghua Unigroup, the two companies will gain more leeway in business development — in addition to access to the IP portfolio of Tsinghua Unigroup and Tsinghua University. Third, the new Spreadtrum, consolidated with RDA under Tsinghua Unigroup, will “go public in the near term,” the sources said. Tsinghua Unigroup won’t waste time making a big financial gain by doing so, they added.

Where everyone agrees is about the complementary roles RDA and Spreadtrum can play under the new structure.

One Chinese semiconductor industry observer explained, “Spreadtrum is weak in everything except TD-SCDMA, while RDA is strong in RF. Both are weak in application processors.” Further, he added, “Spreadtrum’s IC R&D is weak, but strong in software. Meanwhile, RDA is very strong in IC R&D, but has no real software development.” As a result, combining these two “means doomsday for Allwinner and Rockchip,” he noted, because Spreadtrum and RDA could ramp up tablet application processor efforts.

The Chinese industry’s expectation is that the final entity (new Spreadtrum-RDA) will focus more on new wireless technology R&D, while they will spend less time competing in a declining low-end market. As for the market in feature phones for GSM, the serious competition comes down to just MediaTek and Spreadtrum, they explained.

Asked about the latest shopping spree by Tsinghua Unigroup, Will Strauss, president of Forward Concepts (Tempe, Arizona), noted that he knows almost nothing about Tsinghua Unigroup. But he added, “Actually, if you wanted to create a China-based company that could (with a lot of work and a lot of money) someday rival Qualcomm, Spreadtrum and RDA are the two companies that I would pick.”

Facts lying behind such news:

2.  During the course of today’s board meeting approving the entry of the merger agreement with Tsinghua, some of our directors and officers received an unusual and erroneously dated non-binding proposal.  Such proposal was sent from a private QQ email account alleging to be from a PRC-incorporated 3rd party (the “PRC Party”). This PRC Party has never previously contacted our company before or during the evaluation process, nor has it engaged in a semiconductor business to our knowledge.  Such proposal, strangely dated as of September 27, 2013 initially, stated a higher-than-US$18.50/ADS cash offer subject to unspecified combination of equity and debt financing.  The proposal was signed but not sealed by the PRC Party, which suggests a deficiency in the formality of due execution by a PRC incorporated entity. 

3.  Our Board immediately instructed our advisors to reach out to the PRC Party, with the objective of seeking further information and verifying the intent and credibility of such party.  The proposal from the PRC Party also refers to a highly confident letter that the PRC Party claimed it has obtained from several leading financial institutions. Our legal advisor promptly spoke with the sender of such proposal, who claimed he did not know anything about the proposal other than being instructed to send the proposal via his personal QQ email account. The sender also referred our legal advisor to the PRC Party’s in-house counsel.  Our legal advisor then spoke with such in-house counsel, who was not able to provide contact information of any of their project team members, including the signatory of the proposal letter.  Given that we were not able to obtain any credible information about the financial capability of the PRC Party, we have also conducted a public search which indicated that the PRC Party was incorporated in 2011 with a registered capital of RMB60 million (less than US$10 million).

4.  Our Board has determined that based on the currently available information, we have no basis to believe that the unusual proposal from the PRC Party is credible.

… an unsolicited, preliminary non-binding proposal letter dated September 27, 2013 from Shanghai Pudong [上海浦东] Science and Technology Investment Co., Ltd. (“PDSTI” [浦东科]), a wholly state-owned limited liability company directly under Pudong New Area government of Shanghai, pursuant to which PDSTI proposes to acquire all of the outstanding ordinary shares of the Company (the “Shares) and American Depositary Shares of the Company (the “ADSs,” each ADS representing six Shares), in each case other than those Shares or ADSs owned by PDSTI and its affiliates, for US$2.5833 in cash per Share or US$15.50 per ADS. … The Company’s Board of Directors is reviewing and evaluating PDSTI’s proposal. …

[http://www.pdsti.com/english/index.asp]

RDA Microelectronics (Nasdaq:RDA) (“we” or the “Company“), a fabless semiconductor company that designs, develops and markets wireless systems-on-chip and radio-frequency (RF) semiconductors for cellular, connectivity and broadcast applications, today provided the following comments regarding certain recent media reports:
It has come to our attention that there are certain media reports containing inaccurate information on our announced merger transaction (the “Merger“) with Tsinghua Unigroup Ltd. (“Tsinghua Unigroup“) which may be misleading to investors. We are providing the following clarifications in view of potential misinformation, and to re-assure the investors that our board of directors (the “Board“) has been acting, and will continue to act, in the best interests of our shareholders as a whole:
  1. Before we entered into a definitive merger agreement (the “Merger Agreement“) with Tsinghua Unigroup on November 11, 2013, the Board conducted a robust, comprehensive and structured evaluation process of strategic alternatives. The Board considered a wide range of relevant factors, analysis and data points available, with a focus on the commercial terms and closing certainty of various available alternative. After such process, the Board determined that Tsinghua Unigroup’s proposal was clearly the most favorable and certain offer among all the proposals that we had received and therefore selected Tsinghua Unigroup as the preferred buyer over other bidders, including Shanghai Pudong Science and Technology Investment Co., Ltd. (“PDSTI“), on November 8, 2013. The Board further approved unanimously the entry into the Merger Agreement with Tsinghua Unigroup on November 11, 2013.
  2. During the evaluation process, the Board informed all interested buyers that the Board would select the preferred buyer based on the commercial terms and the closing certainty of the received proposals. Until the Board approved the signing of the Merger Agreement with Tsinghua Unigroup, we had not entered into any definitive agreement with, or promised any signing schedule to, any person (including PDSTI) regarding a sale of the Company.  
  3. We have been maintaining close discussions with Tsinghua Unigroup regarding the regulatory approvals required to complete the Merger, and have provided Tsinghua Unigroup with assistance and information in such regard in compliance with the Merger Agreement. We and Tsinghua Unigroup will continue to cooperate with each other in obtaining the relevant approvals that are required for the consummation of the Merger. We also understand from Tsinghua Unigroup that it is on track to obtain the preclearance of the Merger from the National Development and Reform Commission of China.
About RDA Microelectronics
RDA Microelectronics is a fabless semiconductor company that designs, develops and markets wireless system-on-chip and radio-frequency semiconductors for cellular, connectivity and broadcast applications. The Company’s product portfolio currently includes baseband, radio-frequency front-end modules, power amplifiers, transceivers, Bluetooth system-on-chip, Wi-Fi, Bluetooth and FM combo chips, FM radio receivers, set-top box tuners, analog mobile television receivers, CMMB mobile television receivers, walkie-talkie transceivers and LNB satellite down converters. For additional information, please see the Company’s website at http://www.rdamicro.com.

… Mr. Tang succeeds Mr. Vincent Tai, who will remain as a non-executive director until the next shareholders meeting. … Mr. Tang said, “On behalf of the Board, I want to thank Vincent Tai for his contribution to RDA during his term as the Chairman and Chief Executive Officer. …” …

Mr. Wei is a co-founder of the Company and has been the Company’s Chief Technology Officer since its inception in 2004 and a director since 2005. Mr. Wei has almost two decades of experience in CMOS radio-frequency integrated circuit design. Prior to co-founding RDA Microelectronics, he was a vice president of Analogix Semiconductor Inc. in the United States from 2002 to 2004. From 1998 to 2002, he was an integrated circuit design manager at Marvell Semiconductor Inc. in the United States, and from 1994 to 1998, he was an integrated circuit design engineer at LSI Corporation (formerly known as LSI Logic). Mr. Wei received a Bachelor of Science degree in physics from Peking University in China and a Master of Science degree in electrical engineering from the University of Minnesota in the United States.

… Completion of the Merger remains subject to the satisfaction or waiver of other customary closing conditions set forth in the Merger Agreement, including the receipt of the required regulatory approvals.

… The RDA8860 integrates an RF transceiver, WCDMA modem, EDGE modem, application processor, power management unit, analog baseband, and 32kHz oscillator onto a single 40 nanometer die, significantly reducing the customer bill of materials. Built around a 1GHz ARM ® Cortex™-A5 processor with a 256KB L2 cache, the chip uses 400MHz 32-bit LPDDR2 memory, which supplies 3.2GB bandwidth to create a powerful platform for low-cost mobile devices. It supports WiFi, Bluetooth, and GPS connections through various peripheral interfaces and leverages a dedicated CPU, accelerator and memory for the WCDMA/EDGE modem sub-system to further improve performance of the application processor. The chip’s video processor supports 720p H.264 video playback at 30 frames per second combined with Vivante Corporation’s integrated 3D GPU for high-end graphic interface and gaming capabilities. The RDA8860 is designed for smartphone devices running on Android 4.0 operating system and above.

“We are pleased to launch our first WCDMA baseband solution, a fully integrated SoC that greatly increases our addressable market as well as our handset silicon value,” commented Shuran Wei, CEO of RDA Microelectronics. “Low-cost WCDMA smartphones are one of the largest growth drivers in emerging markets today as subscribers in markets such as China continue to transition from feature phones to more advanced devices. The 8860 uses similar production tools as our market-leading feature phone platform, enabling handset manufacturers to easily and quickly migrate to our WCDMA smartphone platform. By offering a fully integrated SoC solution with lowered bill of materials, RDA has once again positioned itself as a price performance leader in a robust growth market.”

RDA Microelectronics Announces Sampling of WiFi Combo Chip With GPS for Mobile Applications [press release, April 10, 2014]

… The RDA5992 single chip solution integrates an 802.11b/g/n MAC, PHY, 2.4Ghz radio, power amplifier and antenna switch with a GPS receiver featuring advanced RF design, a baseband signal processing engine and MIPS compatible XCPU processor to achieve superior positioning performance. The integrated WLAN, Bluetooth and FM capabilities can work simultaneously or independently at low power consumption levels to preserve battery life in mobile devices.

“By adding GPS functionality to our popular WiFi combo chip, RDA offers customers all of the necessary connectivity components on a single CMOS chip for handheld devices,” said Shuran Wei, CEO of RDA Microelectronics. “GPS positioning and location-based services are becoming increasingly prevalent across all mobile applications. The 5992 is the smallest chip of its kind and further demonstrates the strength of RDA’s integration capabilities. Manufacturers can quickly and easily integrate the chip into their designs to achieve rapid time to market at a reduced cost.”

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The case of system validation and early SW development before silicon is available

MediaTek Quick to Market with Palladium [Cadence Design Systems YouTube channel, April 11, 2014]

Watch this video to learn how MediaTek is meeting its time-to-market, power, and design quality goals with the Palladium XP II platform, part of the Cadence System Development Suite.

MediaTek Gets a Jump Developing High-Quality Smart Devices [Cadence, April 10, 2014]

Taiwan-based fabless semiconductor company MediaTek is a leader in developing advanced systems on chip (SoCs) for wireless communications, HDTV, DVD, and Blu-ray, including ARM® -based systems such as the octa-core smartphone platform with LTE. The company’s corporate vice president, Andrew Chang, recently sat down with Cadence to talk about the development challenges of building advanced systems and how the company is using the Cadence® Palladium® XP II platform to help create today’s smart devices.

Cadence Expands ARMv7/v8-based system-to-silicon verification solutions [ARM SoC Implementation Blog, April 12, 2014]

System-to-Silicon Verification Solution

Recently, Cadence Design Systems expanded its ARM-based design system verification solution in order to drive shorter time-to-market for mobile, networking and server applications. This expanded solution features several enhancements and speeds system design and early software development for ARM Cortex®-A processor series based systems including:

  • New adaptable interconnect performance characterization test suite in the Cadence® Interconnect Workbench, along with AMBA Designer integration, that delivers a significant speed-up of performance analysis and verification of CoreLink CCI-400 system IP and NIC-400 design tool based systems.
  • Expanded and pre-verified support of hardware-accurate OS embedded software verification using Palladium XP II platform with ARMv8 64-bit Cortex processor family Fast Models, which are now available through Cadence.
  • Verification IP supporting AMBA 5 Coherent Hub Interface (CHI) protocol is the same protocol as implemented in the ARM CoreLink CCN-508 system IP and silicon proven CoreLink CCN-504 Cache Coherent Networks as used in enterprise level applications. The new Verification IP runs on all industry simulators, plus Accelerated Verification IP for Palladium XP II platforms.

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Spreadtrum Adopts Cadence Palladium XP II Platform for Mobile SoC and Hardware-Software Verification [Cadence press release, April 14, 2014]

Cadence Design Systems, Inc. (NASDAQ: CDNS), a leader in global electronic design innovation, today announced that Spreadtrum selected the Cadence® Palladium® XP II verification computing platform for system-on-chip (SoC) verification and system-level validation. Spreadtrum’s use of the Palladium XP II platform provides the opportunity to shorten time-to-market and improve verification productivity of its mobile chipset platforms for smartphones, feature phones and consumer electronic products.

“In the competitive mobile handset market, low power and time to market are critical,” said Robin Lu, VP of ASIC at Spreadtrum. “Spreadtrum was already using Cadence verification technologies including the Incisive platform. With the addition of the capabilities of the Palladium XP II platform, we now have an efficient tool to verify our low-power design, improve our overall verification productivity and shrink our development cycles.”

The Palladium XP II platform is part of Cadence’s System Development Suite, which significantly speeds up hardware and software verification. The Palladium XP II platform builds on the award-winning Palladium XP emulation technology by boosting verification performance by up to 50 percent and extending its industry-leading capacity to 2.3 billion gates. With reduced power and increased gate density, customers can now run larger payloads in a smaller footprint, reducing overall cost of ownership. For more information on the Palladium XP II platform, visit www.cadence.com/news/pxpII.

About Cadence
Cadence enables global electronic design innovation and plays an essential role in the creation of today’s integrated circuits and electronics. Customers use Cadence software, hardware, IP and services to design and verify advanced semiconductors, consumer electronics, networking and telecommunications equipment, and computer systems. The company is headquartered in San Jose, Calif., with sales offices, design centers and research facilities around the world to serve the global electronics industry. More information about the company, its products and services is available here.

Cadence’s Palladium XP — Creating a virtual platform for Automotive IP [Cadence Design Systems YouTube channel, March 17, 2014]

Volker Wegner, Technical Expert for Hardware Based Verification at Cadence shows the creation of a virtual platform for an automotive IP to enable system validation and early SW development before silicon is available. The demo is based on the Cadence® Palladium® XP Verification Computing Platform. More information here: http://www.cadence.com/products/sd/palladium_xp_series/pages/default.aspx

Cadence Launches Palladium XP II Verification Platform and Enhanced System Development [Cadence feature story article, Sept 10, 2013]

Shorten Time to Market By Up to Four Months

Cadence has unveiled its Palladium® XP II Verification Computing Platform, which delivers a 2X increase in verification productivity and up to four months faster time to market. The platform is a part of the enhanced Cadence® System Development Suite, which features expanded core system and system-on-chip (SoC) verification use models and new use models for hardware/software verification.

Patent-pending hybrid technology combines the Cadence Virtual System Platform with the Palladium XP series to deliver up to 60X speed-up for embedded OS verification and 10X performance increase in hardware/software verification.

According to Kent Goodin, executive vice president of engineering at Zenverge, “The Palladium XP II platform truly allows our software teams to develop production-worthy code prior to the IC’s mask release and arrival of the prototype. This has allowed Zenverge to engage with customers at least six months earlier than would be possible without the co-development aspects of the Palladium XP II emulation solution.”

The Palladium XP II platform supports design configurations with capacity of up to 2.3 billion gates, up to 512 concurrent users, and up to 50 percent performance improvement for SoC verification. What’s more, the platform extends the support of the Cadence Accelerated Verification Intellectual Property (AVIP) portfolio to include PCIe, SRIOV, Ethernet, AHB, APB, HDMI, DSI, CSI, I2C, SimCard, and Keypad. Coupled with the existing AVIP portfolio, the Palladium XP series further extends its support for applications such as mobile Internet devices, computing, networking, processors, and audio/video.

By facilitating the high-speed transfer of interface traffic through a design under test in the Palladium XP II platform, AVIP allows you and your team to gain a substantial boost in verification performance of designs at any integration level: IP, subsystem, SoC, and system.

Understanding the increasing need for early, fast, and accurate hardware/software verification, Cadence has expanded the capabilities of our System Development Suite centered around the Palladium XP platform. Benefit from:

  • Patent-pending hybrid technology that combines the Cadence Virtual System Platform with the Palladium XP series to deliver up to 60X speed-up for embedded OS verification and 10X performance speed-up for hardware/software verification
  • The embedded testbench for advanced virtualization of system environments, which lets you verify peripheral software drivers before tapeout, so you can achieve faster post-silicon bring-up

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Bloomberg (Businessweek) legitimizes Allwinner and Rockchip as challengers to Intel and Qualcomm via the tablet space, as well as Spreadtrum in the smartphone space

Although the title is just:

  1. Qualcomm, Intel Threatened as Allwinner Nabs Tablet Share [Bloomberg, March 17, 2014]
  2. Qualcomm, Intel Threatened as Allwinner Gains Tablet Share: Tech [BloombergBusinessweek, March 17, 2014]

Note that for me there is nothing new about those titles as I introduced a whole new blog to the “Allwinner phenomenon” as evidenced with a specially designed banner on the right here:

And the first post of mine, “Hello world! Here is the Allwinner SoC and the ecosystem built around it”, was created 16 months ago, on November 26, 2012. For very well founded reasons which were explained in quite a detail in that post. Please read them as you will learn much more about the Allwinner case than from the whole Bloomberg (Businessweek) articles. Your interest will be more satisfied with quite a number of additional posts in January 2014, October 2013, September 2013, June 2013, April 2013, March 2013, January 2013 and December 2012.

Allwinner’s success is explained now in the Bloomberg (Businessweek) articles by the following quote:

Local chipmakers benefit from their proximity to the device manufacturers because it bolsters their ability to anticipate and react to new features that are in demand, said Ben El-Baz, head of U.S. marketing for Allwinner.

“Shenzhen is really the electronics hub for the world,” El-Baz said in a phone interview. “We are so close to the market that we’re able to come out with new solutions faster than our competitors. We can do it at lower cost.”

as well as the fact that:

The surge in cheaper devices hasn’t gone unnoticed by more established computer makers. Hewlett-Packard this year began selling the HP 8, a $170 tablet that runs on an Allwinner quad-core processor.

In [1], however, the internal text contains reference to Rockchip as well:

Note that this same blog of mine started to recognize Rockchip 2 years ago with MWC 2012: Fuzhou Rockchip Electronics post which was followed 10 months later with another one claiming no less than China’s HW engineering lead: The Rockchip RK292 series (RK2928 and RK2926) example. Under the Rockchip tag you could find even more recent ones.

Intel Corp. (INTC) and Qualcomm Inc. (QCOM), the two largest U.S. chipmakers, are under threat in the fastest-growing part of the tablet market from a band of upstarts with names like Allwinner Technology Co. and Fuzhou Rockchip Electronics Co. that are little known outside southern China.

Allwinner, based in Zhuhai near the manufacturing center of Shenzhen, became the No. 2 tablet-processor maker behind Apple Inc. in 2012 as demand for cheaper tablets stoked sales of its low-cost chips, according to IDC. Qualcomm ranks third, while Intel comes in at No. 6, following Rockchip.

Success at Allwinner, which was founded in 2007, and Rockchip, established in 2001, is being driven by increasing demand for inexpensive tablets in their home market, where some devices sell for as little as $50, and in other developing economies. Sales of tablets that retail for less than $150 and don’t carry a brand name will rise 36 percent this year, IDC estimates, driving a 22 percent increase in total tablet shipments. The market for tablet processors grew 32 percent in 2013 to $3.6 billion, according to Strategy Analytics.

Allwinner accounted for 18.2 million of the 88.3 million tablet processors shipped in the fourth quarter of 2013, IDC said. That was more than three times what Santa Clara, California-based Intel, the world’s largest chipmaker, shipped in the same period. Rockchip sold 9 million.

Rockchip representatives didn’t return messages for comment.

Update: China’s Parallel Universe [EE Times, March 26, 2014]

SHENZHEN, China — When I’m in China, I often feel as though I’ve dropped into a parallel universe. But worse, once I get back to the good old US of A, I feel even more lost.

This is because I run smack-dab into Western-centric preconceived views on market trends, design requirements, and market leaders that don’t often apply to China.

When I recently sat down with Eva Wu, marketing manager of Allwinner Technology in Zhuhai, she set the record straight. “Yes,” she told me, “there were 10 apps processor vendors in China, all competing for the tablet market in 2012. But by early 2014, those dominating the tablet market are now pretty much down to only three companies — Allwinner, RockChip, and MediaTek.”

I have always felt that a winnowing-down among China’s apps processor vendors was necessary and would happen sooner or later. But I didn’t expect such a drastic change so quickly.

The following table, compiled by Chinese industry sources, is a snapshot of China’s tablet apps processor market. The 2014 market forecast shows a clear upward trend for Taiwan’s MediaTek, doubling shipments and holding its own in China.

Tablet Application Processor Vendors for Chinese Tabletsimage
Source: Compilations of China’s industry data

It’s easy for the Western players to dismiss what’s happening in China, on the presumption that “those guys are playing only in the Tier 2 market.”

Know your tier 2 players
Maybe so, but I find that knowing your Tier 2 players (the guy below you on the ladder) is vitally important. Some of those players are very ambitious and climbing fast. They have no intention to remain Tier 2 forever.

Allwinner’s Wu proudly told me that Allwinner was the first AP vendor to achieve the Android 4.4 Google Mobile Service certification. Noting that the certification tells the world the stability of Allwinner’s apps processor, Wu said, “You have to pass the certification test in order to play in the US market. US retailers like Walmart or BestBuy wouldn’t accept the products without it.”

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Wu noted that Allwinner’s apps processors are getting designed into Tier 1 tablets — such as Sony’s tablet projectors and Samsung’s tablet designed for printers.

Parallel universe for STB SoCs
Meanwhile, the same parallel universe characterizes the set-top box world. Over here in China, the so-called over-the-top (OTT) market has exploded as Internet companies like Alibaba have gone whole-hog with video services over the Internet. This dates back to the third quarter last year.

The OTT market is growing fast, according to Wu, with as many as 2 million OTT boxes sold in a month at its peak.

For Chinese consumers, there are three ways to receive digital video services. They’re available on smart TVs, which cost around 10,000 RMB (US$1,630). Another route is OTT boxes, priced between 200 and 300 RMB ($33 to $49). The last option is an Android USB stick that you can plug into a TV, selling for between 100 and 200 RMB ($16 to $33).

To Chinese vendors comparing tablet SoCs with IP set-top SoCs, it’s clear that key subsystems — including CPU and GPU — are already common. Allwinner is among many Chinese vendors leveraging their tablet SoCs to enter the exploding OTT market.

Of course, back in the USA, leading cable set-top chip vendors like Broadcom have a very different view of the set-top box market. When I chatted with Stephen Palm, senior technical director at Broadband Technology Group, this week, he pointed out that requirements in today’s set-tops in the West are nothing like what current mobile SoCs are capable of handling.

End of update

while both articles contain a whole paragraph devoted to Spreadtrum as well:

Note that this same blog of mine started to recognize Spreadtrum 27 months ago with World’s lowest cost, US$40-50 Android smartphones — sub-$100 retail — are enabled by Spreadtrum post which was followed 7 months later with another one claiming no less than Lowest H2’12 device cost SoCs from Spreadtrum will redefine the entry level smartphone and feature phone markets. Under the Spreadtrum tag you could find even more recent ones.

Spreadtrum’s Relationships

Like MediaTek, Shanghai-based Spreadtrum Communications Inc. is building on its relationship with handset makers serving the China market and exporting from there. The company, founded in 2001, supplies both processors and modems for smartphones that can retail for as little as $25, said Diana Jovin, a U.S.- based vice president at Spreadtrum.

Her company, which is owned by the Chinese government, has learned that quickly providing adaptable solutions is needed to succeed in a rapidly changing market, she said.

“A significant part of the mobile-handset ecosystem is centered in China,” Jovin said. “We’re the only vendor located in China serving those customers. We’ve expanded our portfolio quite rapidly and have the breadth and depth to compete effectively on a global basis.”

Spreadtrum, which has supplied chips used in Samsung’s Galaxy Star model and HTC Corp.’s Desire, is looking to build on its China base just as Qualcomm, the largest maker of semiconductors used in phones, is trying replicate its worldwide market dominance in that country, the biggest global mobile-phone market.

Regarding the question how the western chipmakers could meet these challenges:

Intel Priority

Intel Chief Executive Officer Brian Krzanich — who has made catching up in mobile computing a priority since taking over the company in May — said he’s aiming to quadruple tablet-chip sales to 40 million this year and processors from his company will make their way into devices costing less than $100. To speed adoption, Intel will provide tablet makers with subsidies — what it calls “contra revenue” — to make the cost of its chips competitive. That will cut into profitability this year.

Kathy Gill, a spokeswoman for Intel, said the company is “absolutely accelerating” its roadmap for its Atom line of low-power, low-cost processors for phones, tablets and budget laptops.

New Chips

Qualcomm has already responded to the demand for lower-cost devices made in China with new chips, said Cristiano Amon, the head of the company’s chip division.

The adoption of a faster wireless-data technology called long-term evolution, or LTE, particularly by No. 1 wireless carrier China Mobile Ltd., will open the door for Qualcomm, the San Diego-based company says. While other companies including Intel, MediaTek and Broadcom Corp. (BRCM) have announced LTE-capable chips, Qualcomm has been in the market for more than two years and has 100 percent market share in devices that have integrated modems, according to IDC.

Qualcomm’s Edge

Qualcomm’s advantage in LTE modem chips will be tough to beat. Unlike for stand-alone processors, there’s no source of off-the-shelf modem designs [there is, however, highly advanced semiconductor IP on the market with CEVA as the lead vendor in that space which is dating back to CEVA Introduces Low Power, Multi-Mode LTE-Advanced Reference Architecture for the New CEVA-XC4000 DSP Architecture Framework [press release, Feb 21, 2012] – you can find more about that in The future of the semiconductor IP ecosystem post of mine], and building one takes years of experience, testing and qualification work with phone-service providers, according to Will Strauss, an analyst at Mesa, Arizona-based Forward Concepts Co.

In processors, “everybody can get in, thanks to ARM and the ease of implementing your own applications processor. They’ve lowered the bar,” Strauss said. At the same time, “the barrier for entry for LTE modems is still very, very high.”

The articles end, however, with a kind of gloomy outlook for the leadiong Western chipmakers:

I would be much more sceptical about the Western SoC vendors’ capabilities to withstand the onslaught of Chinese SoC vendors (including MediaTek). Even the “lack of modem technology” argument given above applies only to a limited degree as:

See more in:
Chinese smartphone brands to conquer the global market? [‘Experiencing the Cloud’, March 18, 2014]

Still, Chinese companies have created an obstacle that their more established rivals may struggle to overcome, said Jim McGregor, an analyst at Tirias Research. While the volumes are huge in China and emerging markets, the devices’ low prices leave little room for profits — particularly for companies like Qualcomm and Intel that have shareholders who are accustomed to wide margins, he said.

“We are not just talking about a billion here, but several billion units,” McGregor said. “It’s foolish to avoid that kind of market. The problem is with a publicly traded company, it’s against their instincts to go for it.”

Upcoming FireFox OS powered $25 smartphones with Spreadtrum SC6821 EDGE SoC having 128MB on chip RAM used via zRAM swap by the OS

Hands on with the $25 Smartphone running Firefox OS at MWC 2014 [TrustedReviews YouTube channel, Feb 24, 2014]

We got hands on with the proposed $25 Smartphone which sees Firefox partner with Chinese chip designer Spreadtrum Communications.

[0:15] “This is the newest … set that is running on ultra low-end memory which is 128MB RAM and 256MB ROM. So that’s why we call it the lowest [price] smartphone you probably can get on the market” [0:30]

From With Firefox OS, Mozilla begins the $25 smartphone push [CNET, Feb 23, 2014]

Mozilla doubled down on its bet that low-end smartphones will give Firefox OS a place in the crowded mobile market, announcing partnerships Sunday that will bring $25 smartphones to the large number of people who can’t afford high-end models like Apple’s iPhone 5S and Samsung’s Galaxy S5 that cost hundreds of dollars.

At the Mobile World Congress here, Mozilla announced a deal with Chinese chip designer Spreadtrum Communications that will mean Firefox OS smartphones will arrive in extremely cost-sensitive markets like India and Indonesia where people often buy phones from a bin in a store.

We’re working with them to break through the $50 $25 barrier [should be corrected, obviously], which is hard,” Mozilla Chief Technology Officer Brendan Eich told CNET. “This is going to be for a set of [sales] channels in Asia that do not involve operators,” the carriers that in other parts of the world dominate distribution.

One company that plans to make and promote the phones is Indonesia-based Polytron. And Indonesian carriers Telkomsel and Indosat plan to sell the devices. Hands-on testing shows the cheap Firefox OS phones to be workable. “This is a price point currently out of the reach of Google and even the lowest-cost Android handset vendors. It pushes Firefox OS into feature-phone territory, potentially signaling the beginning of the end for the category,” said Ovum analyst Nick Dillon in a statement.

Mozilla has found a small niche in the mobile OS market by pursuing its low-end strategy, with the first phones debuting in countries such as Hungary, Venezuela, Colombia, Brazil, and Greece. Mozilla, a non-profit organization, hopes to use the browser-based operating system to lower the barriers that today keep people locked into ecosystems linking hardware, OS, app store, services, content, and apps.

Firefox OS takes on challenges
Today, Apple’s iOS and Google’s Android dominate the market for smartphones and tablets. Challengers like Microsoft’s Windows Phone, Ubuntu Touch, WebOS, BlackBerry OS, and Samsung’s Tizen have struggled to push these aside: it’s hard to compete against an incumbent that’s got millions of users, hundreds of thousands of apps, and few signs of the complacency that can open a door for challengers.

Firefox OS won’t have an easy time of it. There’s not as much money to be squeezed from low-end markets, so developers aren’t as likely to pursue it as avidly. The Spreadtrum chipset will support only 2.5G Edge mobile networks that, while common in poorer parts of the world, are too slow for a lot of modern apps. And Google is pushing toward lower-end phones, with Android 4.4 memory-saving techniques [“zRAM swap can increase the amount of memory available in the system by compressing memory pages and putting them in a dynamically allocated swap area of memory.”] that fit KitKat into phones with 512MB of RAM.

At the same time, though, Firefox is pushing, too. It uses the same ZRAM memory compression technique to halve its memory requirement to 128MB of memory, Eich said.

Getting down to $25 phones means Firefox OS will provide an alternative for people who’d otherwise buy a feature phone — a model with a few built-in apps but not much more.

So Firefox has a chance there. But in the long run, to succeed, Firefox OS will need to push up-market, and it’s not clear how Mozilla will succeed there with much stronger competition.

Think Big at #MWC14: Mozilla leadership discuss innovation and digital literacy [ThinkBigEurope YouTube channel, Feb 25, 2014]

During the world’s largest mobile exhibition, Think Big roaming reporters from across Europe cover the smart phone that will give access to the web for millions and the need for increased digital literacy.

Note: Think Big is a Telefonica initiative targeting young people in six European countries: Ireland, UK, Spain, Germany, Czech Republic and Slovakia (countries where Telefonica operates in Europe)

How good is the $25 smartphone from Mozilla – BBC News [BBC News YouTube channel, Feb 24, 2014]

At the Mobile World Congress in Barcelona Mozilla Corp has unveiled a prototype model of what it hopes will become a $25 smartphone. The BBC’s LJ Rich tried it out. #MWC14

Mozilla plans ‘$25 smartphone’ for emerging markets [BBC News, Feb 23, 2014]

Mozilla has shown off a prototype for a $25 (£15) smartphone that is aimed at the developing world.

The company, which is famed mostly for its Firefox browser, has partnered with Chinese low-cost chip maker Spreadtrum.

While not as powerful as more expensive models, the device will run apps and make use of mobile internet.

It would appeal to the sorts of people who currently buy cheap “feature” phones, analysts said.

Feature phones are highly popular in the developing world as a halfway point between “dumb” phones – just voice calls and other basic functions – and fully-fledged smartphones.

Mozilla hopes that it will capture an early lead in a market that is now being targeted by mobile device manufacturers who see the developing world as the remaining area for massive growth.

It will face stern competition from bigger, more established brands, however – with more announcements of this kind expected over the course of the next couple of days at the Mobile World Congress in Barcelona.

“These solutions expand the global accessibility of open web smartphones to first-time and entry-level smartphone buyers by reducing the time and cost required for handset makers to bring these devices to market,” said Spreadtrum in a press statement.

Mozilla said the phone “redefines” the entry-level phone market.

The concept of a cheap smartphone may seem likely to appeal to consumers in developed countries, particularly those who locked into long contracts in order to subsidise the cost of the likes of the Apple iPhone and Samsung Galaxy range.

But analyst Carolina Milanesi, from Kantar Worldpanel, said it should not be seen as a competitor.

You’re not really talking about smartphone experience.

You’re talking about a clumsy smartphone that’s a little bit better than a feature phone – still primarily for voice and text.”

The phone runs Mozilla’s own mobile operating system – something that could cause problems as competition in the cheap smartphone market steps up, Ms Milanesi added.

Mozilla also announced new high-end smartphones

image

In addition to the $25 smartphone, Mozilla also launched several high-end models, including devices from Huawei and ZTE.

Mozilla press conference about Firefox OS at MWC 2014 [firefoxchannel YouTube channel, Feb 23, 2014]

Mozilla demonstrated the breadth and growth of its Firefox OS open mobile ecosystem at a press event on the eve of Mobile World Congress in Barcelona on Sunday, February 23, 2014. To learn more about Firefox OS please visit: http://mzl.la/1dPqt71.

The $25 smartphone announcement comes at [15:30] with the following slides (note the 1Gb, i.e. 128MB LPDDR1 Embedded in the SoC!!):

image

image

From Firefox OS Unleashes the Future of Mobile [Mozilla Press Center, Feb 23, 2014]

Spreadtrum has announced WCDMA and EDGE turnkey reference designs for Firefox OS as well as the industry’s first chipset for US$25 smartphones, the SC6821, that redefines the entry level for smartphones in key growth markets. These solutions are already creating a stir, with global operators such as Telenor, Telkomsel and Indosat, and ecosystem partners such as Polytron, T2Mobile and Thundersoft expressing interest.

$25 Firefox Smartphone (MWC 2014) [ARMflix YouTube channel, Feb 25, 2014]

Mozilla introduced their $25 Firefox smartphone based on 1 GHz Single Core Spreadtrum ARM processor. http://www.mozilla.org/en-US/firefox/os/

[0:33] “The key thing about this device is that this is only powered by 128MB of RAM. So this is only one half or one quarter of the existing entry level devices that we are seeing on the market.” [0:47]

Warning: This article does not take into account the SC6821 characteristics, especially its 128MB on chip RAM used via zRAM swap by the OS, as well as its EDGE only networking!
Is a US$25 smartphone possible? [DIGITIMES, Feb 25, 2014]

Mobile World Congress (MWC) kicked off with a bang, with Mozilla announcing a US$25 smartphone built around a turnkey solution that features silicon from China-based Spreadtrum and software from Firefox.

According to a Mozilla press release, Spreadtrum and Mozilla have now completed the integration of Firefox OS with several of Spreadtrum’s WCDMA and EDGE smartphone chipsets, including the SC6821, unveiled by Spreadtrum as the industry’s first chipset for a US$25 smartphone.

So the key to the solution is the SC6821, which Spreadtrum stated is “designed with a unique low memory configuration and high level of integration that dramatically reduces the total bill of materials required to develop low-end smartphones.” Mozilla added that with this chipset, handset makers will be able to bring to market smartphones with 3.5-inch HVGA [eg. 480×320] touchscreens, integrated Wi-Fi, Bluetooth, FM and camera functions, the advanced phone and browser features of Firefox OS, and access to an ecosystem of web and HTML5 applications.

With a clearer picture of the specs Mozilla envisions for a US$25 smartphone, I approached Digitimes Research Analyst Luke Lin to ask if he thought it was possible to deliver such a product to the market at this time. According to Lin, the simple answer is that it would be “impossible” to see a US$25 Firefox phone hit the shelves this year, unless operators are willing to provide subsidies.

Lin explained that currently, the absolute lowest smartphone BOM in China is estimated to be around US$22 (and most are significantly more than that) and that manufacturing costs are highly unlikely to go below US$20 this year, which would be the cost needed to deliver a US$25 smartphone to end users. The cost would need to get to US$15-20 FOB in order to get a selling price of US$25, Lin said.

In terms of Spreadtrum‘s claims it has produced a level of integration and memory requirements that can reduce the BOM cost significantly, Digitimes Research Analyst Anthony Chen commented that Spreadtrum’s solution is no more integrated than any other integrated solution on the market so there is no clear advantage there. And as for memory, the cheapest and smallest memory modules (ROM and mobile DRAM) for smartphones in China run about US$5 for a configuration of 256MB ROM and 256MB of mobile DRAM, and Chen highly doubts the Mozilla solution could run with a lesser configuration than that.

One other argument being offered as to why Spreadtrum could offer lower pricing than competitors is that the China government has a stake in the company. The logic is that an edge in pricing could help Spreadtrum better compete with Taiwan-based MediaTek and US-based Qualcomm.

Chen responded to the suggestion by pointing out that such a statement is not really an argument. It’s merely speculation. Moreover, Chen noted that Spreadtrum’s cheapest products currently sell in the US$3-4 range, and he doesn’t see much chance for the price to be reduced significantly, with subsidies or without.

While it is true that BOM costs are always falling, Lin and Chen agreed that component makers are much more likely to be squeezed in the higher-end segments, where they have margins. At the bottom of the market, the component makers are not really making any money. As a long term strategy for the low-end of the market, they would much prefer to provide improved specs at the same price rather than cut prices, Lin explained, while adding that it is unlikely that the BOM would drop much further at the bottom end of the market, as it is already close to US$20. Therefore, while prices may drop a little, Digitimes Research does not expect prices to drop all that much in the near future.

Another perspective was offered by Digitimes Research Analyst Jason Yang, who stated that if there is any component that could influence the low-end smartphone BOM at this point, it was the touch panel, not the application processor. Yang indicated that currently the touch panel module, with LCD display, accounts for the largest portion of the BOM, at around US$7-8 for the cheapest modules. Yang did state that he believes the price may drop this year, but not enough to bring the overall BOM cost of the cheapest phones to below US$20.

So, if ultimately the announcement was all about Mozilla driving the launch of a US$25 smartphone, Lin doubts that this will happen this year or anytime soon. Based on the current cost structure, Lin believes Firefox models priced in the US$60-80 are more likely to appear in 2014. Of course, users may be able to find spectacular deals and price cuts, but such a situation would more likely be inventory clearance or something similar, not a mainstream price point.

However, if this announcement is not about Mozilla driving the market to low-cost smartphones and is more about a trend where emerging markets will become flooded with cheap smartphones, then it should be noted that this is a process that is already underway.

Currently in China, entry-level smartphones – mostly white-box but even some brands – are already selling in the US$50 range. And these smartphones are not just being shipped to the domestic market. China vendors exported about 30% of their smartphones in 2013 and that proportion is forecast to rise in 2014. According to Digitimes Research data tracking smartphone shipments by vendor and the related market breakdown, the non top-10 segment (which is dominated by Greater China vendors and white-box players) accounted for 12% of global smartphone shipments in 2012, 21% of the global market in 2013, and Digitimes Research forecasts the share will rise to 25.6% in 2014.

So the flow of cheap smartphones from China going to emerging markets has already started and the shipments are steadily increasing, it’s just that the devices cost a bit more than US$25 and almost all of them feature Android as the OS.

Spreadtrum and Mozilla Take Aim at Global Smartphone Accessibility with Turnkey Solution for US$25 Smartphones [press release, BARCELONA, Spain, Feb. 23, 2014]

– Integration of Spreadtrum’s entry-level smartphone chipsets with turnkey reference designs for Firefox OS aims to bring Open Web Devices to an underserved audience of entry-level smartphone buyers around the world

– Spreadtrum unveils the SC6821, the industry’s first chipset for US$25 smartphones (retail), on Firefox OS

Today at Mobile World Congress, Spreadtrum Communications, Inc., a leading fabless semiconductor company in China with advanced technology in 2G, 3G and 4G wireless communications standards, and Mozilla, the mission-based organization dedicated to keeping the power of the Web in people’s hands, announced that they have teamed up to deliver turnkey Firefox OS reference designs with Spreadtrum’s entry-level smartphone chipsets. These solutions expand the global accessibility of open Web smartphones to first-time and entry-level smartphone buyers by reducing the time and cost required for handset makers to bring these devices to market. Spreadtrum and Mozilla have now completed the integration of Firefox OS with several of Spreadtrum’s WCDMA and EDGE smartphone chipsets, including the SC6821, unveiled today by Spreadtrum as the industry’s first chipset for US$25 smartphones. These smartphones are available for demos at Mozilla’s booth (3C30) at Mobile World Congress 2014 in Barcelona.

“The combination of Firefox OS with Spreadtrum’s entry-level smartphone platforms has the potential to dramatically extend the reach of smartphones and the Web globally,” said Dr. Li Gong, Mozilla Senior Vice President of Mobile Devices and President of Asia Operations. “Firefox OS delivers a customized, fun and intuitive experience for first-time smartphone buyers and our collaboration with Spreadtrum enables the industry to offer customers an extremely affordable way to get a smartphone and connect with Web apps.”

At Mobile World Congress, Spreadtrum unveiled the SC6821, its new smartphone chipset that redefines the entry level of the global smartphone market. The chipset is designed with a unique low memory configuration and high level of integration that dramatically reduces the total bill of materials required to develop low-end smartphones. With this chipset, handset makers will be able to bring to market smartphones with 3.5″ HVGA [e.g. 480×320] touchscreens, integrated WiFi, Bluetooth, FM and camera functions, the advanced phone and browser features of Firefox OS, and access to a rich ecosystem of web and HTML5 applications, at prices similar to much more minimally featured budget feature phones.

Spreadtrum’s turnkey reference design brings together this highly cost-effective chipset platform with the intuitive, easy-to-use experience and Web/HTML5 application ecosystem of Firefox OS. “Turnkey solutions benefit the vast majority of small handset makers by reducing the time and cost involved in bringing new devices to market,” said Stuart Robinson, analyst at Strategy Analytics. “This joint effort between Spreadtrum and Mozilla will help make Firefox OS more readily available to handset makers that focus on the needs of entry level smartphone buyers in emerging markets.”

Firefox OS smartphones are the first devices powered completely by Web technologies to deliver the performance, personalization and price users want in a smartphone with a beautiful, intuitive and easy-to-use experience that is unmatched by other phones. Firefox OS has all the things users need from a smartphone as well as the things they want like built-in social integration with Facebook and Twitter, HERE Maps with offline capabilities, much-loved features like the Firefox Web browser, the Firefox Marketplace for apps and more. Firefox OS features a brand new concept for smartphones – an adaptive app search that literally transforms the phone to meet a user’s needs and interests at any moment.
Firefox OS offers Mozilla-pioneered WebAPIs that unlock the power of the Web and enable developers to build fun and rich app experiences that were previously only available to proprietary native apps, which are fragmented by platform and not portable.

Xiaomao Xiao, Spreadtrum’s vice president of software development added, “By integrating Firefox OS support with our smartphone platforms, we are providing our customers with flexibility and choice in how they develop and design their smartphones as well as access to the increasingly rich base of HTML5 applications that are available on this platform. We are pleased to work with Mozilla to expand Firefox OS support to all of our smartphone platforms to provide the benefits of open web technologies to consumers around the world.”

Spreadtrum and Mozilla have completed the integration of Firefox OS with Spreadtrum’s SC6821 and SC7710 WCDMA smartphone chipsets, and expect to complete a turnkey reference design for the SC7715, Spreadtrum’s single-core WCDMA smartphone chipset with integrated connectivity, next month. Spreadtrum and Mozilla’s collaboration will extend across Spreadtrum’s full chipset portfolio.

About Spreadtrum Communications, Inc.
Spreadtrum Communications, Inc. is a fabless semiconductor company that develops mobile chipset platforms for smartphones, feature phones and other consumer electronics products, supporting 2G, 3G and 4G wireless communications standards. Spreadtrum’s solutions combine its highly integrated, power-efficient chipsets with customizable software and reference designs in a complete turnkey platform, enabling customers to achieve faster design cycles with a lower development cost. Spreadtrum’s customers include global and China-based manufacturers developing mobile products for consumers in China and emerging markets around the world. Spreadtrum is a privately held company headquartered in Shanghai and an affiliate of Tsinghua Unigroup, Ltd. For more information, visit www.spreadtrum.com.

About Mozilla
Mozilla has been a pioneer and advocate for the Web for more than 15 years. We create and promote open standards that enable innovation and advance the Web as a platform for all. Today, half a billion people worldwide use Mozilla Firefox to discover, experience and connect to the Web on computers, tablets and mobile phones. For more information please visit https://www.mozilla.org/.

Firefox OS Expands to Higher-Performance Devices and Pushes the Boundaries of Entry-Level Smartphones [Mozilla Press Center, Feb 23, 2014]

Mozilla, the mission-based organization dedicated to keeping the power of the Web in people’s hands, today previewed the future of Firefox OS to show how the flexibility, scalability and powerful customization will empower users, developers and industry partners to create the exact mobile experience they want with relevant and innovative features, localized services and more.

Expanding Ecosystem
imageToday, device partners ALCATEL ONETOUCH, Huawei, LG and ZTE are all using Firefox OS on a broad range of smartphones that are tailored for different types of consumers. The Firefox OS devices unveiled today showcase dual-core processors for better performance, higher screen resolution and more. The newest Firefox OS devices to join the family include the ZTE Open C and Open II, Alcatel ONETOUCH Fire C, Fire E, Fire S and Fire 7 tablet, all using Snapdragon™ processors from Qualcomm Technologies Inc., a leader in mobile communications.

In the few months since initial launch, Firefox OS smartphones are now available in 15 markets, with new operators and new markets around the globe announced today. Mozilla is working to create a level playing field with the openness of the Web. The ecosystem is catching fire and resulting in development of new form factors beyond the smartphone. For example, Panasonic announced they will make SmartTVs powered by Firefox OS, Foxconn and Via are making Firefox OS tablets, and Mozilla is working with suppliers to enable devices for all target user groups.

Significant growth is also happening with apps and content on Firefox OS, proving the Web has the potential to be the world’s largest marketplace. Firefox OS offers two ways to discover and utilize apps and content – the Firefox Marketplace and an adaptive app search that enables discovery and access to apps that users can instantly use once or download to keep. This innovative approach helps maximize data and storage usage.

The Firefox Marketplace has seen thousands of developers submitting apps and millions of downloads of popular global and relevant local apps. Top global apps include Cut the Rope, Disney’s Where’s My Water?, Facebook, EverNav, HERE, Line, Pinterest, SoundCloud, The Weather Channel, TimeOut, Twitter, Yelp and YouTube.

image

The ZTE Open C will offer the latest version of Firefox OS
in Venezuela and Uruguay in Q2 of 2014

The Firefox Marketplace makes it possible to create local and niche apps with relevant regional content by allowing developers to build on basic Web technologies, without gatekeepers. The top new local apps in the Firefox Marketplace include Despegar.com travel booking, Capp World Cup highlights, Captain Rogers game, Manana reading app, Napster, SurfTime and more.

Future of Firefox OS
At Mobile World Congress, Mozilla is showing off a preview of what to expect from Firefox OS in the coming year and what’s possible when the Web is the platform.

Firefox OS is made to change with each individual and adapt to his or her interests and needs with features like adaptive app search, offline use and cost control. New content can be enjoyed instantly with a simple search, making downloads virtually a thing of the past. Firefox OS offers deep levels of customization that are unmatched by any platform or device. This is possible because Firefox OS is built on the flexible technologies of the Web and the user interface is made of a modular architecture of building blocks that make it easy for anyone to customize.

Upcoming versions of Firefox OS will offer users fun and innovative new features and services including new and intuitive navigation, a powerful universal search feature, support for LTE networks and dual SIM cards, easy ways to share content, ability to create custom ringtones, replaceable home screens and Firefox Accounts.

New versions of Firefox OS have many performance improvements that dramatically improve the user experience including speedier launch times, smoother scrolling and improved keyboard accuracy.

Here are highlights on a few of the features coming next for Firefox OS:

  • Deep customization options for operators and manufacturers, developers and users. This includes the ability to create custom ringtones and replaceable home screens, which were direct requests from Firefox OS users.
  • A new universal search that will revolutionize how users discover content on their phones. The feature is available on any screen – simply swipe down from the top to find new apps, content or navigate to anything on the phone or the Web.
  • New navigation features to make multitasking intuitive, fluid and smart, much like how users interact with the Web. Users can easily swipe from the left and right edges to seamlessly move between pages, content and apps in a fun way that saves time.
  • Easy and direct sharing of content (and even software updates) in a secure way with NFC support, without the need for data or Wifi.
  • LTE support to make the mobile experience even faster.
  • Firefox OS will introduce Firefox Accounts and services. Firefox Accounts is a safe and easy way for users to create an account that enables them to sign in and take Firefox everywhere. With Firefox Accounts, Mozilla can better integrate services including Firefox Marketplace, Firefox Sync, backup, storage, or even a service to help locate, message or wipe a phone if it were lost or stolen.

As the platform evolves, Firefox OS will enable new technologies for the mobile industry. Mozilla is already leading the way in areas like gaming, privacy and security, WebRTC and other services. Firefox OS is a great platform for which partners can build additional services that meet the needs of their customers regionally and individually.

Early examples:

  • Telefonica offers a very helpful cost control app for customers to manage their usage and top off their account.
  • Deutsche Telekom just announced they are utilizing the deep levels of customization Firefox OS offers to develop new privacy features for the Future of Mobile Privacy project, a joint effort with Mozilla to create effective, user-driven privacy functionality for mobile devices.
  • WebRTC is an open, standards-based technology that enables operators to offer services like real time chat, image and file sharing. With WebRTC, operators can let users make calls to any desktop or mobile device, regardless of platform or service provider.

“We’re pleased to see the Firefox OS ecosystem grow so quickly as users, developers and partners come together to experience and build the future of mobile experiences,” said Andreas Gal, Mozilla Vice President of Mobile. “Firefox OS will continue to evolve and add more features to offer choice and customization that is unmatched by any other smartphone. We’re excited to see what other features and services will result from an open platform being contributed to by developers, partners and community around the world.”

About Mozilla
Mozilla has been a pioneer and advocate for the Web for more than 15 years. We create and promote open standards that enable innovation and advance the Web as a platform for all. Today, half a billion people worldwide use Mozilla Firefox to experience the Web on computers, tablets and mobile devices. With Firefox OS and
Firefox Marketplace, Mozilla is driving a mobile ecosystem built entirely on open Web standards, freeing mobile providers, manufacturers, developers and consumers from the limitations and restrictions imposed by proprietary platforms. For more information, visit http://www.mozilla.org.

For More information: https://blog.mozilla.org/press/kits/firefox-os/

New Developer Hardware and Tools Show Firefox OS Ecosystem Momentum [Mozilla Press Center, Feb 23, 2014]

Mozilla, the mission-based organization dedicated to keeping the power of the Web in people’s hands, today announced new developer reference hardware and tools that will continue to accelerate momentum around the Firefox OS ecosystem, making it cheaper, faster and easier for developers, operators and OEMs to deploy innovative Web apps and create personalized Firefox OS experiences.

Mozilla announced a 4.5” dual-core reference phone, enabling developers to test new Firefox OS features and apps against different memory configurations. It also expanded the Mozilla tablet program that helps developers test their apps and build out Firefox OS for tablets.

New Firefox OS developer tools and hardware demonstrate ecosystem momentum

New Firefox OS PhoneGap integration was also announced, allowing hundreds of thousands of PhoneGap developers to port their existing apps to Firefox OS in a matter of hours, while new WebAPIs will continue to narrow the gap between native and Web apps. At Mobile World Congress, Mozilla also launched developer tools that will allow OEMs and operators to easily customize Firefox OS for a variety of customer segments.

Developers have always been the key to driving innovation around the Web, and continue to enable it as a platform for app development and distribution. With these new reference devices, tools, and WebAPIs, Mozilla is catalyzing the growth of Web apps and continuing to break down the barriers and restrictions inflicted by other app ecosystems. The Web not only simplifies app development and reduces fragmentation, but allows developers to own the direct customer relationship with the option to host their own apps and or sell them through the Firefox Marketplace.

Vision Mobile recently published a report showing that developer interest for Firefox OS continues to grow, capturing 7% of developer mindshare in just six months. The report also highlighted that during Q1 2014, 52% of developers were already using HTML5 for mobile websites or Web apps with an additional 16% indicating their intention to join them.

A recent survey by Strategy Analytics found that the number of mobile app developers building for Firefox OS is expected to triple this year, showing the biggest rise in developer interest of any mobile platform.

This industry momentum is fueled by the fact that there are already millions of Web developers programming in HTML5 who are eager to target mobile without having to learn a new programming language, or pay engineers to target specific mobile platforms.

The following expanded reference hardware, tools, and WebAPIs, will continue to drive growth of the Firefox OS ecosystem and help prove why the Web is a powerful platform for app development and distribution:

New Reference Phone

At Mobile World Congress, Mozilla is showcasing its new developer reference phone, the Firefox OS Flame, enabling developers to test the capabilities of Firefox OS in a real environment with a mobile network and true hardware characteristics like the accelerometer, NFC and camera. Like the commercially available Firefox OS phones, the Flame developer reference phone is powered by a Qualcomm processor, in this instance a high powered 1.2GH dual core processor, so developers can test their more processor-intensive games and apps with ease. Developers looking to target their apps for specific Firefox OS phones with lower memory footprints also have the option to alter the RAM capacity of the Flame, from 1GB to 256MB, to see how their apps would perform on lower specked phones. The Flame also provides developers and early adopters with access to the latest Firefox OS builds to test nightly releases and contribute to the overall development platform.
Firefox OS Flame Specs (Reference device):

  • Qualcomm MSM8210 Snapdragon, 1.2GHZ Dual core [Cortex-A7 with Qualcomm Adreno 302 GPU] processor
  • 4.5” screen (FWVGA 854×480 pixels)
  • Cameras: Rear: 5MP / Front: 2MP
  • 3G UMTS quad-band (850/900/1900/2100)
  • 8GB memory
  • 256MB -1GB RAM (adjustable by developer)
  • A-GPS, NFC
  • Dual SIM support
  • Battery capacity: 1,800 mAh
  • WiFi: 802.11 b/g/n, Bluetooth, Micro USB

Hundreds of Thousands of PhoneGap Users Can Now Target Firefox OS

Firefox OS will be supported in the next release of PhoneGap, the leading developer tool for building apps across platforms. This builds on the recently announced Firefox OS integration with Cordova, a popular Apache Foundation open source project that allows HTML5 applications to be packaged as native apps.

PhoneGap is a mobile application development framework used by hundreds of thousands of developers. It is based upon the open source Apache Cordova project and allows developers to write an app with HTML, CSS and JavaScript, and then deploy it to a wide range of mobile devices with the same capabilities as native apps. With the Firefox OS integration, developers can now port their existing PhoneGap apps to Firefox OS in a matter of hours, with minimal work. For more information, please see this Hacks post.

App Manager Simplifies App Development with Live Prototyping and Debugging

App Manager brings the Firefox Web developer tools to mobile app developers. It shows how the power of the Web helps developers test, deploy and debug Web apps on Firefox OS phones directly from their desktop. The Firefox Web developer tools are already used by millions of Web developers for creating Web pages, and now the App Manager extends these capabilities to mobile app creation, with the same familiar workflow. There is no SDK to download, developers simply use the App Manager as part of the integrated developer tools in the Firefox browser.

Because the App Manager and Firefox OS both use open Web technologies, debugging, live editing and prototyping is straightforward. For example, an operator or OEM may want to prototype different branded homescreen themes for different audiences. Using the App Manager, they can code this on their desktop and in real-time see the changes appear on their connected Firefox OS phone, eliminating lengthy build times. To see how this is done, please see this MDN article.

New WebAPIs and Industry Adoption

There are now more than 30 Mozilla-pioneered WebAPIs with at least eight new APIs introduced in the last year, including WebNFC and Data Store API. These new APIs build more functionality and features into the Web for app development. There is increasing industry adoption as these APIs move towards standardization. Samsung added the Vibration API and Battery Status API to WebKit, while tools like Apache Cordova and Adobe’s PhoneGap now integrate six of the most popular WebAPIs into their products.

Foxconn and VIA Join Tablet Contribution Program

Mozilla recently introduced a tablet contribution program aimed at accelerating the build of Firefox OS for tablets and its supporting ecosystem, with Foxconn as the first hardware partner.

As part of the Firefox OS tablet contribution program, VIA is offering a 7” Vixen reference tablet for developers around the world to help the Mozilla community complete the build of Firefox OS for tablets. Developers can now apply to be a part of this program from this Mozilla Hacks post.

Developer Reference Tablet Specifications:

VIA Vixen:

  • 7’’ 1024×600 HD LCD screen
  • 1.2 GHz Dual Core Cortex-A9 processor
  • ARM Mali-400 Dual-Processor GPU
  • 8GB storage
  • 1GB RAM
  • Cameras: Front 0.3 MP, Back 2.0 MP
  • Wifi: 802.11 b/g/n

Foxconn InFocus:

  • 10” screen (1280 x 800 pixels, 24-bit color)
  • [Allwinner] A31 (ARM Cortex A7) Quad-Core 1.0GHz w/ PowerVR SGX544MP2 GPU
  • 16GB storage
  • 2GB RAM
  • Cameras: Rear 5MP/ Front 2MP
  • A-GPS
  • Battery capacity: 7,000 mAh
  • WiFi: 802.11 b/g/n, Bluetooth, Micro USB

“It’s clear that more and more developers are choosing the Web as their preferred development platform for mobile apps, as the technical gap between native and Web apps narrows,” said Brendan Eich, Mozilla CTO and SVP Engineering. “We listen to what developers are asking for to make the Web their primary development platform and think Mozilla and its partners have made significant progress with these new hardware, tools, and WebAPIs. It’ll be exciting to see what new mobile innovations come in 2014.”

Firefox OS Unleashes the Future of Mobile [Mozilla Press Center, Feb 23, 2014]

Mozilla, the mission-based organization dedicated to keeping the power of the Web in people’s hands, demonstrated the breadth and growth of its Firefox OS open mobile ecosystem at a press event on the eve of Mobile World Congress in Barcelona. The event introduced seven new commercial Firefox OS devices and highlighted advancements and partnerships that will enable the platform to scale up in 2014.

In the year since MWC 2013, Firefox OS devices have gone on sale in 15 markets with four global operators and handsets from three manufacturers. Firefox OS will be expanding into important new markets in 2014. Telefónica will build on the list of countries where it’s selling Firefox OS phones, with eight more launching this year: Argentina, Costa Rica, Ecuador, El Salvador, Germany, Guatemala, Nicaragua and Panama. Deutsche Telekom will also add four new markets: Croatia, the Czech Republic, Macedonia and Montenegro.

Operator support for Firefox OS also continues to expand, as Telkomsel and Indosat have joined the list of 21 key operators across the globe that support the open Web device initiative. That list also includes partners announced last year: América Móvil, China Unicom, Deutsche Telekom, Etisalat, Hutchison Three Group, KDDI, KT, MegaFon, Qtel, SingTel, Smart, Sprint, Telecom Italia Group, Telefónica, Telenor, Telstra, TMN and VimpelCom.

A new smartphone entry level
Spreadtrum has announced WCDMA and EDGE turnkey reference designs for Firefox OS as well as the industry’s first chipset for US$25 smartphones, the SC6821, that redefines the entry level for smartphones in key growth markets. These solutions are already creating a stir, with global operators such as Telenor, Telkomsel and Indosat, and ecosystem partners such as Polytron, T2Mobile and Thundersoft expressing interest.

In six short months, Firefox OS has more than established itself in the very markets it aimed to address,” said John Jackson, VP of Mobility Research, IDC. “Today’s announcements underscore the platform’s rapid maturation and growing ecosystem benefits. New products, tools, categories, partners, features, and extraordinarily compelling price points will reinforce Firefox OS’s momentum into 2014. IDC expects year-on-year Firefox OS volumes will grow by a factor of six times in the smartphone category alone.”

Flexibility and customization
Firefox OS devices are the first devices built entirely to open Web standards, with every feature developed as an HTML5 application. Mozilla previewed the future of Firefox OS at its press event, demonstrating how its flexibility, scalability and powerful customization empower users, developers and industry partners to create the exact mobile experience they want. Carriers can easily and deeply customize the interface and develop localized services that match the unique needs of their customer base.

Deutsche Telekom is utilizing this customization to develop new Firefox OS features for the Future of Mobile Privacy project, a joint effort with Mozilla to bring data privacy closer to customers. The organizations’ privacy offices have been collaborating over the past year to conceptualize and develop new privacy features that are currently being tested for consideration in future Firefox OS releases.

Firefox OS is also expanding to additional form factors, as partners and contributors work to optimize the software for TVs, tablets and other devices. In January, Panasonic announced a partnership with Mozilla to release next-generation smart TVs powered by Firefox OS.

“Firefox OS is off to an amazing start. We launched our first smartphones in July, and have since expanded into fifteen markets,” said Jay Sullivan, chief operating officer of Mozilla. “People in Latin America and Eastern Europe have eagerly upgraded from their feature phones to Firefox OS smartphones and now have rich access to the Web and apps. Sales have far exceeded our targets. But 2013 was just the beginning. In 2014, we are differentiating our user experience and our partners are growing the portfolio of devices. We are also enabling a whole new category of smartphone, priced around $25, that will bring even more people around the world online.”

Streamlining the support process
Mozilla has received significant interest from mobile manufacturers looking to differentiate themselves by producing Firefox OS phones and tablets. To help service this demand and facilitate the next wave of device growth, Mozilla launched a new self service partner portal to fast track manufacturers and streamline bringing devices to market. Manufacturers get all the resources and branding required to launch a Firefox OS device in one place.

In order to promote the success of this ecosystem, the Open Web Device Compliance Review Board (CRB) was formed by Mozilla and major global partners in late 2013. The CRB’s aim is to define and evolve the process of encouraging API compatibility and competitive performance for open Web devices.

Partner quotes
Marieta Rivero, Global Chief Marketing Officer at Telefónica, said: “We started marketing Firefox OS less than eight months ago, commencing with Spain and expanding to several Latin American countries. In a number of these countries, Firefox OS has been a market leader in smartphone sales from the very start. We’re transforming the market, and will continue focusing our efforts on open environments that give clients more freedom, and prices that are better suited to their possibilities. 2014 will undoubtedly be a key year for all of this.”

“The continuing rollout across our European markets is tangible proof of our drive to push Firefox OS, together with Mozilla and bring an open operating system to all of our customers,” said Thomas Kiessling, Chief Product & Innovation Officer at Deutsche Telekom. “The introduction of an even more affordable handset on the one hand and a higher-end model on the other also show we are reaching more market segments.”

“Telenor and our operating businesses have seen great consumer satisfaction and a continued appetite in the market for quality, low-cost products based on Firefox OS,” said Holger Hussmann, VP Device and OS at Telenor. “We are supportive and welcoming of the efforts of enabling vendors and device partners focused on serving this great, underserved market opportunity.”

Alistair Johnston, Director of Marketing for Telkomsel, said: “Telkomsel will support Mozilla with its Spreadtrum turnkey solution and device partner as an attempt to bring the smartphone to the palm of every Indonesian and to perform Telkomsel strategy to speed up and enrich the DNA (Device – Network – Application) ecosystem in Indonesia.”

President Director & CEO of Indosat, Alexander Rusli, said: “Indosat as the leading communications provider in Indonesia is ready for Firefox OS smartphones based on the Spreadtrum solution. This is in line with our strategy in 2014 to provide the best experience to our customers and become the customer’s preferred choice for smartphones and smart device users.”

“Polytron is announcing the intention of supporting the manufacturing, distribution, and promotion of Firefox OS smartphones based on Spreadtrum’s latest solution,” said Mr. Hariono, CEO of Polytron, Indonesia’s leading mobile device brand. “T2Mobile specializes in offering our customers the ability to rapidly address the needs of its customers in every segment of the wireless ecosystem,” said Aaron Zhang, CEO, T2Mobile, a leading ODM specializing in Firefox OS-based mobile solutions. “The creation of new Firefox OS and open Web devices will be further accelerated by these solutions and we are pleased to support these new offerings.”

“We are excited by the new and highly affordable possibilities enabled by Firefox OS,” said Hongfei Zhao, CEO, Thundersoft, a leading global technology and solutions provider that helps OEMs’ accelerate high quality product development and achieve fast time to market. “We have expanded our services in new areas including support for Firefox OS, enabling new and unique offerings in the mobile Internet device industry and ecosystem.”

More information
Opening remarks by Mitchell Baker, Executive Chair and Jay Sullivan, Chief Operating Officer

Please visit Mozilla and experience Firefox OS at stand 3C30 in Hall 3, at the Fira Gran Via, Barcelona from February 24-27, 2014.

For additional resources, such as high-resolution Firefox OS images and b-roll video, visit: https://blog.mozilla.org/press.

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China is the epicenter of the mobile Internet world, so of the next-gen HTML5 web

My preceding posts on this site are already leading to such a massive conclusion. Read:

IMT-Advanced (4G) for the next-generations of interactive mobile services, China is triumphant [‘Experiencing the Cloud’, Oct 24, 2010]
Good TD-LTE potential for target commercialisation by China Mobile in 2012 [‘Experiencing the Cloud’, July 13, 2011 – Feb 8, 2012]
TD-SCDMA: US$3B into the network (by the end of 2012) and 6 million phones procured (just in October) [‘Experiencing the Cloud’, Oct 18, 2011]
China becoming the lead market for mobile Internet in 2012/13 [‘Experiencing the Cloud’, Dec 1, 2011]
MWC 2012: the 4G/LTE lightRadio network [‘Experiencing the Cloud’, Oct 16, 2012]
China: 20,000 TD-LTE base stations in 13 cities by the end of 2012 and about 200,000 base stations in 100 cities launched in 2013 with the 2.6GHz TDD spectrum planning just started—SoftBank with TD-LTE strategy in Japan getting into global play with Sprint (also the 49% owner of US TD-LTE champion, Clearwire) acquisition [‘Experiencing the Cloud’, Oct 16, 2012]

The latest information collected to support my headline here is providing further evidence:

  1. The new frontier: application service (e.g. WeChat) global expansion with lead market advantage and tremendous growth opportunity lying ahead
  2. Online shopping growing very fast
  3. Applications, applications to be added to the search
  4. Xiaomi to take Apple place
  5. Strong central government support
  6. Country-wide 4G roll-out by year end 2013 after extensive trials
  7. From operator branded to white-box superphones supporting all that

Lead #1: Choosing Sides: Who’s Partnered with Who in China’s Internet War? [Tech In Asia, Aug 5, 2013]

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The battle between China’s internet giants is only becoming more contentious, and the nation’s major companies seem to be making acquisitions and partnerships at a breakneck pace this year (not to mention rolling out products designed to invade rivals’ markets).

In the interest of clarity, I thought it would be fun to do a roundup of who’s on whose team so far, based on China’s three most internet profitable companies. Obviously none of this is cast in stone, but it’s still quite an interesting way to understand the internet sector. (Note: these lists only include acquisitions and partnerships from 2013).

Team Alibaba:

  • Sina Weibo – a huge new partnership that’s likely to yield more social products from Alibaba.
  • Qihoo 360 – Arguably an independent player, but Qihoo has worked with Alibaba on a product search engine. Qihoo is itself rumored to be buying Sogou.
  • Autonavi – Alibaba invested a boatload in the online mapping company, though it’s not yet clear what role this will play in Alibaba’s long-term strategy.
  • Xiami (acquisition) – Another likely part of Alibaba’s social plan.

Shots fired: Alibaba has been especially harsh to Tencent this year, banning third-party communication tools (mostly WeChat and QQ) in its offices andshutting down the Taobao-WeChat interface. But it has also taken a swipe at Baidu via the launch of its own search engine.

Team Tencent:

  • Xiaomi – A very new partnership, but one that could see Tencent strengthen its strangehold in mobile.
  • China Unicom – WeChat’s popularity has got all of China’s telecoms trying to cozy up to Tencent to get in on the money train.

Shots fired: New security features in WeChat 5 will challenge Qihoo, and Tencent is also rumored to be interested in buying Sogou which would put it at odds with Baidu. Additionally, Tencent dealt old rivals Qihoo a loss in the courts this year.

Team Baidu:

  • 91 Wireless (acquisition) – A huge buy that shows Baidu is serious about mobile.
  • PPS (acquisition) – Another major buy that turned Baidu into one of the major players in internet video.
  • Qunar – Baidu has invested big in the online travel company.
  • Kingsoft – Baidu has also invested in Qihoo rival Kingsoft.

Shots fired: Baidu really hates Qihoo, and has launched an antivirus suite and Baidu Guard, both of which are designed to break into Qihoo’s PC security market. Entering Alibaba’s domain, it has also released a product search engine. Plus, just like Tencent, Baidu has spanked Qihoo in court this year.

First watch this video about Baidu [firecracker888 YouTube channel, Dec 4, 2012]
Baidu is one of the WPP, BrandZ Top 50 Most Valuable Chinese Brands 2013. Each brand has its own individual story and to tell them we have put together 50 short films – one on each of the brands in the rankings.
as well as about Baidu’s recent expansion by acquiring 91 Wireless, the biggest 3d party appstore in China: Baidu Gains Mobile Share in $1.9B 91 Wireless Deal [BloombergMarket YouTube channel, July 16, 2013], note Baidu’s earlier platform attempts—Baidu Site App Platform [Sept 3, 2012] and Baidu Yi [Sept 2, 2011]—now joined by 91 open mobile platform [Oct 11, 2012] as well.

Jin Yoon discusses Baidu on CNBC World [BeyondPixInterviews YouTube channel, July 30, 2013]

Jin Yoon, Nomura Live at Beyond Pix Studios in San Francisco, CA. July 16, 2013. http://www.beyondpix.com
Then go deeper first with:
Alibaba is one of China’s largest–and most successful–online retailers, and its IPO could command upwards of $70 billion dollars. With a offering coming as early as September, Alibaba appears to be taking steps to limit the counterfeit merchandise on its platform. The Wall Street Journal reports:
Unlike Amazon.com Inc. (AMZN), Alibaba doesn’t sell products itself but operates websites that help sellers find buyers. While Alibaba doesn’t have much control over who sells what on Taobao–a mammoth site with more than 800 million product listings—it has been continuously upgrading the system to delete listings for counterfeit goods. In Alibaba’s efforts to maintain credibility, Tmall, another shopping site that became independent from Taobao in 2011, plays a key role. While anyone with a national identification document can become a seller on Taobao, Alibaba’s criteria for Tmall, which hosts storefronts for major brands such as Nike Inc. (NKE) and Gap Inc. (GPS), are more stringent as it tries to make the site a piracy-free zone…
…Alibaba said it blocks some items from being posted on Taobao using filtering mechanisms based on certain keywords used by sellers to describe counterfeit goods. Brands like[guitar-string manufacturer] D’Addarioconstantly monitor Taobao and report any counterfeit items to Alibaba.
which provides a good introduction to Jack Ma: E-commerce in China and Around the World [Credit Suisse YouTube channel, March 20, 2013]
With 242 million people in China expected to shop online in 2013, spending an estimated US$265 billion, China’s e-commerce industry is a force no-one can afford to ignore. Jack Ma, the head of Alibaba Group, China’s largest e-commerce company, discusses how the sector has been generating grassroots economic opportunities and changing lives in China and beyond, and what the future of e-commerce will be like.
And now it’s time to learn via an authentic video of how that business started in 1999 (with the experience of the first Internet company “China Pages” started in 1995 and then 14 months of work for the goverment behind) Jack Ma Speech From “Crocodile In The Yangtze” [PandoDaily YouTube channel, Jan 16, 2013]
Alibaba founder Jack Ma gives an inspirational speech to his recruits in the company’s first office: his apartment. This clip is from Porter Erisman’s documentary film about Alibaba: “Crocodile In The Yangtze.” See http://www.crocodileintheyangtze.com/

Then continue with Alibaba Founder Jack Ma: Ideas & Technology Can Change the World [stanfordbusiness YouTube channel, June 19, 2013] the same appeared as Jack Ma: E-Commerce and the China Opportunity [TeamAlibaba YouTube channel, May 9, 2013] with “… talks about his unusual entrepreneurial beginnings at …. See what else he has to say about e-commerce and the China opportunity.

Jack Ma, the founder of China’s most profitable e-commerce company Alibaba Group, made his last public speech at Stanford University on May 4th, 2013 before stepping down as CEO. In his talk, Ma discussed why embracing change is critical for global leaders managing the fast turnover of technology. The event was co-hosted by Alibaba Group and the Stanford Graduate School of Business’s Stanford Program on Regions of Innovation and Entrepreneurship (SPRIE): http://stnfd.biz/lVQGt Transcript (English): http://stnfd.biz/mZAZw Transcript (Mandarin): http://stnfd.biz/mZB1D
Jack Ma reflects at Stanford during final days as CEO; says ‘people bet I’d be a loser’ [By Daniel Limón on SPRIE, May 14, 2013], see also the full transcript in English (PDF)
Speaking without notes or visual aids on May 4th at Stanford University’s NVIDIA Auditorium, founder and former CEO of Alibaba Group Jack Ma unspooled a farewell talk that at moments turned highly personal and deeply reflective: Ma spoke openly about his persistent failures in school, including spending seven years in elementary school and being rejected by Harvard ten times, and about his struggles to jumpstart Alibaba with only 50,000 RMB.
Less than two minutes into his talk at the event co-hosted by Alibaba Group and the Stanford Program on Regions of Innovation and Entrepreneurship (SPRIE) of the Stanford Graduate School of Business, Ma touched on the trials and travails he had faced early on as an internet and e-commerce pioneer in China. “Back in 1995,” revealed Ma, “I felt I was a loner and people thought I was a cheater. They said I was trying to make something out of nothing.” In fact, added Ma, his first interview with CCTV was censored at the behest of the producer, who feared Ma’s talk about giving the Chinese government internet access was “not a positive influence” and made Ma “look like a bad guy.”
Ma’s personal struggles, however, began well before he knew anything about e-commerce—in elementary school—where Ma confessed to being such a bad pupil that no school in his hometown of Hangzhou wanted him. In high school, he spent three years taking the college entrance exam before scoring high enough to enroll in a local teachers college. Harvard rejected him ten times. “Nobody said that I would be a very capable person that would do something significant or meaningful in the future,” Ma admitted to a silent and still audience of about 100 people. Ma also recalled his father asking him to focus and do calligraphy. “I couldn’t really do it—I didn’t have good penmanship,” he said.
It’s clear the former English teacher turned internet billionaire never let the doubts of his detractors or the rejections from Harvard spoil his high aspirations—in fact, Ma credited the Silicon Valley for inspiring him to bring internet innovation to China amid the setbacks: “I knew nothing about technology, but every time I came to Silicon Valley, on the weekends I would see cars fill each and every parking lot… I saw the lights were on at each and every office building. When everyone spoke, their eyes were filled with sparkles. They were really hopeful about the future. So I was really inspired when I went back to China—I thought that I should do an internet business.”
So Ma did, founding Alibaba Group in 1999 with 17 other co-founders. Today, Alibaba is China’s largest e-commerce firm, something Ma readily admitted exceeded his wildest dreams: “I never thought that Jack Ma would have, in the future, a day like today. I never thought that Alibaba or Taobao or any type of transaction developed by Taobao would have a day like today. I never thought the internet would have a day like today.”
Midway through the speech, the 49-year-old seasoned entrepreneur also struck a philosophical and political chord, making tacit references to god, social conflict, war, and generational change. He encouraged the audience to be grateful for living in an era of great opportunity, adding “the worst thing is that mankind experiences war… if we can actually solve problems through economic development, we will not need wars and we can actually use economic development to influence many people.” He warned, nonetheless, that in the next 30 years the world would face a host of unknown vicissitudes, including “lots of social conflicts,” which Ma described as opportunities for young people. “If everything stays stable, we are not going to have any opportunities.”
Ma also gave the audience his views on the state of China’s present social milieu: “This is the best of times, this is the worst of times,” remarked Ma. “Nobody is happy in China… there’s a lack of trust and nobody is happy. The poor people are unhappy; the rich people are unhappy. The government doesn’t trust media; the media doesn’t trust government. We are in an era of constant change.”
At least twice during his speech, the founder of China’s most profitable e-commerce company also took spirited swipes at some of his personal critics. “You know, we are experiencing economic and political restructuring and they want me to commit suicide. Lots of people are asking, ‘why are you not advocating for political restructuring?’ I don’t feel that’s actually something that can be done. I feel that lots of people encouraging me to do that have foreign passports. And they aren’t going to stay in China as long as they see the situation changing. They’re going to flee the country.” Ma also took to task those that ask why he runs a technology company if he knows so little about technology. He said it’s like asking a real estate developer “you know nothing about constructing a house—how can you be a real estate developer?”
Fourteen years removed from when he founded Alibaba, Ma’s personal belief is that one shows respect and admiration for technology and the people that develop it. “That you don’t know about technology,” said Ma, “doesn’t mean you don’t respect technology.”
You can understand the role of Alibaba in global e-commerce (already) via Small Business Success: DS Global Corporation (DS글로벌) [TeamAlibaba YouTube channel, July 17, 2013]
A look at how DS Global Corporation (DS글로벌) president, Heaon-Jae Lee, found success for his small business in the automotive industry using Alibaba.com from Korea. From early on, Lee understood how the internet could help him reach new markets around the world. He now works with companies across 70 countries, including Turkey, USA, Spain, South Africa, Brazil and Russia.
and for making simple the task of global sourcing for potential customers there is an all-encompassing service on Alibaba.com, the AliSourcePro [TeamAlibaba YouTube channel, July 3, 2013]
Find out more and submit your buying request now at:http://www.Alibaba.com/AliSourcePro Save time and find quality suppliers in one easy step to use sourcing platform. AliSourcePro makes sourcing easy!
More information:
Why Alibaba’s Future Looks Bright [Tech In Asia, May 21, 2013]
Why Alibaba could be China’s next $100bln IPO [Reuters’ Analysis & Opinion blog, April 25, 2013]
Interview with Alibaba.com’s Chairman, Jack Ma [a bmpcroxon article now available only via Alibaba Trade Forums, Oct 23, 2006]
Jack Ma, In the Chinese Cave of Alibaba – La Tribune, Business section [Alibaba Trade Forums, Aug 13, 2007]

Lead #2: Here’s why a war has started between Chinese Internet giants Tencent and Alibaba [The Next Web, Aug 5, 2013]

Chinese Internet giant Tencent has been on a roll recently — for a while last week, it seemed that plenty of other Chinese tech companies wanted to be friends with the firm behind WeChat, a wildly popular messaging service in the country.
However, a huge crack appeared in its veneer of popularity toward the end of the week when Chinese e-commerce giant Alibaba suddenly suspended its working relationship with WeChat, marking the start of war.
A series of collaborations and one break-off
Last week, Chinese telecom operators did a surprise turn-around after previously getting upset that WeChat was allegedly stealing users away from traditional SMS.
China Unicom officially announced the introduction of a new SIM card that includes an independent data package for WeChat. Subsequently, it was reported that China Telecom would launch a plan that includes 2GB worth of data specifically for WeChat as well as Sina Weibo — though WeChat was obviously the focus of this package.
Following that, Chinese smartphone manufacturer Xiaomi launched its latest Hongmi phone — at $130, it is the lowest-priced in Xiaomi’s range — in collaboration with Qzone, a social networking website owned by Tencent.
Tencent seemed to be riding the wave of popularity throughout last week — until all of a sudden, Alibaba announced that it was suspending all WeChat-related marketing applications from its e-commerce sites.
Alibaba cited misuse by sellers as the reason for doing so, but in the next moment, the company announced that it was launching a “Weibo-Taobao” platform to make it easier for customers on the Twitter-like microblogging platform to shop on e-commerce site Taobao. Interestingly enough, it was also revealed that Sina Weibo will provide Taobao sellers with marketing services.
This suspension of any existing working relationship is a clear indication that war has started between the two Chinese Internet giants — Tencent and Alibaba.
Unlikely rivals cross paths
It would seem that the two make unlikely rivals. The former focuses on providing service portals, while the other mainly dabbles in e-commerce.
However, Alibaba — which makes more money than eBay and Amazon combined — has been showing interest in tapping into the social market. It took an 18 percent stake in Sina’s Weibo in a bid to slow down Tencent’s WeChat success and also bought 28 percent of AutoNavi, China’s top mapping system, suggesting that it is focusing on maps as another prong of its social strategy.
This comes as Tencent revealed last year that it was looking to expand its business into a number of new areas as it sought to increase its already sizable online presence and appeal to advertisers — one of which was e-commerce, which would infringe on Alibaba’s presence. Subsequently, it created an e-commerce subsidiary called Tencent E-Commerce Holding Company.
Just recently, Tencent also led a $150 million investment in design-focused e-commerce service Fab.com, aimed at helping the firm learn more about global e-commerce models.
Alibaba’s fear of Tencent’s social power
Why would Alibaba be so afraid of Tencent though, given that Tencent has not yet made its big jump into e-commerce? The reason is simple:
Tencent’s dominance in the social market.
The power of social is something that every company aspires to have. Communities form opinions and can ultimately define future products and services, according to Jeremiah Owyang, an industry analyst and partner at Altimeter Group.
Right now, it is clear that even if communities haven’t entirely started defining products and services yet, they can decide which ones should get the love. This means that if you have the community on your side, you have a significant advantage.
And Tencent has the power of communities on its side, which could easily become a force to be reckoned with. QQ had close to 800 million active accounts at the end of 2012, while WeChat has nearly 400 million users in all, out of which there are 195 million monthly active users.
This means that any new initiative rolled out by Tencent, such as e-commerce, could very possibly tip the scale to its favor.
Even though Tencent has not started mapping a clear route to develop e-commerce, its dabbling into selling peripherals such as stickers and games could see it inch slowly toward rolling out more products.

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Furthermore, Tencent has the payments solution in place to enable possible e-commerce. The company owns Tenpay, a PayPal-like online payments solution. Its QQ platform also has a virtual currency already, while the latest update to Weixin (what WeChat is known as in China) saw it introduce mobile in-app payments linked to a banking account which is in turn supported by TenPay.
A Sina Tech report noted that by introducing payments onto WeChat, Tencent is literally declaring war on Alipay, the mobile payments company spun off by Chinese e-commerce giant Alibaba. The report cites a source close to Alipay as saying that the company had already sensed the impending threat of TenPay being integrated into WeChat, and has been developing new techniques to head off the challenge – for example, it recently announced a major update of its mobile app, Alipay Wallet.
Who will win the war?
Alibaba has shown all intentions of fighting this war to victory. Newly-installed Chief Executive Jonathan Lu has pledged to continue the e-commerce giant’s recent string of big investments as it continues focusing on improving its services for mobile. Lu wants Alibaba’s service – and in particular its two biggest e-commerce businesses: virtual ‘mall’ for brands Tmall and eBay-likeTaobao marketplace – to make better use of customer data to provide a more tailored user experience.
However, even Tencent’s rival — and Alibaba’s ally – Sina has publicly admitted that WeChat is causing its users to spend less time on the Twitter-like Sina Weibo service.
In other words, Tencent isn’t China’s biggest Internet company without a reason. By harnessing the power of social, Tencent has laid its foundation well and could easily spread its influence into a wider variety of businesses.
John Hancock once said: The greatest ability in business is to get along with others and to influence their actions.
The community that Tencent has painstakingly built up over the years will lead to much easier influence in the future, which bodes well for its business. On the other hand, Alibaba needs to brush up on its social influence in China. It is doing swimmingly well in its main businesses — which include e-commerce, financial solutions and big data — and has been tipped for a multi-billion-dollar initial public offering (between $60 billion-$70 billion), but its lack of a persuasive social strategy still sticks out like a sore thumb.
Could the tables turn though? Definitely, considering that Alibaba has already recognized this and is taking steps to beef up its social strategy. In war, victory is always possible as long as you keep fighting. Who knows, Alibaba could one day just as easily roll out a phenomenal success like WeChat.
Then I recommend to watch Tencent [firecracker888 YouTube channel, Dec 4, 2012], note that the “weixin” service (mentioned in the video by Chinese) is WeChat mentioned above
Tencent is one of the WPP, BrandZ Top 50 Most Valuable Chinese Brands 2013. Each brand has its own individual story and to tell them we have put together 50 short films – one on each of the brands in the rankings.
To close this lead section is best with these 13 months old Tencent CEO interview which speaks for the whole Internet industry in China, also by clearly expressing its global expansion potential:  Tencent’s Pony Ma (马化腾) on China’s internet economy [NUS Business School  YouTube channel, July 1, 2012]
Founder and CEO of China’s biggest internet company speaks to NUS Business School on the challenges and opportunities in China’s fast-changing dotcom sector.

End of the Lead Contents

My preliminary investigation was concluded in an ‘April 13, 2013 Report’, which is following after the above sections, and organized around the following findings:

Digitimes Research: Smartphone sales to reach 329 million in China in 2013 [DIGITIMES Research, March 18, 2013]
China Mobile aims to sell 100-120 million TD-SCDMA handsets in 2013 [DIGITIMES, March 15, 2013]
China Mobile 2013 capex increases 49% on year [DIGITIMES, March 14, 2013]
China Mobile to build world’s largest 4G network [CCTV News via GoUTube123 YouTube channel, Feb 27, 2013]
China Mobile launched 100 cities 1 million terminals-covered 4G plan to create world’s largest 4G network [GTI News, March 8, 2013]
China Mobile to procure TD-LTE devices from Huawei, ZTE, Samsung [DIGITIMES, March 19, 2013]
China Mobile: 4G licensing expected by year-end [China Daily, March 13, 2013]
China to lead mobil payment technology [CCTV News via GoUTube123 YouTube channel, Feb 27, 2013]
Commercializing 4G in China needs 1 yr: minister [China Daily, March 15, 2013]
FRANCE 24 Report : Chinese smartphone brands take bite out of APPLE [france24englishYouTube channel, Feb 18, 2013]
Rise of Chinese smartphones [CNNInternational YouTube channel, Feb 26, 2013]
Mike Walsh on Global Innovation [cmispeakers YouTube channel, Feb 5, 2013]
China Smartphone Sector [Asia Pacific/China Equity Research, Credit Suisse, Jan 7, 2013]
Chinese Smartphones [FinancialTimesVideos YouTube channel, April 5, 2012]
Chinese smartphones going big [CCTV News via the GoUTube123 YouTube channel, July 11, 2012]
Handset Industry 2013 Outlook [Asia Pacific/China Equity Research, Credit Suisse, Jan 7, 2013]
SED Electronics Market (Tablets Market) in Shenzhen walk-through [Charbax YouTube channel, March 17, 2013]
Allwinner A31 9.7″ Retina factory tour at Celeb Tech [Charbax YouTube channel, March 17, 2013]

Then followed by More information

This getting even more interesting as the quite dramatic by itself introductory information is only one of the reasons (more will follow below) why we can say that China is the epicenter of the mobile Internet world, so of the next-gen HTML5 web … even if such a power of influence is too new for the country to be able to exercise that to a greater degree (yet): China Knocks Off U.S. to Become World’s Top Smart Device Market [Peter Farago on the Flurry blog, Feb 18, 2013]

Nevertheless the collection given below in the ‘Background’ section is showing that potential. Just look at the major headlines in that section:
China becomes world’s top smartphone producer
China’s e-commerce revenue hits over 1 trillion yuan in 2012: minister
China’s top microblog site boasts 500 mln users
China expected to issue 4G licenses this year: minister
Preparing for a 4G network across China
ZTE leads in 4G wireless networks
EU telecom demands raise tensions with China
China has till June for solar, telecoms trade deal: EU
China’s mobile phone users reach 1.11 bln
China market: Samsung takes up 22.5% of 2012 smartphone sales, says iiMedia Research
Smart phones cover 70 pct of mobile market: report
Android powers a third of all mobile phones shipped in 4Q12, says Canalys
Google controls too much of China’s smartphone sector: ministry
Too late for China to develop own mobile operating systems, say Taiwan makers
China handset makers hope to reduce reliance on Android
China to modify plan to open up mobile telecom sector
4M[bps] broadband to cover 70 percent of Chinese users in 2013
Broadband network expansion in the pipeline

DETAILS


1. The new frontier: application service (e.g. WeChat) global expansion with lead market advantage and tremendous growth opportunity lying ahead

The new frontier: WeChat striving for global expansion [ChinaDaily, Aug 5, 2013]

Lisa Tseretzoulias, a 51-year-old office administrator living in Montreal, Canada, came across WeChat a year ago and instantly fell in love. “I like it a lot and have recommended it to family and friends.”
WeChat, known as weixin in Chinese, is the country’s most popular messaging and social media app developed by Tencent, China’s biggest Internet firm. WeChat is often likened toWhatsApp, developed by a US firm, and Japan’s Line.
But WeChat is more than a messenger app and packs a host of other features, including a hold-to-talk function that allows users to send audio messages to other WeChat users, much like a walky-talky. It’s also a social media platform to post photos and make comments, much like Facebook. Companies and celebrities can open a special account to interact with fans and build a following. NBA basketball player LeBron James has an account.
Founded in 1998 in the southern city of Shenzhen, Guangdong province, Tencent has over the past decade proven itself to be China’s undisputed king of messaging, with its banner instant messaging service called QQ, China’s largest instant messaging service with over 800 million users. With a shift in Internet usage from personal computers to smartphones and tablets, Tencent launched WeChat in 2011.
By the end of the first half of 2013, the number of WeChat users in China had exceeded 400 million, driving revenue growth from mobile traffic up by 56.8 percent, according to the Ministry of Industry and Information Technology.
Just like the impact Skype has had on landlines, the heavy use of WeChat in China now poses a challenge for telecom operators, whose revenues for text messaging—its most profitable business—fell markedly, leading to a debate overwhether or not to charge a user fee for the application. The attempt by telecom operators to pressure WeChat to charge for the service was roundly condemned by Chinese netizens and others who called on the phone companies to leave WeChat alone and develop their own products to compete. So far, Tencent has no plans to charge users for the popular app but says it will cooperate with China’s big telecom players in other ways.
WeChat is already a huge domestic success and is used by everyone from teenagers to their parents to their grandparents. But Tencent is not satisfied with success in the home market and is branching out globally tooth-and-nail. Roadblocks, however, remain.
With an eye on the international market, WeChat is now available in 18 languages, including English, Indonesian, Spanish, Portuguese, Thai, Vietnamese and Russian. The app can be used on almost all mainstream mobile phone systems thanks to a first-class research and development team at Tencent. WeChat is growing quickly in overseas markets. Tencent announced on July 3 that WeChat has accrued over 70 million registered overseas users, a sharp jump from the 40 million users it claimed it had back in April.
“The software has been especially successful in Indonesia, India, Malaysia, Mexico, Singapore and the Philippines,”said Martin Lau, President of Tencent, at a developer conference held in Beijing on July 3.
To further expand its user coverage, Tencent has unveiled an advertising campaign featuring internationally famed soccer star Lionel Messi to run in 15 countries, including Argentina, Brazil, India, Italy, Mexico, South Africa, Spainand Turkey.
WeChat has adopted a localization strategy when branching out by hiring celebrities as part of its marketing efforts. A much-loved feature of WeChat is a wide range of cartoon emoticons that users can send to each other, called emoji. With overseas markets in mind, WeChat hasd esigned emoticons featuring local big names. For instance, in India, Tencent roped in popular Bollywood actors Parineeti Chopra and Varun Dhawan as brand ambassadors. Emotes featuring the two Bollywood stars caused a sensation in the country. WeChat is also working closely with businesses overseas and is cooperating with Chang, a well-known beverage company in Thailand.
WeChat’s fun features coupled with Tencent’s strong marketing skills have made the app popular across different markets and helped the app’s popularity soar. User growth is one encouraging sign for the tech company, one of several Chinese Internet companies that have ambitions to expand their businesses abroad. “Successful or not, this is an once-in-a-lifetime opportunity for Tencent,” said Ma Huateng, co-founder and Board Chairman of Tencent, speaking about Tencent’s global layout.
Not easy
While boosting popularity among users outside China, WeChat is faced with competition in the global mobile-chat app market from WhatsApp, Line and Kakao from South Korea.
WhatsApp announced in June it has racked up over 250 million active monthly users worldwide. Line announced on July 23 that it has amassed 200 million global users, and Kakao said in July that the number of its users has topped 95 million. The four are bound to duke it out in the global market.
WeChat has made a splash in emerging nations, especially in Southeast Asia, and has yet to gain a foothold in a large developed economy like the United States, a highly coveted market. By the end of September 2012, there were 100,000 registered WeChat users in theUnited States, a distant cry from the numbers WeChat will need to make an impact beyond the limited population of Chinese-Americans and Chinese students studying there. To that end, Tencent opened an office in February to study the US market and form partnerships with US firms to boost the app’s popularity.
In comparison with the boom in Southeast Asia, WeChat is in its nascent stages of development inthe United States. WeChat faces stiff competition from Line and the Japanese company also has designs on the US market. For now, it’s unclear exactly how WeChat stacks up against its rivals in the battle for the UnitedS tates.
“The US market is a difficult and important one for any Internet company. Many first-class Internet products and companies were born there. The US market is highly sought out by many foreigncompanies and products, and WeChat is no exception,” reads a recent statement from Tencent in February.
“The United States is the most difficult market to tap in our global campaign,” said Ma. “China’s Internet companies lag far behind their globally successful peers and have never been a globals uccess. But now mobile phone and Internet use is developing faster in Asia than in the West. This has given China’s Internet companies a precious opportunity to surpass Western ones,” said Ma, who touts that WeChat is more innovative and user-friendly than its rivals.
But one major concern has Tencent worried: If its popularity grows, could other nations erect the same kind of roadblocks to expansion that have plagued Chinese telecommunications companies like Huawei and ZTE? Both companies have seen their efforts to expand into the United States halted over “national security” concerns.
WeChat has already run into such resistance. India’s intelligence bureau has reportedly proposed a ban on WeChat, saying that the app has already possessed too much personal information on Indians. The United States and other Western nations may suggest the same, fearing that too much citizen data could easily fall into the hands of the Chinese Government.
In response, a spokeswoman for Tencent said, “We have taken user data protection seriously in our product development and daily operations, and like other international peers, we comply with relevant laws in the countries where we have operations.”
Given the recent revelations that the US National Security Agency has been snooping on the e-mails of Americans, users may have few nagging doubts about downloading the Chinese app.
Another issue is whether China’s global image will hold back WeChat in international markets since China is often associated with producing cheap, low-quality products. Persistent foods candals and toxic toys have created a lack of trust of Chinese-made goods in developed countries and beyond.
Duncan Clark, Chairman of BDA China, a consulting firm that specializes in China’s technology and Internet sectors, told The New York Times that WeChat has the potential to overcome anylingering doubts in the West over the made-in-China label, saying potential users would haveno idea the product is Chinese when visiting, for example, an app store, thereby leveling theplaying field for mobile-chat app developers.
Robin Pinsto, a 54-year-old WeChat user in Canada, said she was surprised the app is Chinese.
“I started using WeChat six months ago and I use it every day now. I think WeChat is even better than WhatsApp, with its wide range of cartoon images and other functions,” said Pinsto. “I think WeChat has a shot at being a global success.”
Tseretzoulias, the office administrator in Montreal, has no qualms about WeChat’s origins.
“It doesn’t concern me which country developed it, as long as it’s good to use.”

The lead market advantage: China´s online population nearly 600 mln [CCTVupdates YouTube channel, July 19, 2013]

China’s online population hits 591 million [Shanghai Daily via Xinhuanet, July 18, 2013]

China’s Internet population reached 591 million by the end of June, fueled by a booming mobile Internet user base, a top industry group said yesterday.

More than 70 percent of the new users accessed the Internet via smartphones or other wireless devices. These users are already accustomed to services like instant messaging such as Tencent’s WeChat and payment modes like Alibaba’s Alipay on handsets, according to the China Internet Network Information Center (CNNIC), a government-authorized Internet research organization based in Beijing.

CNNIC publishes China’s Internet development report twice a year, which is regarded as an authoritative dot-com review of the country.

“The traditional Internet applications (e-mail and search engine) have developed smoothly in the period but mobile Internet has come into the spotlight,” CNNIC said in a statement on its website.

By the end of June, China had 591 million Internet users, a 10 percent growth from a year ago, and indicating that 44.1 percent of the country’s population uses the web. The Internet penetration rate was 2 percentage points more from the end of last year, CNNIC revealed.

The growing web applications were online music, video, games and literature, according to CNNIC.

China’s mobile Internet user base reached 464 million by June, 78.5 percent of the total Internet users, compared with 72.2 percent a year ago, the center said.

Mobile Internet has become new economy development engine with an increasing number of users and latest innovation, according to Analysys International, a Beijing-based research firm.

WeChat, which is mainly used on mobile platforms, has attracted more than 400 million users in China within about a year. Its developer Tencent has launched WeChat in overseas markets and expects to reach the 500-million user mark soon.

GSMA, a global mobile communications industry association, said last month that by 2017, the Asia Pacific region will have 1.9 billion mobile subscribers, accounting for almost half of the predicted global total of 3.9 billion.

The popularity of smartphones and wider coverage of 3G network, which provides faster web access, will continue to boost the user base of mobile Internet, CNNIC added.

And there is tremendous growth ahead. Here are the latest quarterly trends for the current situation of the mobile Internet according to operators’ company data:

image

China’s H1 telecom income up 8.9% [Xinhua, July 24, 2013]

China’s telecom business income increased 8.9 percent year on year in the first half of 2013, with 319 million users of 3G technology, a Ministry of Industry and Information Technology (MIIT) official said on Wednesday.

At a press conference about the communication industry, Zhu Hongren, the MIIT’s chief engineer, also said that from January to May, the country’s information consumption surged 19.8 percent year on year to 1.38 trillion yuan (223.68 billion U.S. dollars).

He said the mobile Internet sector has grown along with broadband access, online shopping and mobile payments.

Information consumption has become a new way to stimulate domestic demand and has been crucial in boosting China’s economy as foreign trade of goods and services only contributed 0.9 percent to the gross domestic product in the first half of 2013.

Zhu said China had more than 400 million users of Weixin, a popular free WhatsApp-like messaging service with all the functions of short messaging service (SMS) by the end of June.

The application, developed by one of the country’s largest information technology (IT) companies, Tencent Holdings Ltd., helped income through mobile Internet data traffic rise “56.8 percent in the January-June period,” according to Zhu.

Thanks to new platforms like Weixin and Sina Weibo, China’s most popular Twitter-like microblog, the country’s e-commerce market size grew 38.5 percent year on year to 5.4 trillion yuan and sales of smart phones and televisions both surged over 25 percent, Zhu added.

Chinese Premier Li Keqiang demanded at a meeting of the State Council, China’s Cabinet, on July 12 an average growth rate of over 20 percent in information consumption in the next three years.

Zhu Jun, another MIIT’s official, said the ministry is mapping out measures to realize the growth objective through building and upgrading the network communication infrastructure, enhancing the application and service of 3G technology and promoting the private capital in the telecom market.

Meanwhile, the government will push the share of education and medical treatment resources, encourage innovation in e-commerce and strengthen the safety of private network information, Zhu Jun added.

Digitimes Research: China 3G service subscribers to top 300 million in 1H13 [DIGITIMES Research, June 26, 2013]

The number of 3G service subscribers in China is expected to top 322 million by the end of the first half of 2013, representing a penetration rate of 27.1%. Meanwhile, sales of smartphones in China will total 170 million units in the first half of 2013, up 51% on the prior six-month period, according to Digitimes Research.

In the second quarter of 2013, Samsung Electronics delivered a total of 14.5 million smartphones, including entry-level to mid-range 3G models and the high-end Galaxy S4, in China, accounting for a 15.7% share.

Lenovo ranked second with smartphone shipments totaling 8.6 million units in the second quarter, followed by Coolpad with 8.4 million units, Huawai with 8.0 million units and Apple with 7.7 million units.

Buoyed by brisk sales of its 3.5-inch entry-level models and CNY1,000 (US$163) dual-core models, Coolpad outperformed both Huawei and Apple to take the third-rank title in China in the second quarter and accounted for a 9.1% share.

Sales of Apple smartphones were lower than expected in the second quarter as the US-based vendor did not release any new models during the period. But Apple may see its sales rebound in the second half of 2013, powered by the planned launch of a low-priced model as well as a TD-SCDMA version iPhone.

The penetration rate of 3G telecom services in China is expected to reach 30-40% for all of 2013, and total smartphone sales will reach 390 million units in the year, including 280 million units sold through the retail channels of telecom carriers, estimated Digitimes Research.

The world biggest operator, Chinal Mobile is heavily increasing its 3G penetration. Here are the latest monthly change trends for the current situation according to operators’ company data:

image

CBBC Webinar – The Evolution of Social Business in China [China-Britain Business Council YouTube channel, recorded on July 17, published on July 30, 2013]

Wednesday 17th July 2013 – Presented by: Lewis Rosa, Consulting Manager, Social Business Consulting, CIC Background: China is home to an active community of over half a billion internet users, or netizens, over three quarters of whom are creating original content, which when compared to less than a quarter of American internet users, puts any accusations that China lacks creativity firmly to bed. They’re also far more inclined to discuss brands, products and services. This committed engagement and creativity begets a bonanza of social business intelligence if you know where to look, or more accurately, how to listen This webinar covers: • China’s vast, fractured and dynamic digital landscape • The evolving tastes and behaviors of Chinese netizens • Social listening to inspire creative and inform strategy • Operational implications of social business development

Half of Chinese urban kids surf Internet [Xinhua, July 30, 2013]

About half, or 52.6 percent, of kids aged four to six in urban areas of China know how to use the Internet, according to a report on the lifestyle of Chinese children.

In the survey, which covered 9,114 four-16 year olds in 10 provincial areas or cities including Beijing, Wuhan and Qingdao, 93.2 percent of 13-16 year olds have used the Internet, The Beijing Times cited the report as saying on Saturday.

The report put the proportion of seven-nine year olds and 10-12 year olds accessing the Internet at 58.6 and 77.1 percent respectively, according to The Beijing Times.

In addition, it showed that 57.5 percent of the respondents use mobile phones, about 26 percent use Twitter-like microblogs, and 17.9 percent use tablet computers.

China’s netizen population, the world’s largest, continues to grow and reached 591 million at the end of June, according to the China Internet Network Information Center.

China Blocks Swedish Town Because of It’s Name [ChinaForbiddenNews, Feb 16, 2013]

Beijing launches platform for debunking online rumors [Xinhua, Aug 1, 2013]

Six Chinese websites jointly launched a platform on Thursday to refute online rumors, a move that an official has termed Beijing’s latest endeavor to clean up the “Internet environment.”

The platform is a website that collects statements from Twitter-like services, news portals and China’s biggest search engine, Baidu, to refute online rumors and expose the scams of phishing websites.

The platform operates under the instruction of the Beijing Internet Information Office (BIIO) and the Beijing Internet Association, a non-profit social organization.

The popular use of the Internet has expanded Chinese people’s channels of expression, but also facilitated the circulation of rumors and false information, said Chen Hua, director of the Internet information service and management department under the BIIO.

“The platform will be a new try by Beijing’s websites to eradicate online rumors and raise Internet users’ awareness of telling rumors from the truth,” he said.

The platform was jointly launched by websites Qianlong, Sogou, Sohu, Netease, Baidu and Sina Weibo, a Chinese Twitter-like microblogging service.

So far, the first phase of the platform has been completed, said Chen.

It has collected about 100,000 brief statements on online rumors and phishing websites and offered Internet users about 30 websites through which they can report online rumors or scams.

Operators of the platform will spend another year finishing the second phase. Once that is complete, more entertaining and interactive programs will be introduced to encourage the public to report online rumors.

WHY RUMORS TRAVEL FAST

Some Internet users create rumors to attract attention, while others do it to blow off some steam. But rumors fabricated on purpose can be dangerous and incite panic, said Min Dahong, a researcher on Internet usage.

Based on Wu Chenguang’s observations, rumors travel especially fast in times of emergency such as natural disasters and other mass incidents.

Wu is the news center director of Sohu. In June last year, the web portal’s news center launched a program called “Rumor Terminator” and has handled 300 rumors to date.

Soon after downpours hit Beijing on July 21, 2012, Internet users began disseminating photos of severe flooding that had been taken years earlier.

Another example involves rumors about earthquake forecasts. Internet users claim that people had successfully predicted that an earthquake would shake Lushan County, Sichuan Province, as early as five years ago, but these claims weren’t made until after a 7.0-magnitude earthquake struck Lushan County on April 20, leaving at least 196 dead.

Such rumors had an extremely harmful influence, Wu Chenguang said, adding that the government’s slow pace in releasing information has allowed Internet users to spread their rumors easily.

When explaining why rumors travel fast in China, Min Dahong proposed that it is because rumors touch on issues of common concern.

The Chinese people now care about their surroundings. Rumors travel fast because they cater to public curiosity and concern about environmental protection, food safety and corruption, he said.


2. Online shopping growing very fast

CHINA’S SHOPS SUFFER AS ONLINE RIVALS BOOM [CCTVupdates YouTube channel, June 4, 2013]

CBBC Webinar – yourcompany com cn — Online Presence in China [China-Britain Business Council YouTube channel, recorded on Jan 16, published on July 30, 2013]

Wednesday 16th January 2013, presented by Richard Unwin, Backbone IT Group. This webinar discusses webpage content, social media and how Chinese people interact with the internet. The topics covered are as follows: – How does the internet differ between UK & China? – Visual impact of web design in China – Content — what do Chinese readers want to learn from your website? – Engage your target audience while retaining your corporate image – Social Media

China Focus: Online shopping penetrates smalltown China [Xinhua, July 30, 2013]

Online shopping is no longer exclusively for city dwellers, as residents of smaller locales are now spending more money buying goods on the Internet.

People living in counties and townships each spent an average of 5,628 yuan (910.7 U.S. dollars) online in 2012, almost 1,000 yuan more than their urban counterparts, according to a report released Monday by Taobao, China’s leading online shopping website.

The report showed that township residents placed an average of 54 orders each on Taobao in 2012, far more than the 39 orders placed by e-shoppers living in China’s first- and second-tier cities.

Major international brands like Estee Lauder have sold well in counties and townships. Shoppers in those locations spent an average of 765 yuan apiece on Estee Lauder cosmetics, slightly more than the 652 yuan spent by first- and second-tier city residents.

Over 30 million county residents spent a combined total of 179 million yuan on Taobao, according to figures posted online by the company.

Although residents’ incomes tend to be lower in small towns and counties, their online spending habits are similar to those of urban residents, according to a report released in March by McKinsey Global Institute.

The McKinsey report said that for every 100 yuan spent online, 57 yuan is spent by people in third- and fourth-tier cities, greater than the national average of 39 yuan.

The county-level city of Yiwu, ranked by Forbes as the richest county in China, topped the Taobao ranking, with online spending totaling 3.4 billion yuan.

Residents in Qingliu County in southeast China’s Fujian Province spent a staggering 20,151 yuan, or 72.55 percent of their combined income, on online shopping. In first-tier cities such as Beijing, Shanghai, Guangzhou and Shenzhen, the ratio has yet to exceed 27 percent.

The report also showed that 22 percent of Taobao customers in small towns used its mobile application to shop online. But the percentage declined to 17 percent in first- and second-tier cities.

Commentary: Global online shopping benefits Chinese manufacturers [Xinhua, July 16, 2013]

With just a few clicks on a shopping website, a Nigerian girl buys her favorite wig, to be delivered to her home several days later from China.

That was a scene shown Sunday by Chinese national broadcaster CCTV.

An African girl buying Chinese products on the Internet is, by no means, an isolated case. In fact, cross-border online shopping has become quite a frenzy in recent years.

Despite that, though, online sales of Chinese-made goods in foreign markets are still a new phenomenon and represent a strategic opportunity for China’s giant manufacturing sector.

If the popularity of global online shopping continues to grow, it would provide a vital channel for China to sell more of its products to the rest of the world. In the long run, it may even reshape the face of global trade.

Overseas consumers can save a lot of money by purchasing quality goods from China via the Internet because the products are generally cheaper than their counterparts from elsewhere in the world.

This comparative advantage has made Chinese goods popular among online shoppers in Russia, Brazil, America and Europe. Chinese-made commodities such as clothes, suitcases, mobile phones and shoes are among the best-selling items.

In the larger picture, the trend may also help modify the unfair distribution of profits in global trade.

China has been the world’s largest exporter since 2009. However, it receives only a small portion of the profits generated by goods that are domestically produced but sold through retailers in developed economies.

The situation may be corrected, though, if online shopping continues to prosper across the globe and the made-in-China label can be brought directly to individual consumers.

Global online shopping, however, is still in its infancy and its future is closely tied to the development of online payment mechanisms, cross-border deliveries and tax issues.

It is safe to say, meanwhile, that online shopping is a rising wave sweeping the globe. Online shopping boasts unprecedented vitality and its significant role for Chinese-made goods should not be underestimated.

Mobile payment new technology [NFC] changing ways of consumption [CCTVupdates YouTube channel, July 3, 2013]

Beijing China Mobile users can make purchases with phone [cntv.cn via Xinhuanet, July 23, 2013]

Transit cards make taking the bus and subway in Beijing an easy thing. But they may soon be unnecessary.

Starting Monday, China Mobile users can use near-field-communication, or NFC-enabled handsets to get access to public buses and subway lines in Beijing. They can also make payments below 1,000 yuan at a number of up-scale shops. Beijing China Mobile customers can visit any of six designated China Mobile shops to switch their SIM cards out for new ones that will allow them to connect their phones to their bank accounts.

Samsung’s Galaxy S4, the HTC One, and some Huawei and ZTE models can support NFC functions.

China’s mobile payments to exceed 9 trln yuan in 2015: report [Xinhua, July 30, 2013]

Online payment transactions handled by Chinese mobile payment service providers will exceed 9 trillion yuan (1.45 trillion U.S. dollars) in 2015, according to an industry report published on Monday.

In 2012, the country’s mobile banking sector handled 800 billion yuan in online payment transactions, an increase of 265.3 percent from a year earlier, according to a report published by the Internet Society of China (ISC).

Last year, the country’s online payments rose 66 percent to nearly 3.7 trillion yuan, with fast growth in payments on premiums, according to the report.

Online premiums payments grew 123.8 percent year on year to 3.66 billion yuan in 2012, the report said.

The country’s online payment market is maturing with an accelerated growth of internet finance, said Shi Xiansheng, deputy secretary-general of the ISC.

Online payment transactions handled by Chinese payment service providers totaled 830 trillion yuan in 2012, according to data from the Payment & Clearing Association of China (PCAC).

China’s online payments total 830 trln yuan in 2012 [Xinhua, June 27, 2013]

Online payment transactions handled by Chinese payment service providers totaled 830 trillion yuan (about 134.3 trillion U.S. dollars) in 2012, according to an industry report published on Thursday.

In 2012, banks handled 19.2 billion online payment transactions totaling 823 trillion yuan, according to a report published by the Payment & Clearing Association of China (PCAC).

Another 10.46 billion online payment transactions amounting to 6.89 trillion yuan were handled by other payment agencies last year, the report said.

Online transactions are being used not only in traditional areas, such as online shopping and bill-paying, but also in areas related to education, tourism, fund products, insurance, community services and medical and health services, the report said.

But experts noted that the increasing variety of payment tools has also caused problems concerning the safety of funds and customer information, calling for strengthened regulation and supervision.

“The payment business is closely linked with people’s daily lives, so customers will be less tolerant of risks,” said PCAC’s deputy secretary-general Kang Lin.

The People’s Bank of China, or the central bank, has so far approved 197 non-financial institutions to provide payment services, of which 72 are eligible for online payment business, tPCAC data showed.

The association said mobile payments, or online payments made through mobile phones, totaling 2.31 trillion yuan were handled by banks in 2012, as well as 181.2 billion yuan in transactions handled by non-bank payment service providers.

China cloud computing conference kicks off [CCTVupdates YouTube channel, June 6, 2013]

[1:36] “China’s biggest cloud is Aliyun run by e-commerce giant Alibaba [China’s Amazon].” … … [2:44]

Alibaba, e-concierge, soon at your service [ChinaDaily via Xinhuanet, July 26, 2013]

Chinese e-commerce giant Alibaba Group Holding Ltd plans to boost its presence in China’s online market, and is adding services to ease consumers’ daily lives, from ordering food to booking movie tickets.

The company expects the new business area to become a major revenue source in the future.

Online shopping has become a new way of life for many Chinese consumers, said Zhang Jianfeng, vice-president of Alibaba Group. And the company has realized that customers are not satisfied with merely buying items on Internet.

“Gradually, consumers are developing a strong demand for daily life services, in fields like catering, entertainment and travel,” Zhang said at a Beijing news conference on Thursday.

Taobao Life, a platform owned by Alibaba that provides such services, has been receiving unprecedented attention from Alibaba’s management since the beginning of the year. In March, Alibaba’s chairman Jack Ma said that “amazing” things will happen if everyday activities are combined with mobile Internet services.

Ma compared the growing importance of e-commerce in people’s lives to “the rising sun at 5 or 6 am”, and Alibaba expressed its ambition to develop the new business to reach a scale similar to its booming Taobao Marketplace.

If so, investors who are eyeing Alibaba’s possible initial public offering will find another bright spot for the company’s future profitability, analysts said.

Alibaba is said to be planning to include its e-commerce platforms – Taobao Mall, Taobao Marketplace and eTao – into the planned IPO package. Last year, Taobao Mall and Taobao Marketplace posted about 1 trillion yuan ($163 billion) in total transaction value.

Zhang revealed that the Taobao Life platform has three strategic business sectors. One is Taobao Diandian, a mobile application launched in July that helps customers order food. More than 100 restaurants in Beijing, Shanghai and Hangzhou have opened services on Diandian.

Meanwhile, Taobao Movie is the nation’s biggest mobile platform to buy film tickets. It allows clients in more than 100 Chinese cities to select seats from about 800 theaters, Zhang said.

The company also set up a platform on Taobao Life, known as Offer, which provides people with classifieds in areas such as apartment rentals and housekeeping services.

Song Yang, e-commerce senior analyst with the Beijing-based research firm Analysys International, said that there’s a promising future for companies able to successfully combine people’s everyday needs with the Internet-based services.

“There are no official statistics about the size of the market, but this is the future of e-commerce. Because the services are all about making people’s everyday life better and easier, ” Song said.

Video Alibaba Group launches China Smart Logistics Network [CCTVupdates YouTube channel, May 30, 2013]

Tencent invests in Fab, takes on Alibaba [ChinaDaily via Xinhuanet, June 20, 2013]

US e-commerce website Fab.com said on Wednesday it had raised investment of $150 million from companies including Chinese Internet giant Tencent Holdings Ltd.

Analysts said Tencent may help Fab enter the Chinese online market, which is expected to record nearly 2 trillion yuan ($326 billion) in sales by the end of this year.

Shenzhen-based Tencent said it will make a “minority investment” in the US company, but has not disclosed the value of its investment.

Tencent will have a seat in Fab’s boardroom after the deal is done.

Fab could take on as much as $100 million in further investment over the following months, company CEO Jason Goldberg told The Wall Street Journal.

The funds will be used to build its online stores, develop exclusive products and expand its international footprint, he said.

Fab is one of the leading online design retailers in the world. Tencent believes Fab has the potential to further develop under the wave of the global, social and mobile transformation of the e-commerce industry,” Tencent said via e-mail.

Founded in June 2011, Fab recorded revenue of $120 million last year. That figure is likely to reach $250 million by the end of this year, tech news website TNW said.

The Manhattan-based startup has 14 million registered members.

Tencent said its social strength and technical capabilities will help bring Fab to Internet users around the world.

Fab’s other investors include Japanese retail conglomerate Itochu Corp, an indication the company may be looking toward Asian markets.

China’s online shopping business is dominated by the Alibaba Group Holding Ltd. The company’s customer-to-customer platform, Taobao, contributed roughly 70 percent of the sector’s turnover. Alibaba also owns Tmall, the country’s No 1 business-to-customer portal.

Tencent has been vigorously building up its e-commerce segments to challenge Alibaba’s dominance. Its most recent attempt is authorizing payments via WeChat, its popular smartphone application.

Statistics from the China Internet Network Information Center revealed that China had 242 million online shoppers by the end of 2012 – or more than 40 percent of the country’s entire Internet population.

Internet giants enter online pay market [ChinaDaily via Xinhuanet, July 11, 2013]

Chinese Internet giants Baidu Inc and Sina Corp received third party payment licenses from the People’s Bank of China, the central bank, to conduct related online payment services within the country.

According to the bank, the two Internet companies received official approval on July 6. Both companies were granted a five-year permission to conduct Internet payment businesses. Sina, which operates the twitter-like micro-blogging service Weibo, also got the nod to run a mobile phone payment business.

It means all major Chinese Internet companies, including Alibaba Group Holding Ltd and Tencent Holdings Ltd, have obtained third party payment licenses. Alipay, the online payment arm of Alibaba, together with Tencent’s Tenpay, were among the first companies to receive licenses from the People’s Bank of China – in May 2011.

The reasons why Baidu and Sina are latecomers in the online payment industry, even lagging far behind some Chinese telecom companies, is because their online payment branches are weak and didn’t receive much attention from their management, said Zhang Meng, an analyst with Beijing-based research firm Analysys International.

“Baidu’s and Sina’s application for online payment licenses have more strategic significance than immediate practical meaning for the two,” Zhang said.

Sina started to explore the Internet payment business in 2011. It launched the online payment tool SinaPay that year and upgraded the service into WeiboPay (micro-blogging wallet) in 2012. Every Weibo user automatically has a WeiboPay account. Sina said it hopes to provide a more convenient way for micro-blogging users to conduct transactions online and developers to charge users for products and services.

Sina Weibo introduced Alibaba as a stakeholder in May to act as a bridge for Sina to make use of the Alipay service. Analysts said it’s safer for Sina to have its own payment tool as it’s important to keep transaction data in Sina’s own realm.

“An online payment service will prompt Sina Weibo’s commercialization process,” Zhang said. Previously, Sina had made some attempts to generate money from its Weibo platform. It cooperated with mobile phone manufacturer Xiaomi Corp to sell Xiaomi smartphones through WeiboPay last year. However, some shoppers complained after WeiboPay was paralyzed for a while through excessive use.

Baidu started investigating an online payment service as early as 2008 but the company’s enthusiasm for it cooled alongside the fall of its e-commerce business Baidu Youa.

Alibaba’s Alipay still dominates the Chinese Internet payment market. According to a report issued by Analysys International, Alipay had a 46.3 percent share of the online payment market in the first quarter of 2013, followed by Tencent’s Tenpay, with 20.3 percent.

Alipay had a total of 800 million registered accounts by the end of April. Tenpay said it had 200 million registered users by the end of last year.

Alibaba´s new online investment tool faces regulation challenge [CCTVupdates YouTube channel, June 24, 2013]

about Alipay

Say no to streaking to ensure online payment security [CRIENGLISH.com via Xinhuanet, April 12, 2013]

Seven leading internet companies, including Baidu, Microsoft and Alibaba, have formed an Internet Security Working Group.

It’s hoped the new collaboration will help lead to the better safeguarding of users’ and companies’ online profiles.

While Consumers enjoy the ease and the financial benefits of online shopping, sometimes their financial security and personal information can be threatened during the online payment process.

Many so-called phishing scams and malicious websites try to cheat consumers by convincing them to transfer money to their accounts instead of an online dealer’s accounts.

Li Xiaoling is a product manager with Alipay, the largest third-party payment company in China.

“Phishing websites imitate a popular website, like taobao.com and some other shopping websites. Consumers have to tell from small details whether they are really the websites that they want to visit.”

Ding Rui, a senior product manager with Microsoft, says no matter how strong systems become, phishing websites will never completely disappear.

“Driven by a strong financial interest, someone always wants to take the risk. And the word ‘risk’ is not so accurate, as there isn’t too much risk as a result of a lack of supervision and difficulty in handing out punishment.”

Alipay began fighting the problem of phishing sites at the end of 2007.

Li Qiushi is Alipay’s leading expert on market security.

“Actually, merchants, payment platforms, banks and consumers online are all victims of such behavior. We joined together to prevent these problems from occurring in advance initially. That has yielded noticeable effects.”

To be more alert, Alipay product manager Li Xiaoling suggests web users don’t access the internet without some sort of internet protection, such as an anti-virus software program or other safe control programs.

“Firstly, we hope consumers do not use the same pass code for various accounts online. Secondly, do not input personal information like ID numbers into unfamiliar websites or into those websites that the browser reports as being dangerous. Thirdly, check clearly the usage of different verification codes and do not tell strangers the codes.”

The internet companies taking part in the collaboration say it’s their hope they can raise consumer awareness to try to bring down the number of cases of online fraud here in China.


3. Applications, applications to be added to the search

Baidu searches for growth [TheDealVideo YouTube channel, July 17, 2013]

China’s largest search engine pays $1.9 billion for Chinese mobile app distributor 91 Wireless, betting big on a still small market

Baidu to buy 91 Wireless for 1.9 bln USD [Xinhua, July 16, 2013]

China’s leading search engine, Baidu, Inc. announced Tuesday that it will buy all equity interests in smartphone apps distributor 91 Wireless Websoft from NetDragon for a record 1.9 billion U.S. dollars.

The move, which is Baidu’s latest effort to diversify beyond its core search engine business, is set to mark China’s biggest merger and acquisition (M&A) in the Internet market after Yahoo’s 1-billion-U.S. dollar deal with Alibaba in 2005.

According to the MOU, Baidu will purchase the entire issued share capital of 91 Wireless for a total of 1.9 billion U.S. dollars.

Baidu and NetDragon will further negotiate and agree on the relevant terms of the proposed acquisition by Aug. 14 as the “Long Stop date” to buy Hong Kong-listed NetDragon’s 57.41-percent stake in 91 Wireless.

NetDragon is restricted from approaching or discussing with any third parties the sale of 91 Wireless.

Baidu said it intends to purchase the remaining equity interests in 91 Wireless from other shareholders based on terms and conditions similar to those offered to NetDragon, if they are willing to sell by Aug. 14.

In May, Baidu announced its plan to buy the online video business of PPS to rival industry leader Youku Tudou, which was created last year through the merger of the country’s two major video giants, Youku and Tudou.

My own insert: China’s Alibaba Buys Stake in Sina Weibo [NTDonChina YouTube channel, April 30, 2013]

A China’s e-commerce giant has purchased a stake in Sina Weibo, the country’s largest service provider of Twitter-like microblogs. Alibaba announced on Monday that it is acquiring 18% of Sina Weibo for $586 million. If the online retailer wanted to, it could increase the stake to 30% at an unspecified future date. Alibaba is like eBay in the United States. With the new deal, it will have access to Sina Weibo’s 46 million daily active users. According to the Wall Street Journal, Alibaba could be looking to boost its share of the mobile market against Google’s Android smartphones. Alibaba has been promoting its own smartphone operating system. It could boost the use of its OS by leveraging off the large amount of mobile customer data available through this alliance with Sina Weibo.

The deal came on the heels of Alibaba‘s announcement in April that it would take an 18-percent share in Sina Corp‘s microblogging service Weibo and a 28-percent stake in digital mapping company AutoNavi Holdings Ltd.

Experts said the M&A spree highlights the intense competition among Internet giants to secure dominance of the mobile Internet market, as an increasing number of Chinese are going online through mobile devices.

Data from the China Internet Networks Information Center show that China’s online population reached 564 million as of the end of last year, with the number of mobile Internet users hitting 420 million.

Baidu Buys Up China’s Internet [TheStreetTV YouTube channel, July 16, 2013]

Baidu is spending $1.9 billion to buy mobile app store 91 Wireless, making this the biggest Chinese internet takeover.

Baidu, 91 Wireless deal epitomizes mobile Internet scramble [Xinhua, July 17 2013]

The attempt by China’s biggest search engine, Baidu, to buy a leading apps platform epitomizes Chinese Internet giants’ quickening steps in mobile Internet, even though some question if the company to be bought is worth the price offered.

NASDAQ-listed Baidu Inc. announced on Tuesday its bid to buy all equity interests in smartphone apps distributor 91 Wireless Websoft for 1.9 billion U.S. dollars. The deal, if completed, will mark China’s biggest merger and acquisition in the Internet market after Yahoo’s 1-billion-U.S. dollar deal with Alibaba in 2005.

Analysts viewed the alliance as complementary in that Baidu will promote 91 Wireless’s smartphone app distribution systems, and in return, Baidu will be better able to contend for a position as a leading access portal for mobile Internet.

“Through the acquisition, Baidu not only gains access to app distribution, it will also attract around 100,000 app developers to its own platform in the future,” according to Ge Jia, an Internet analyst who was quoted in a Tuesday report by the Beijing News.

Ge said that digital mapping, voice, and app distribution represent the three battle grounds in the mobile Internet market in the future, and the deal could turn around Baidu’s current disadvantages in a market that already boasts strong rivals including Tencent and Alibaba.

On the same day as Baidu’s announcement, China’s e-commerce giant Alibaba also confirmed that it has made a strategic investment in outbound travel site qyer.com, as it seeks to boost its travel offerings, including plane tickets and hotels, on its marketplace site Taobao.

Industrial analysts even labeled this year’s mergers and acquisitions in the Internet industry as major players’ efforts to split the mobile Internet market and obtain a lion’s share.

In May, Baidu announced its plan to buy the online video business of PPS in order to rival industry leader Youku Tudou. Just one month earlier, Alibaba revealed it would take an 18-percent share in Sina Corp’s microblogging service Weibo and a 28-percent stake in digital mapping company AutoNavi Holdings Ltd.

Ge Jia said that Baidu expects to attract large numbers of advertisers through its purchase of 91 Wireless. Data shows that 12.9 billion apps had been downloaded through 91 Wireless’s two leading smartphone app distribution platforms in China as of Dec. 2012.

However, some believe that the 1.9-bln-U.S.-dollar tender by Baidu is too high for a company with an estimated value of only 140 million U.S. dollars two years ago.

“Baidu has no better choices because its strategic arrangements for the mobile Internet came too late and it has been at a disadvantaged position. So it is seeking to change the status quo through the costly deal,” said Wang Jun, a mobile Internet analyst with Analysys International.

Data from the China Internet Networks Information Center show that China’s online population reached 564 million as of the end of last year, with more than 74 percent of them, or 420 million, using cell phones to access the Internet.

“The Internet giants will not miss any opportunity amid the boom of mobile Internet,” said IT commentator Hong Bo. In a report published Tuesday by the China Business News, Hong said that Alibaba’s advantages lie in its strong capabilities to do business, while Tencent has flagship apps including WeChat, a free app that enables all-round communications in text, voice, picture and video form.

However, the commentator added that with advantages in technology, Baidu is also seeking to become a titan in app distribution through the acquisition of 91 Wireless.

Official stresses Party building in non-public enterprises [Xinhua, May 22,  2013]

A senior Communist Party of China (CPC) official has called for efforts to strengthen Party building in the country’s non-public enterprises.

Zhao Leji, head of the Organization Department of the CPC Central Committee, made the comments on Wednesday during an inspection in Beijing.

Visiting Baidu, China’s leading online search engine operator, Zhao called for more efforts to integrate businesses’ own developments with the progress of the country and society.

Moreover, the fostering of a corporate culture should be consistent with the practicing of socialist core values, the official said.

During his inspection, Zhao also underlined efforts to improve China’s talent pool, including innovations to attract, train, use and support talented people.

China’s Internet giants in acquisition spree [Xinhua, May 14, 2013]

China’s Internet giants have gone on a new acquisition spree in recent months as they ramp up efforts to diversify businesses amid the industry’s constantly changing dynamics.

Alibaba, China’s leading e-commerce firm, announced last week that it will pay 294 million U.S. dollars for a 28-percent stake in digital mapping company AutoNavi Holdings Ltd..

The move, following Alibaba’s previous deal to take an 18-percent share in Sina Corp’s microblogging service Weibo, is the giant’s latest attempt to map out a strategy in the key mobile Internet market, in which major companies have been vying for presence.

Li Zhi, an analyst with Internet service provider Analysys, noted that rather than developing new products on their own, the Internet giants have preferred to make up for their weak areas through mergers and acquisitions (M&A) to consolidate their positions.

Earlier this month, China’s online search leader Baidu Inc. announced its plan to buy the online video business of PPS, to rival industry leader Youku Tudou, which was created last year through the merger of the country’s two major video giants, Youku and Tudou.

The purchase is Baidu’s latest step to diversify beyond its core search sector.

The string of M&A deals has highlighted the heated competition among Internet giants to secure dominance of the mobile Internet market as an increasing number of Chinese are going online through mobile devices.

Currently, Tencent, which has so far attracted 300 million users to its popular voice messaging platform Wechat, is widely regarded as having secured a dominant seat in the mobile Internet market.

But Ma Huateng, Tencent’s chairman and CEO, took a cautious view about the company’s position.

“No matter how well-placed we are now in the mobile market, a slight oversight may cause a shipwreck,” he said at an Internet conference earlier this month.

According to data from the China Internet Networks Information Center, China had 420 million mobile Internet users as of the end of 2012.

With the market potential yet to be tapped, the Internet giants’ M&A activity will likely to go on for a while, according to Li.


4. Xiaomi to take Apple place

Xiaomi takes aim at Apple after big increase in sales [ChinaDaily via Xinhuanet, July 17, 2013]

Chinese smartphone manufacturer Xiaomi Corp said on Tuesday it sold 7.03 million Xiaomi mobile phones in the first half of this year and realized unaudited revenue of 13.3 billion yuan (2.16 billion U.S. dollars) during the same period.

According to a news release sent to China Daily, Xiaomi disclosed that its half-year revenue in 2013 exceeded the company’s 12.6 billion yuan revenue from all of 2012 but it did not reveal the profitability ratio.

The company is on track to reach its annual goal of selling 15 million Xiaomi smartphones by the end of the year, according to officials from Xiaomi’s public relations department on Tuesday.

As of June, Xiaomi had more than 14 million smartphone users on the Chinese mainland, Hong Kong and Taiwan, the news release said.

Lei Jun, founder and chief executive officer of Xiaomi, attributed the good performance to the company’s more influential branding, better industry partner support and an improved logistics and warehouse system.

Founded in 2010, Xiaomi has experienced rapid growth. The company launched its first smartphones in August 2011 and quickly gained market share, beating some traditional mobile phone giants.

“In the Chinese market, with the exception of Apple and Samsung, if the shipment of one smartphone model exceeds 1 million during its life cycle, it can be described as ‘quite successful’,” said James Yan, an analyst with the research firm IDC China.

Xiaomi has managed to sell every one of its smartphone models above the 1 million level and is easily ahead of companies such as Huawei Technologies Co Ltd and ZTE Corp in terms of single smartphone shipments, Yan added, pointing out the latter firms have been selling mobile phones for about a decade.

Xiaomi is now directly challenging international giants Samsung Electronics Co Ltd and Apple Inc, which both keep single smartphone sales records in China. According to IDC, Apple had sold about 16 million iPhone 4 and 15 million iPhone 4S handsets in China as of March.

Xiaomi’s Lei sees Apple as a target to overtake in the future. During a previous interview with China Daily, Lei expressed Xiaomi’s ambition to ship more than 100 million smartphones annually worldwide for each model by 2016.

Apple, based in Cupertino in the United States, managed to break the 100 million iPhone devices mark in 2012, less than five years since the first iPhone was sold in 2007.

Lei dreams of achieving a similar, or even faster, pace of development.

“I know it is crazy, but we would like to have a try,” Lei said last year.

image

[in the Q1 2013, see below]

Overall, Xiaomi’s smartphone shipments in China, if they are not counted on the basis of single device shipments, are still small. The company even failed to become a top 10 smartphone supplier in China in the first quarter, according to the Beijing-based research firm Analysys International.

Samsung was the top smartphone company after acquiring a 17.3 percent share in the Chinese market in the first quarter, followed by Lenovo with 13.1 percent and Coolpad with 10.3 percent. The country had sales of 75.3 million smartphones, a year-on-year rise of 141.5 percent, in the first quarter ending on March 31.

Fewer Chinese consumers picking Apple’s iPhone [ChinaDaily via Xinhuanet, July 25, 2013]

image

Apple said on Tuesday that its revenue from China
fell 14 percent year-on-year to $4.6 billion in the
quarter ended June 29. Provided to China Daily

The devices are becoming so common in China these days that many people lost their once strong desire to own one. Also, iPhones are considered too expensive, and many consumers are opting for cheaper phones with similar capabilities.

And the Chinese market’s hesitation has showed in Apple’s latest quarterly financial report. Even though the California-based company delivered better-than-expected global iPhone shipments of 31.2 million units during the quarter ended June 29, its performance in Greater China, including Hong Kong and Taiwan, was sluggish in the period.

Apple said on Tuesday that its revenue from China fell 14 percent year-on-year to $4.6 billion in the quarter ended June 29. The figure, which represents a 43 percent decline from the previous quarter, marked the first time that revenue decreased in the region.

Overall, Apple’s quarterly global revenue remained flat at $35.3 billion.

Apple said its growth in the Chinese market had slowed, particularly due to economic headwinds. China’s GDP growth eased to 7.6 percent in the first half, compared with 7.8 percent a year earlier.

Apple’s chief executive officer Tim Cook said that he wasn’t discouraged by the numbers from just one 90-day period.

“I continue to believe that in the arc of time here, China is a huge opportunity for Apple,” Cook said on an earnings call on Tuesday.

However, analysts believe that fiercer competition, together with other factors, played a much bigger role in Apple’s lackluster performance in China than the macro-economic effects.

“The iPhone 5 was less popular than its predecessor, the iPhone 4S, in China during the first 100 days after they hit the market,” said James Yan, an analyst with research firm IDC. IPhone 5 handsets also saw stronger competition from brands such as Samsung Electronics Co Ltd and HTC Corp, as well as some local brands like Huawei Technologies Co Ltd and Xiaomi Corp, Yan said.

Meanwhile, Chinese telecom operators have cut their subsidies for iPhone 5 devices.

“Consumers and industry partners adopted a wait-and-see attitude toward the iPhone 5,” Yan said. On the consumer side, they started to look for other high-quality smartphones with lower prices, or they are planning to buy the upcoming iPhone 5S or the iPhone 6, which seem to be more innovative products, he added.

Kevin Wang, an analyst with IHS iSuppli, said that Apple’s pricing strategy also discouraged some first-time smartphone buyers and low-end customers. A 16 GB iPhone 5 costs at least 5,000 yuan ($809.80), more than the average monthly salary of people working in Beijing.

“The situation will only change when Apple introduces a less-expensive version of the iPhone, then we’ll see a new sales surge in the country,” Wang said.

For instance, Chinese telecom equipment maker Huawei, which in recent years expanded to the smartphone market, launched its P6 model in June, targeting high-end users but selling at a mere 2,688 yuan.

Huawei said on Wednesday that its first-half revenue was 113.8 billion yuan, up 10.8 percent year-on-year.

Meanwhile, the Beijing-based Xiaomi is selling high-quality smartphones at extremely low prices, usually below 2,000 yuan. Xiaomi said it sold more than 7 million smartphones in the first half.

But Apple still has ways to protect its status as a major player in China, said Xiang Ligang, a telecom industry insider.

Xiang said that Apple will likely quicken the pace of its collaboration talks with China Mobile Ltd, the nation’s biggest telecom operator, to boost iPhone sales.

China Mobile and Apple have been in talks for years, but the two have yet to reach an agreement. Some industry sources said that the two companies will likely start cooperating soon, since all the preliminary work is done.


5. Strong central government support

IT push aims to boost domestic demand [ChinaDaily via Xinhuanet, July 14, 2013]

China is to promote consumption of IT-related products and services as it seeks to spur domestic demand and push economic upgrading.

It will speed up work to issue licenses for the fourth generation (4G) mobile network this year and accelerate development of broadband Internet access, according to a statement released after an executive meeting of the State Council presided over by Premier Li Keqiang.

The nation is aiming for annual average growth of 20 percent in the information consumption industry from 2013 to 2015, the statement said.

The meeting demanded implementation of the “Broadband China” strategy, stepped-up efforts to construct and upgrade network infrastructure, pushing forward the FTTH (Fiber To the Home) project and improving Internet speed.

China, which has the largest number of mobile phones in the world at 1.2 billion, is already building 4G trial networks in major cities.

Liu Lihua, vice-minister of industry and information technology, said last year that China aims to have more than 250 million broadband users by 2015.

The central government is also encouraging private capital to enter the basic telecom service market, such as the voice and messaging business, by setting up joint ventures with State-owned players.

Projects to merge telecommunications, television and Internet services will also move forward on a nationwide basis this year, according to Friday’s meeting.

The meeting also called for quicker development on energy saving, with the goal of ensuring the market share for efficient energy-saving products reaches 50 percent by 2015.

Private capital set to enter telecom industry [CCTVupdates YouTube channel, June 18, 2013]

China eyes energy-saving, IT industries to spur domestic demand [Xinhua, July 12, 2013]

China is to speed up development in the energy-saving industry and promote consumption of IT-related products and services as it looks to spur domestic demand and push economic upgrading.

Stimulating growth in the two sectors is a multi-purpose approach aimed at easing resource restraints, unleashing consumption potential, stimulating effective investments and fostering emerging industries, according to a statement released after an executive meeting of the State Council presided over by Premier Li Keqiang on Friday.

Regarding IT-related consumption, including communication services and e-commerce, the State Council said China will press ahead with the construction of network and telecommunication infrastructure and strive to issue 4G licenses by the end of this year.

Efforts to boost consumption in the area also include widening Internet-based information services, piloting “smart city” schemes, boosting e-commerce, and increasing information securities.

Through these plans, China aims to achieve an annual growth of over 20 percent in IT-related consumption for the 2013-2015 period, the State Council said.

In the first five months of 2013, China consumed 1.38 trillion yuan (22.4 billion U.S. dollars) worth of IT-related products and services, up 19.8 percent year on year, data from the Ministry of Industry and Information Technology has showed.

Sub-anchor: China’s industrial structure optimized [CNETTV.cn via Xinhuanet, July 24, 2013]

The Ministry of Industry and Information Technology held a press conference this morning — it’s about China’s industrial output in the first half of this year, and what’s being done to boost the IT industry.

Let’s chat to our reporter Guan Xin — who has been following the press conference.

Q2. IT industry is one of the strategic emerging industries, what initiatives can we expect?

A: The Ministry says IT will become a new engine to boost China’s consumption, with explosive growth of IT services and products. The spokesman shared some figures this morning….revenue from mobile internet traffic grew some 57% in the first half. The e-commerce market reached a whopping 5.4 trillion yuan, growing 38.5%, and sales of smart phones and smart TVs, are up more than 25%. The Ministry is now working on new measures to further boost IT consumption…including IT infrastructure building, expanding IT products supply, and improving public services. And these new measures will come out soon.


6. Country-wide 4G roll-out by year end 2013 after extensive trials

China’s telecom firms reveal 4G strategies [ChinaDaily.com.cn via Xinhuanet, June 27, 2013]

China’s three telecom operators have laid out their strategies on the development of fourth-generation, or 4G, mobile networks, as the official issuance of 4G licenses is expected to happen soon.

China Mobile Ltd – the world’s biggest telecom operator by subscribers – has always been an aggressive promoter of the domestic Time Division-Long Term Evolution, or TD-LTE, 4G technology.

Xi Guohua, its chairman, briefed the press on the company’s latest progress on TD-LTE network deployment at Shanghai’s Mobile Asia Expo on Wednesday.

Xi said that China Mobile has built more than 22,000 4G base stations in 15 Chinese cities, but that it plans to set up 200,000 base stations in 100 cities by the year-end.

However, the other two smaller Chinese telecom operators – China Unicom (Hong Kong) Ltd and China Telecom Corp Ltd – have expressed their willingness to adopt the Frequency Division Duplex-Long Term Evolution, or FDD-LTE, technology, or at least to build a converged network under both standards.

TD-LTE and FDD-LTE are the two major 4G international standards, but the latter has gained more popularity across the globe and has stronger industry support.

Lu Yimin, general manager of China Unicom, said the company is conducting tests for 4G wireless networks with mixed technologies. It is the first time that China Unicom has admitted that it is actively preparing to launch 4G services.

However, Lu added that because the Chinese government has not yet awarded the 4G licenses, China Unicom’s final strategy is still “uncertain.” Lu also made the remarks at Shanghai’s Mobile Asia Expo.

Last weekend, Wang Xiaochu, China Telecom‘s chairman, confirmed that the company is stepping up efforts for its LTE network trials.

“It’s inevitable (for China Telecom) to adopt a converged network, since the spectrum is at the core of every carrier’s resources,” Wang said.

Even though Chinese authorities have not said exactly when they plan to issue the 4G licenses, industry experts expect the licenses to be awarded shortly.

He Shiyou, executive vice-president of ZTE, expressed an optimistic view on TD-LTE’s prospects in China.

“I think that all the three Chinese telecom carriers will get TD-LTE 4G licenses because the rich TD-LTE spectrum resources in China allow the government to do so,” he said.

Shang Bing, vice-minister of the Ministry of Industry and Information Technology, said the development of the TD-LTE technology has entered a fast-track phase.

“The Chinese government will firmly support TD-LTE industry development, and help create a favorable policy and market environment,” he said on Wednesday.

The moves by the three Chinese carriers will help to further back the development of 4G technology globally, said Anne Bouverot, director-general of the GSM Association, an industry alliance of mobile operators and related companies.

“In general, what matters is not to have the absolutely best technology, but that everybody agrees to deploy it. That’s where you get the economy of scale, and get the equipment for networks and handsets to improve each time there is a new release,” she said.

Analysts have said that LTE 4G technology will usher in a society much more connected and convenient for people.

Jin Lee, senior managing director at Accenture’s mobility department in South Korea, said that LTE will provide speeds about 50 percent higher than current Wi-Fi networks.

“Once consumers get to taste that speed, they will never go back,” Lee said.

Related:
5,000 city users to put 4G services to the test
BEIJING, May 18 (Xinhuanet) — Long-awaited 4G services, which provide mobile users with Internet access 20 to 50 times faster than 3G network, make their debut in Shanghai next month when China Mobile begins large-scale trials, the carrier said yesterday.
The trial in the world’s biggest mobile phone market indicates that the country is ready to adopt the most advanced mobile technology for more than a billion handset users, and create a billion-dollar market for telecommunications equipment and handsets. Full story
4G market set to ignite hot competition
BEIJING, March 25 (Xinhuanet) — Foreign telecom companies are keen to join China’s fourth generation (4G) mobile network deployment with the country looking likely to issue the relevant licenses as early as this year.
Minister of Industry and Information Technology Miao Wei said the country is expected to award 4G licenses to domestic telecom operators by the end of 2013. Full story
China expected to issue 4G licenses this year: minister
BEIJING, March 6 (Xinhua) — China is expected to start licensing telecom operators to offer services on its fourth-generation (4G) mobile phone network within 2013, a senior official has said.
“China has made breakthroughs in R&D of 4G technologies, but is still facing restrictions in commercial use,” Miao Wei, minister of industry of information technology, said on the sidelines of the ongoing annual session of the country’s national legislature. Full story

China likely to issue 4G licenses by year end [CRIENGLISH.com via ChinaDaily, July 26, 2013]

Internet users in China are eagerly looking forward to ultra-fast 4G mobile Internet services.The anticipation has heated up following the government’s announcement that licenses tooperate such wireless system will be issued before the year’s end.

At a 4G service center of China Mobile in Henan’s Zhengzhou city, customers are trying out the new service with high expectations for faster speeds and easier access.

“I look forward very much to the availability of 4G service, which will be faster than the current3G network. But I’m not sure if it will be able to synchronize with televisions and other homeappliances.”

“I hope it will be launched soon. I really want to experience it as soon as possible.”

The fourth-generation wireless service is designed to deliver a speed four to ten times faster than today’s 3G system, the most widespread, high-speed wireless service at the moment.

China Mobile, China’s largest cell phone provider, is now promoting a homegrown 4G standard and hopes to start commercial rollout soon.

The core technologies are ready and the company has been ramping up installations of its base stations, which will be shared by both 3G and 4G networks.

Li Xiaobang is an engineer with China Mobile.

“We need to examine all the base stations currently used for 3G services, including the machine room and the roof, and carry out Long Term Evolution upgrade, either to F frequency band or to D frequency band, based on overall conditions of the base stations.”

According to Li, the company is hoping to finish the work as soon as possible so people can use the new service once the 4G license is issued.

The government says it will press ahead with building infrastructures and hopes to issue 4G licenses by the end of this year.

There are 1.2-billion mobile phones in China, more than any other country in the world.

New battle for 4G equipment market share [ChinaDaily, June 25, 2013]

China Mobile Ltd has officially launched its largest tender ever for the construction of its fourthgeneration (4G) network in China, igniting a new battle among telecom gear makers for marketshare.

On June 21, China Mobile, the world’s largest telecom operator by subscribers, posted an online tender saying it plans to purchase equipment for 207,000 4G base stations.

That purchase means the number of China Mobile’s 4G base stations is likely to catch up with that of its 3G base stations soon.

China Mobile is using the domestic Time Division-Long Term Evolution technology for its next-generation mobile network.

Unlike its 3G tenders, China Mobile said it will not accept agent bidders or those who make allcritical equipment on an original equipment manufacturing basis.

The Chinese telecom operator’s capital spending will jump 49 percent year-on-year to 190.2billion yuan ($30.5 billion) in 2013. More than half of the company’s network expenditure, or 42billion yuan, will go on 4G projects this year.

Foreign and domestic telecoms equipment vendors have shown strong interest in ChinaMobile’s 4G network deployment.

Yuan Xin, president of Alcatel-Lucent China, said he is very optimistic about achieving a satisfactory result in the third quarter, when China Mobile announces the final bidding results.

“TD-LTE business will be the core foundation for Alcatel Lucent’s future development,” Yuan said at a Shanghai news conference on Monday. China’s 4G industry is about to take off, since the market environment for LTE development has matured, he said. “Based on our solid technology and 4G experience in and out of China, we are confident of performing well,” headded.

Alcatel-Lucent had the largest share, or 14.5 percent, among foreign telecom gear makers during China Mobile’s first round of 4G tenders last year, according to research firm IHS iSuppli.

The company is the major telecom equipment supplier for Verizon Communications Inc’s 4G network, which covers about 200 million subscribers in the United States.

“We even dream of introducing TD-LTE technology to the US market, which follows the trendthat carriers worldwide want to make the best use of spectrum resources,” he said.

Because foreign telecom equipment vendors achieved less than a 30 percent market share in total during the first round bidding of China Mobile’s TD-LTE tender, they seemed more anxious to improve their positions by grabbing bigger shares this time.

“We are not satisfied with the results Ericsson achieved in China Mobile’s first-round 4G bidding last year,” said Mats H. Olsson, senior vice-president of Ericsson Asia-Pacific, duringthe 2013 Mobile World Congress held in Spain in February.

“In the past Ericsson paid a lot of attention to countries including the United States, Japan and South Korea and mainly focused on the deployment of FDD-LTE networks. Now we have turned our sights on China and TD-LTE technology,” Olsson said.

However, analysts argued that domestic rivals still hold advantages over foreign players. ChenPeng, analyst with China Merchants Securities Co Ltd, said he expected Huawei Technologies Co Ltd and ZTE Corp to gain more than half of the share in China Mobile’s 4G bidding.

image

Guangxi to build wireless cities with 4G network [ChinaDaily Liuzhou Guangxi, June 25, 2013]

The Guangxi branch of China Mobile, which is the world’s biggest telecom carrier, said it will start construction of a fourth-generation network in 14 cities in the autonomous region in the second half of this year in a bid to build high-speed “wireless cities”.

Nanning, Liuzhou and Guilin are among the 14 cities, which will soon be covered in the 4G network in Guangxi. The 4G technology transmits data to wireless devices and has a theoretical speed as high as 100 Mbps.

It takes a 2G network 16 hours to download a 1 gigabyte movie, while it takes a 3G network two hours to download the same movie. The 4G network can complete the download within two minutes.

In addition, with the growing popularity of mobile phones, tablets and other wireless devices, 4G networks can effectively link people with each other and eventually build a convenient “wireless city”.

A woman surnamed Lin, who works in the media sector, said she is looking forward to the 4G networks in Guangxi. “We often need to carry a laptop on business trips in order to send stories back to our headquarters. With the 4G network, I will be able to do it with my mobile phone in the near future,” she said.

Though the 4G network is very high-end, the cost of using the network is even lower than 3G technology because 4G is a Chinese home grown technology.

China Mobile has spread its 4G network in 13 cities in China, including Guangzhou, Shenzhen and Hangzhou, and it plans to include 100 cities into its 4G network by the end of 2013. With the completion of the project, China Mobile is expected to build the largest 4G network in the world, covering 500 million people.

4G network covers Pingtan [ChinaDaily Pingtan Fujian, May 21, 2013]

The city of Fuzhou, capital of Fujian province, launched a fourth generation, or 4G, wireless Internet service on May 17, which was also World Telecommunication Day.

The 4G network mainly covers the downtown area within Second Ring Road, the university zone, and the Pingtan Comprehensive Pilot Zone, said the Strait News on Saturday.

Fuzhou became a pilot city for 4G trial network in September 2012. After eight months of construction, it has built 1,138 base stations and carried out several rounds of signal upgrading.

With the launch of the 4G network, residents in both Fuzhou and Pingtan will enjoy free high-speed Wi-Fi to play videos, surf the Internet, and start online video chats on their mobile phones.

Telecom giants tap Internet potential [ChinaDaily via Xinhuanet, May 18, 2013]

Chinese telecom operators have stepped up their efforts to boost their business through exploring online channels, since more people in the country prefer shopping on the Internet.

On World Telecommunication and Information Society Day, which fell on Friday, Chinese mobile carriers launched different e-commerce campaigns to attract clients’ attentions.

China Mobile Ltd, the nation’s biggest mobile carrier with 726 million subscribers, said that Friday was its first “Online Shopping Day” and offered favorable prices for people topping up accounts, purchasing mobile phones, or registering a telecom service plan.

The operator, which suffered weak profit growth in the first quarter, said it has also developed an optional package, consisting of diversified telecom services, for customers to build up tailored telecom contracts.

Xing Hongtao, an official from China Mobile’s market operation department, said that the new service was a bit like “going to a cafeteria, looking at the menu and choosing your favorite dishes”.

Previously, the operators designed the service plans, but now it is up to customers to devise the contracts,” he said.

China Mobile is the first telecom operator in the nation to deliver this kind of service. The company started a pilot of the optional package in 13 provinces in the second half of last year, which more than 8 million customers have signed up to so far.

On Friday, China Mobile officially rolled out the service across the nation.

China Mobile’s sales from e-commerce channels have grown rapidly in recent years, according to the company.

By April, China Mobile had sold around 250,000 mobile phones per month on its website, an increase of 30 percent on the figure in January.

Ma Jingxin, deputy general manager of China Mobile Terminal Co, said in an earlier interview with China Daily that the company aims to sell up to 30 percent of its customized mobile phones through e-commerce channels by 2015.

China Unicom (Hong Kong) Ltd, the nation’s second-biggest telecom carrier, started building its e-commerce channels in 2007.

The average daily sales on China Unicom’s online platform now surpass 150 million yuan ($24.4 million) and its daily user base is more than 10 million, according to Zong Xinhua, general manger of China Unicom’s e-commerce department.

From May 17 to May 23, China Unicom plans to offer 10,000 smartphones at discounts to new telecom service subscribers.

The growing number of Internet users in China, combined with the public’s growing acceptance of e-commerce, is driving online sales of mobile phones.

“The most important reason for choosing a device online is because mobile phones are cheaper on the Web,” said Deng Kuibin, deputy general manager of SINO Market Research Co.


7. From operator branded to white-box superphones supporting all that

China Mobile launches own-brand smartphones [ChinaDaily via Xinhuanet, Aug 3, 2013]

China Mobile Ltd officially entered the booming mobile terminal market on Friday as it unveiled its own-brand smartphone models.

The China Mobile M701, a 5-inch screen Android-based smartphone equipped with MediaTek Inc’s 1.2-gigahertz quad-core processor, is priced at 1,299 yuan ($212). The China Mobile M601 is a 4-inch screen, dual-core Android smartphone that targets lower-end users with a price of 499 yuan.

The two smartphones are produced by original equipment manufacturers, Hisense Group and Shenzhen-based BYD Co Ltd, respectively. They will hit the Chinese market through China Mobile’s online and offline outlets this month.

Li Yue, chief executive officer of China Mobile, the world’s biggest telecom operator by subscribers, said the company has about 740 million customers.

Li said those customers usually change their mobile phones every 23 months, so at least 300 million new mobile devices are needed every year.

China’s mobile terminal industry has a very bright future,” Li said, during a Beijing news briefing on Friday.

Analysts pointed out some additional implications for China Mobile’s smartphone launch.

James Yan, an analyst with research firm IDC China, said China Mobile’s move aims to create a platform that seamlessly integrates its current mobile services, such as the instant messaging tool Fetion, and other mobile applications.

“Chinese mobile carriers hope to decrease the risks of being a ‘dumb pipe’ and to relieve the pressure from Internet companies’ challenges,” Yan said.

Lingxi, the Chinese version of Apple Inc’s Siri service, will be installed on the new China Mobile smartphones. A year ago, China Mobile struck a $214 million deal to acquire a 15 percent stake in Anhui USTC iFlytek Co Ltd, a Chinese company that develops software and apps related to voice input services.

“Lingxi is a highlight of China Mobile smartphones,” said Li Lin, a marketing manager with iFlytek. Compared with Siri, Lingxi is more localized and has partnered with third-party service providers such as Dianping.com and douban.com to offer helpful daily living information for customers, Li said.

“You can ask Lingxi to make a phone call, send a text message or find a nearby restaurant,” Li explained.

The other benefit for China Mobile in its launch of own-brand smartphones is that it helps the carrier to expand and strengthen coverage in county-level markets.

In tier five, tier six cities, which most mobile phone companies fail to reach, China Mobile can successfully sell smartphones through its powerful distribution channels,” Yan from IDC said. Those areas are usually remote from bustling cities and have less intense market competition, he said.

Kevin Wang, an analyst with the research firm IHS iSuppli, said China Mobile’s move will help reinforce its branding, but he said that he doubted the smartphone business will be a major revenue driver for the company.

Foreign telecom operators such as AT&T and Vodafone have offered own-brand products for many years, but the own-brand smartphone proportion they sell is still small,” Wang said.

China white-box vendor introduces ultra-thin smartphone [DIGITIMES, July 3, 2013]

China-based white-box smartphone vendor UMeox Mobile has joined the world’s ultra-thin smartphone market by introducing its UMeox X5, which has a thickness of only 5.6mm.

The Umeox X5 is equipped with a 5.3-inch touchscreen and is powered by a dual-core processor set on Android 4.2.2 Jelly Bean. It has an 8-megapixel rear camera and a 3-megapixel front camera.

The UMeox X5 comes less than a month after fellow company Huawei unveiled on June 18 its ultra-thin model, the Ascend P6, which the vendor claimed to be the world’s slimmest smartphone at 6.18mm during a launch event. The Ascend P6 has a 4.7-inch 1280 by 720 in-cell display and is powered by a HiSilicon 1.5GHz quad-core K3V2E processor.

In China, the ultra-thin segment was previously dominated by branded players including Huawei, ZTE and Oppo; the entry of white-box vendors will eventually heat up the competition in the sector, said industry watchers.


April 13, 2013 Report:

Digitimes Research: Smartphone sales to reach 329 million in China in 2013 [DIGITIMES Research, March 18, 2013]

There will be 329 million smartphones sold in the China market in 2013, hiking 67.0% from 2012 due to large growth in the total number of 3G subscribers, while sales of feature phones will drop 39.9% to 146 million units, according to Digitimes Research.

The 2013 sales of smartphones will consist of 110 million TD-SCDMA models [88M till end of 2012 in total !!!], increasing 155.8% from 2012, 77 million WCDMA models [76.5M till end of 2012 in total !!!], up 45.3%, 67 million CDMA models [80M till end of 2012 in total !!!], up 59.5% and 75 million EDGE models, up 27.1%.

The average production cost of entry-level smartphones will decrease from US$35 in the fourth quarter of 2012, to US$31 in the first quarter of 2013, according to Digitimes Research.

Here is the monthly change trend for the current situation according to operators’ company data:

image

So 2013 indeed will be quite a different year, especially for the biggest by far operator China Mobile (having the world’s largest customer base which is 64% of the market in terms of the overall number of 1.11 billion Chinese subscribers there), with new 3G subscribers to be added greatly exceeding even the total number of 3G subscribers accumulated so far over the last 4 years (since February 2009, precisely):

China Mobile aims to sell 100-120 million TD-SCDMA handsets in 2013 [DIGITIMES, March 15, 2013]
China Mobile, the only TD-SCDMA mobile telecom carrier in China, aims to sell 100-120 million TD-SCDMA handsets in 2013, 80% of which will be smartphones, according to company president Li Yue.
China Mobile saw the total number of TD-SCDMA subscribers increase by 36.72 million in 2012 to 87.93 million at the end of the year, China-based sina.tech.com indicated. There were 242 models of TD-SCDMA handsets, including 138 smartphones, launched in the China market in 2012 and the total sales volume stood at 56 million units, of which more than 60% were smartphones, sina.tech.com pointed out.
China Mobile spent CNY23.8 billion (US$3.77 billion) to subsidize purchases of TD-SCDMA handsets bundled with contracts in 2012, and has set aside a budget of CNY27.0 billion for 2013, the company indicated.
image
source: 2012 Annual Results presentation [China Mobile, March 14, 2013]

So a dramatic change will be not only for 3G but for 4G/LTE as well:
China Mobile 2013 capex increases 49% on year [DIGITIMES, March 14, 2013]

China Mobile, one of the biggest telecom carriers in China, reported 2012 total revenues of CNY560.4 billion (US$90 billion, up 6.1% on year. Net profits were CNY129.3 billion, representing an on-year increase of 2.7%, said the firm. China Mobile reported that 2013 capex will reach CNY190.2 billion, an on-year growth of 49.29% compared to CNY127.4 billion in 2012.
In particular, the capex for 4G networks will be CNY41.7 billion in 2013. The capex is for investments regarding 200,000 TD-LTE base stations. However, currently, TD-LTE service coverage is only 35-40%, and according to company CEO Li Yue, if the firm pushes TD-LTE service coverage to 90%, another CNY40 billion needs to be invested. China Mobile currently has no schedule for this type of investment.
China Mobile currently has 710 million users with 87.93 million being 3G users, a relatively low 3G service penetration rate. According to China Mobile chairman Xi Guo-hua, the firm’s sales of handsets in 2013 will reach around 100-120 million units and 80% will be smartphones.
In addition, China Mobile has been seeing strong growth in the usage of mobile networking among users. According to the firm, 2012 usage increased 187.6% on year and revenues from mobile networking services increased 53.6% on year, accounting for 12.2% of total revenues.

China Mobile to build world’s largest 4G network [CCTV News via GoUTube123 YouTube channel, Feb 27, 2013]

China Mobile announced on Tuesday that it plans to deploy the world’s biggest 4G LTE network in China this year, covering more than a billion people. During a keynote speech at the Global TD-LTE Initiative summit in Barcelona, the vice-chairman of China Mobile said homegrown TD-LTE technology is gaining popularity across the world as the industry matures, and the company will build the world’s biggest 4G network this year.
image
source: 2012 Annual Results presentation [China Mobile, March 14, 2013] 
Note that GTI stands for the Global TD-LTE Initiative

China Mobile launched 100 cities 1 million terminals-covered 4G plan to create world’s largest 4G network [GTI News, March 8, 2013]

On February 26th, Mr. Xi Guohua, Chairman of China Mobile announced China Mobile’s new 4G plan at the Mobile World Congress 2013 (MWC) in Barcelona that China Mobile will build the world’s largest 4G network covering over 100 cities in China and purchase more than 1 million 4G terminals by this year.
Since GTI announced the GTI Plan & Actions that was initiated to construct over 500,000 TD-LTE base stations in 2014 covering over 2 billion population, global commercialization of TD-LTE has seen a great leap forward. At present, TD-LTE has set up a complete end-to-end industry chain involving widespread participation of global industries and highly mature products. Significant progress has also made in terms of chips. In addition, the scale of TD-LTE commercial networks and user base has been enlarged to a large extent. The capability of LTE global roaming has also been proven.
Mr. Xi Guohua expressed in his opening address, “TD-LTE technology and industry have been mature enough for large-scale development. China Mobile will scale up the construction of trial network to create the largest LTE network in the world. Besides, China Mobile will purchase more than one million units of TD-LTE terminals, with a hope to promote TD-LTE multi-mode multi-band terminal to reach 3G standard as soon as possible and lay a good foundation for its complete commercialization.
It was reported that China Mobile, as a leader and main driving force for the global deployment of TD-LTE, has built pilot TD-LTE networks in 15 cities across China, among which the networks in Hangzhou, Shenzhen and Guangzhou have achieved full coverage in main districts. China Mobile also launched diversified TD-LTE trial commercial services, receiving high praise from consumers. According to this latest released program, China Mobile’s TD-LTE network will cover all the prefecture-level cities and above with over 200,000 base stations covering more than 500 million population, which will be the largest 4G network in the world.
Dynamic development in the field of TD-LTE terminals has also been seen. At the summit, China Mobile and its industry partners, including Huaiwei, ZTE, Samsung, HTC and LG, jointly launched 5 models of TD-LTE multi-mode multi-band smart phones. Remarkably, China Mobile also released 3 eye-catching independently branded MiFi [wireless router that acts as a mobile WiFi hotspot, the abbreviation stands for “My Wi-Fi”] products. With the joint efforts by global chip vendors, the technologies for TD-LTE multi-mode multi-band smart phones are getting mature increasingly. It is estimated that booming development of TD-LTE terminals will be realized in a diversified, large-scale manner in the coming two years. Beside high-end mobile phones, middle and low end mobile phones will enter into the market. This will provide consumers with enriched choices while allowing seamless global roaming.
In pace with further promotion in the fields of commercial network deployment, multi-mode multi-band terminals, global roaming test and commercialization as well as the application of automotive consumer electronics, 2013 will be a key year for the global deployment and large-scale development of TD-LTE.

China Mobile to procure TD-LTE devices from Huawei, ZTE, Samsung [DIGITIMES, March 19, 2013]

China Mobile, the only TD-SCDMA mobile telecom carrier in China, will procure TD-LTE terminal devices from Huawei Technologies, ZTE, and Samsung Electronics, and will offer two own-brand Mi-Fi models, according to industry sources in Taiwan.

China Mobile will procure Huawei Mi-Fi model E5375, ZTE Mi-Fi model MF91S and offer own-brand CM510 and CM512. It will procure Huawei’s Ascend D2-TL smartphone, Samsung’s Galaxy I9308D smartphone and ZTE’s network interface card MF820T. These devices support TD-LTE, FDD-LTE, TD-SCDMA, WCDMA and GSM standards and 10 frequency bands.

CM512 will be produced by Tech-Full (Changshu) Computer, a China-based subsidiary of Quanta Computer.

China Mobile has launched a 4G network trial in Guangzhou and Shenzhen, with signal coverage over 30% of the population. This marks a further step in the network being fully operational. “4G, Life-Changing Experience.” The importance of the new data network to China Mobile has two meanings. First, it is the only 4G network in China, giving China Mobile an obvious lead over the other two telecom giants. Second, the 4G network, TD LTE, designed and developed by China, strengthens the country’s place in the field of information technology. Sun Lian, planning & development manager of China Mobile Guangdong, said:”The 4G network developed by China can have an impact beyond the whole telecom industry. It brings opportunities for electronics and mircro-chip companies, online service and content providers. It could change our entire experience of the information service.” But it is never easy to tap into new markets. China launched its own 3G network, the TD SCDMA in 2009, but even standing on the shoulder of this telecom giant, its development was anything but smooth sailing. It is incompatible with other 3G networks in the world, and users cannot choose carriers outside China Mobile. This time, the telecom giant has vowed not to make the same mistake. Yang Wenbin, engineer of China Mobile R&D Center, said:”There are currently two kinds of 4G network, the TD LTE network in China, and the FDD LTE network already adopted by some countries. Many of the communication protocols they use is the same, therefore it is easier to achieve compatibility on software level, without making tweaks on the hardware.” The 4th Generation network is marked by its high speed. On the launch of the trial, the top download speed could reach around 80 megabytes per second. The speed of the 4G network is amazing, it can download several gigabytes of contents in just a few minutes. But unless you have an unlimited download plan, this could also mean a very heavy telephone bill. For those not using the monthly package, the current price for 3G usage is 1 yuan per megabyte. This means downloading a movie will cost over 500 yuan on average, or about $80 US dollars. So knowing what kind of package comes with the 4G network is key for customers. A customer in Guangzhou said:”Of course I look forward to a faster network, but I hope it won’t be too expensive.” A customer in Guangzhou said:”On my current data plan, the cost of the 3G network is acceptable. I hope the 4G network won’t be more expensive than the 3G network.” A retail store manager of China Mobile Guangdong said:”We are now offering more data plans and discount packages to meet the growing demand. And along with the 4G network, we will also have many discounts to encourage users to switch to faster services.”

China Mobile: 4G licensing expected by year-end [China Daily, March 13, 2013]

The chairman of China Mobile, the world’s largest carrier by subscriber base, says the rollout of4G technology in the country is just around corner. Speaking on the sidelines of the on-going two sessions, Xi Guohua, a CPPCC member, also said that the carrier is extending a trial of 4G networks
<embedded video worth to watch>
According to China Mobile, the fourth generation technology offers 10 times bigger bandwidthand 10 times transmission speed than its 3G predecessor. The operator plans to build more than 200,000 4G base stations. The network, when completed, will be the largest of its kind worldwide, and will cover a population of more than 500 million.
Xi Guohua, chairman of China Mobile, said, “We will further expand the current trial on a large scale network. We plan to build 4G base stations in 100 cities, and purchase 1 million terminals.”
Xi also expects the government to issue its fourth generation license before the end of thisyear.
Xi said, “The timing of licensing should be in line with technological development. I think it is appropriate to do that by the end of this year.”
China Mobile started its large-scale 4G trial last year. Industry insiders say if commercialized, the new technology will give a major boost to every part of China’s telecommunications industry.

China to lead mobile payment technology [NFC] [CCTV News via GoUTube123 YouTube channel, Feb 27, 2013]

Smartphones may soon replace cash and credit cards. Constantino de Miguel reports from the Mobile World Congress, China is poised to be the leader in this technology. Just like motorists who pay tolls electronically, consumers the world over may soon be paying on-the-go at any shop, using smartphones or tablets. Mobile devices will be our wallets thanks to a technology called “near field communications”, or NFC. China is expected to lead mobile payments since it already has the largest network of credit cards.

Commercializing 4G in China needs 1 yr: minister [China Daily, March 15, 2013]

With the third-generation communication network flourishing in China, consumers are eager to know when they will be able to start using the next generation’s network, 4G. On the sidelines of the NPC sessions, the Chinese Minister of Industry and Information Technology, Miao Wei,said that the large-scale commercialization of 4G is currently in a testing phase, but that the network coverage still has a long way to go.
<embedded video worth to watch>
Miao Wei, Minister of China Ministry of Industry & IT, said, “Some factors are blocking the 4G development. First is the network. At the moment, even the 3G network is not fully received in many places across China, as it always drops to 2G due to poor network coverage. We have to speed up the installation of coverage technology so as to realize the smooth switching between 3G and 4G. Licenses will still be given to China Mobile, China Unicom and China Telecom. 4G will first be commercialized in six pilot cities as the network coverage will be available there. But it needs at least one year to commercialize it across the country.”

FRANCE 24 Report : Chinese smartphone brands take bite out of APPLE [france24english YouTube channel, Feb 18, 2013]

Global technology heavyweights are eager to make inroads into China, the world’s biggest smartphone market. Yet local brands like Xiaomi, Lenovo, Coolpad, Huawei are putting up stiff resistance, selling phones for around half the price of their larger competitors. They’ve even beaten the iPhone into fourth place in rankings of Chinese smartphone sales… and now they’re setting their sights on foreign customers too.

Rise of Chinese smartphones [CNNInternational YouTube channel, Feb 26, 2013]

Fortune magazine writer Michal Lev-Ram examines the rise of Chinese smartphones.

Mike Walsh on Global Innovation [cmispeakers YouTube channel, Feb 5, 2013]

86% of the worldwide web comes from global markets…only 14% from the US…learn about China’s ‘Shanzhai’ innovation on cloned phone technology.

China Smartphone Sector [Asia Pacific/China Equity Research, Credit Suisse, Jan 7, 2013]

A specific growth opportunity within China
The Chinese market is a critical market for the local branded Chinese smartphone brands, whitebox and chipset suppliers into that channel. Overall market growth is poised to continue, driven by a significant step-up in subsidies of sub-Rmb1,000 smartphones from Chinese brands and much better low-cost handset availability and quality.
The market is also a key market not dominated by the traditional Tier 1 brands, with feature phones traditionally 60% served by whitebox and local brands. The initial ramp of smartphones was dominated by the traditional global Tier 1s at 70% share in 2011. In 2012, however, this market made a marked turn and is now only 36% supplied by Tier 1s, 35% by the Top 4 Chinese brands (Huawei, ZTE, Lenovo and Coolpad), and 29% by the whitebox and Tier 2 Chinese brands. The key shift was substantial lowering of entry barriers due to higher quality chipset reference designs, better availability of components (panels, touch, image sensors, low cost mobile DRAM) and a stable Android platform.
The availability of these smartphones has already prompted a substantial rise in smartphone penetration of device purchases, from 17% of units in 2011 (78 mn smartphones out of 458 mn handset sales) to 38% of units in 2012 (197 mn of 512 mn handset sales). By 2015, we model in our global forecast 421 mn of 570 mn handset sales (74% of device units). The export channel has taken off a bit slower, with penetration in emerging markets increasing YoY from 16% to 23% in 2012 and projected to reach 54% in 2015 (619 mn of 1.13 bn devices), a potential area of further upside.
Based on rising affordability and quality continuing to improve, we expect the Chinese smartphone market to grow from 197mn units in 2012 to 421mn in 2015, with 30% from tier one’s, 33% from the top Chinese brands and 37% from other brands.
We note that the whitebox and other brands can expand as Tier 2 brands (Hisense, BBK, Oppo, Gionee, Tianyu/K-Touch, TCL, Xiaomi) become household names in China and emerging markets and the quality of clone Galaxy and iPhones improve with better touch, quad core and sweeter flavours of Android versions.

Chinese Smartphones [FinancialTimesVideos YouTube channel, April 5, 2012]

http://www.FT.com/ The popularity of smartphones is causing a fundamental shift in the handset market in China. The FT’s Kathrin Hille visits Shenzhen in southern China to discover where the mobile phone industry is heading.

Chinese smartphones going big [CCTV News via the GoUTube123 YouTube channel, July 11, 2012]

Last year 488 million smart phones were sold worldwide. That’s nearly two thirds more than 2010. The smart phone industry has quickly become so hot that many investors feel that they must get in on the action, and in China they’re doing it fast.

Handset Industry 2013 Outlook [Asia Pacific/China Equity Research, Credit Suisse, Jan 7, 2013]

Increased push towards lower end smartphones. One of the common themes emerging out of all three carriers in China is the increased push toward bringing down smartphone price points. During 2011, the focus had been on launching smartphones priced at around Rmb1,000 with a number of product introductions in that price range. For 2012, the target seems to be to further price point reductions.
  • China Mobile noted that out of 166 smartphone models it offered during mid-2012, 126 of them are being sold at a price point of around Rmb1,000 (or US$150), with the company already working towards launching smartphones priced at Rmb500.

  • China Unicom highlighted that after having successfully launched a series of Rmb1,000 smartphones in 2011, it has been working on to introduce smartphones priced at Rmb700 (US$ 100) or below during 2012.
  • China Telecom had an offering of around 240 models for smartphones in mid-2012, compared to only 100/200 models at the end of 2010/2011. Further, the carrier sold 16mn smartphone devices in 1H12 compared to 17mn in 2011 (up 2x yoy).

And the Chinese industry and supply chain positions are even better in the tablet ecosystem space as well described in my spinoff blog:

SED Electronics Market (Tablets Market) in Shenzhen walk-through [Charbax YouTube channel, March 17, 2013]

Here’s my latest steadicam/GH3 walk through the SED Electronics Market in Shenzhen, that building is my favorite in the Shenzhen Huaqiangbei Electronics market area. This is where you can find all the tablets, HDMI sticks and tablet accessories.

Allwinner A31 9.7″ Retina factory tour at Celeb Tech [Charbax YouTube channel, March 17, 2013]

Here is a tour of the Celeb Tech factory in Shenzhen China. This is their touchpanel [TP] assembly line, they also have a more general tablet assembly factory in another part of Shenzhen (Dongguan) which I may go to and film at the next time I visit Shenzhen. They are in full swing producing the pretty awesome 9.7″ Retina Allwinner A31 Quad-core ARM Cortex-A7 tablet that sells at some pretty amazing prices on the Chinese market.

 


More information

This getting even more interesting as the quite dramatic by itself introductory information is only one of the reasons (more will follow below) why we can say that China is the epicenter of the mobile Internet world, so of the next-gen HTML5 web … even if such a power of influence is too new for the country to be able to exercise that to a greater degree (yet): China Knocks Off U.S. to Become World’s Top Smart Device Market [Peter Farago on the Flurry blog, Feb 18, 2013]

SmartDevice InstalledBase China vs US Feb2013 resized 600

Nevertheless the collection given below in the ‘Background’ section is showing that potential. Just look at the major headlines in that section:

China becomes world’s top smartphone producer China’s e-commerce revenue hits over 1 trillion yuan in 2012: minister China’s top microblog site boasts 500 mln users
China expected to issue 4G licenses this year: minister Preparing for a 4G network across China ZTE leads in 4G wireless networks
EU telecom demands raise tensions with China China has till June for solar, telecoms trade deal: EU China’s mobile phone users reach 1.11 bln
China market: Samsung takes up 22.5% of 2012 smartphone sales, says iiMedia Research Smart phones cover 70 pct of mobile market: report Android powers a third of all mobile phones shipped in 4Q12, says Canalys
Google controls too much of China’s smartphone sector: ministry Too late for China to develop own mobile operating systems, say Taiwan makers China handset makers hope to reduce reliance on Android
China to modify plan to open up mobile telecom sector 4M[bps] broadband to cover 70 percent of Chinese users in 2013 Broadband network expansion in the pipeline
China Unicom’s 3G
[W-CDMA] subscribers hit 76.46 mln
   

For the mobile Internet world, and consequently for the next-gen HTML5 web there is still a huge untapped potential in China, especially for the far the biggest network operator, China Mobile:

image

China Mobile’s untapped potential in the 3G space is even greater than that of other two operators as from Q4’11 to Q2’12 it was operating at much lower quarterly growth rate of 3G penetration than its bigest domestic rival, China Unicom (see the chart in the middle). In fact during the last 2 years both China Unicom (W-CDMA) and China Telecom (CDMA) had a consistently faster growth of 3G subscribers than China Mobile (TD-SCDMA) as well illustrated by the first chart on the top. In fact the resulting 3G penetration rates by the end of the period (Q4’12) speak for themselves:
– China Mobile (TD-SCDMA): 12.4% (vs. 3.5% in Q4’10)
– China Unicom (W-CDMA): 32% (vs. 8.4% in Q4’10)
– China Telecom (CDMA): 43% (vs. 13.6% in Q4’10)

The major reason for China Mobile’s significant underperformance between 2010 and 2012 is related to all the difficulties related to the stubborn attempt to deliver a completely homegrown solution in the 3G space, 100% of China’s own, end-to-end: TD-SCDMA, SoCs, operating system, services etc.

  1. TD-SCDMA defined and developed totally independent of the Qualcomm driven CDMA  and the Europe driven W-CDMA (including HSPA) which both had broad involvement of all kind of interested parties, especially the final 3G+ winner W-CDMA (including HSPA). This is well expressed by the following technology adoption chart (which includes forecast for the recently launched 4G LTE as well):

    From: Report: LTE Connections To Hit 90 Million By Year’s End, 1 Billion By 2017 [TechCrunch, May 17, 2012], i.e. LTE was in its 3d year in 2012
  2. China Mobile, as a SOE (State Owned Company, see SOEs and state coexistence in China [‘Experiencing the Cloud’, June 19, 2011]) with only 25.82% of shares not in the state hands as of 31 December 2011, got full support of the state via different financial means and other TD-SCDMA related companies of the state as well. See China Mobile repositioning for TD-LTE with full content and application aggregation services, 3G [HSPA level] is to create momentum for that [‘Experiencing the Cloud’, June 18, 2011]. China Mobile awards 12 companies TD-SCDMA research grants [May 17, 2009] and  China Mobile Reveals TD-SCDMA Handset Subsidy Bidding Results [May 17, 2009] there are particulary revealing such efforts in the very beginning.

    There was no lack of resources for everything, despite of doing it all alone, nevertheless it took no less than 3 years from the TD-SCDMA launch to have a workable plan which resulted just in the end of the fourth year in the significantly improved results of greater quarterly TD-SCDMA penetration growth of 14.4% in Q4’12 Q vs. 13.2% in Q1’12, 10% in Q2’12 and 10.2% in Q3’12. The plan was TD-SCDMA: US$3B into the network (by the end of 2012) and 6 million phones procured (just in October) [‘Experiencing the Cloud’, Oct 18, 2011] and the Q4’12 result is quite visible in the penetration growth rate jump (copied here as well for convenience):

    image

  3. It was clearly identified from the very beginning that SoCs would be needed from several sources. China Mobile was getting that quite early from local  chip design houses Spreadtrum and Leadcore as well as from ST-Ericsson, MediaTek and Marvell coming from outside (see Marvell beaten by Chinese chipmakers in sub 1,000 yuan handset procurement tender of China Mobile [‘Experiencing the Cloud’, Nov 15, 2010] and Marvell’s single chip TD-SCDMA solutions beaten (again) by two-chip solutions of Chinese vendors [‘Experiencing the Cloud’, July 11, 2011]). Despite of Marvell’s very strong and early 2008 commitment to capitalise on the TD-SCDMA opportunity only, even strengthening that with Kinoma is now the marvellous software owned by Marvell [‘Experiencing the Cloud’, March 8, 2011] and ASUS, China Mobile and Marvell join hands in the OPhone ecosystem effort for “Blue Ocean” dominance [‘Experiencing the Cloud’, March 8, 2011], it was much more later that there were First real chances for Marvell on the tablet and smartphone fronts [‘Experiencing the Cloud’, Aug 21, 2011].

    Then, in fact, rather its long-time local competitor gained the upper hand with World’s lowest cost, US$40-50 Android smartphones — sub-$100 retail — are enabled by Spreadtrum [‘Experiencing the Cloud’, Dec 11, 2011] which was already at the time of  China becoming the lead market for mobile Internet in 2012/13 [‘Experiencing the Cloud’, Dec 1, 2011] and The new, high-volume market in China is ready to define the 2012 smartphone war [‘Experiencing the Cloud’, Jan 6, 2012]. In the end not Marvell but Spreadtrum exploited best the tremendous volume opportunities when it was possible to state that Lowest H2’12 device cost SoCs from Spreadtrum will redefine the entry level smartphone and feature phone markets [‘Experiencing the Cloud’, July 26 – Nov 9, 2012] as the 2.5G only $48 Mogu M0 “peoplephone”, i.e. an Android smartphone for everybody to hit the Chinese market on November 15 [‘Experiencing the Cloud’, Nov 9, 2012] arrived. And the increase in the number of TD-SCDMA subscribers was still not that much more: 12.3 million in Q4’12 vs. 8.5 million in Q3’12.

    So Spreadtrum’s H2’12 success came much more from its extremely low-cost with 2.5G+WiFi (SC6820) capability than from the one which included as well  the TD-SCDMA capability. This also means that for our final word about the maturity of the TD-SCDMA technology stack from the network basestations through the TD-SCDMA SoCs we will able to say just in 2013, after similar kind, or even higher, increases in the number of TD-SCDMA subscriber additions would indeed be reported by China Mobile. The findings of the market research panels published just last week are well supporting this reasoning (see the full press release much more below of the excerpts included here):

    Wi-Fi is the Data Beast of Burden among Smartphone Panelists [Arbitron press release via PRNewswire, March 4, 2013]

    … Even as carriers aggressively promote their newest generation of cellular data networking, the Arbitron smartphone panelists in the United States, United Kingdom, Germany, France, and China, still consume nearly two thirds of their mobile data through public and private Wi-Fi networks. …

    … China and France have the lightest users of mobile data … However, their respective share of Wi-Fi networks as a data source stands at a polar opposite. China panelists consume the largest share—70 percent—on Wi-Fi networks. French panelists, consume the smallest share—53 percent—of mobile data on Wi-Fi. …

    This means that the Chinese were well satisfied with their less costly 2.5G mobile connections for less data consuming tasks, while for most consuming ones the great majority of them were relying on the Wi-Fi networks available to them in the various hotspots and at home (probably at the workplace as well). Considering that along with the 4G/LTE there is the upcoming 5G WiFi with Wi-Fi CERTIFIED™ ac Miracast™ from Broadcom for streaming content to UHD (4K) TVs as well [‘Experiencing the Cloud’, March 3, 2013] this situation will not change in the future either, definitely not in the much more cost-concious Chinese market (see: China: going either for good quality commodities or the premium brands only [‘Experiencing the Cloud’, Nov 21, 2012]).

  4.  Wi-Fi is the Data Beast of Burden among Smartphone Panelists [Arbitron press release via PRNewswire, March 4, 2013]
How much mobile data Arbitron smartphone panelists consume varies by country and mobile platform
Wi-Fi® remains the leading data network for on-the-go data consumption in the five leading Arbitron Mobile-based smartphone panels.
Even as carriers aggressively promote their newest generation of cellular data networking, the Arbitron smartphone panelists in the United States, United Kingdom, Germany, France, and China, still consume nearly two thirds of their mobile data through public and private Wi-Fi networks.
Wi-Fi Data Consumption by Arbitron Mobile-based Smartphone Panelists
Sorted by average mobile data consumption per month (cellular +Wi-Fi)
 
% via
Wi-Fi
Cell + Wi-Fi Data
MB/User/Month
% of panelists
> 1,000 MB/month
U.S.
61%
1,496
49%
U.K.
69%
1,181
37%
Germany
63%
861
37%
France
53%
730
24%
China*
70%
719
25%
Source: Arbitron Mobile Index: Executive Summary Reports, 4th quarter 2012
* Operated by iResearch using Arbitron Mobile technology

The United States and United Kingdom have the heaviest users of mobile data in their Arbitron smartphone panels. A substantial share of the data consumption—61 and 69 percent respectively—relies on Wi-Fi networks.
China and France have the lightest users of mobile data in their Arbitron Mobile-based smartphone panels, both in terms of the average monthly data consumed and the share of the panel who consume more the 1,000 MB a month. However, their respective share of Wi-Fi networks as a data source stands at a polar opposite.
China panelists consume the largest share—70 percent—on Wi-Fi networks.  French panelists, consume the smallest share—53 percent—of mobile data on Wi-Fi.
In all five of the Arbitron Mobile panels, Apple iOS users are heaviest consumers of mobile data and are the heaviest users of Wi-Fi for their on-the-go data needs.
Data Consumption by Leading Mobile Operating Systems
Sorted by average mobile data consumption per month (cellular +Wi-Fi) on iOS
Apple iOS
Android
 
MB/User
/Month
% via
Wi-Fi
MB/User
/Month
% via
Wi-Fi
U.S.
2,512
66%
821
57%
U.K.
2,216
80%
740
64%
China*
1,636
81%
347
65%
France
1,527
70%
635
52%
Germany
1,203
71%
566
56%
Source: Arbitron Mobile Index — Executive Summary Reports, 4th quarter 2012
* Operated by iResearch using Arbitron Mobile technology

Apple iOS was the predominant operating system among the heavy data users in these five smartphone panels.  Seventy-two percent of iOS users in the U.S. and German panel were in 1,000+ MB/month club; in the U.K., 76 percent, and in China 60 percent. In stark contrast, only 29 percent of the iOS users in the France panel consumed more than 1,000 MB/month in the fourth quarter 2012.
About iResearch Consulting
iResearch Consulting, founded 2002, is the leading consulting and media measurement company in the Internet industry in China. With more than 200 employees, iResearch, headquartered in Shanghai, has been at the forefront of Chinese Internet measurement and operates a currency Internet audience rating service for China.
About Arbitron Mobile
Arbitron Mobile Oy, a wholly owned subsidiary of Arbitron Inc., uses a proprietary, on-device software meter to provide marketers, the media, content providers, app developers, and wireless access suppliers with information on how mobile consumers use apps, surf the web, engage in social media, participate in e-commerce, and employ their devices to communicate.
For more information, visit www.arbitronmobile.com or contact mobile@arbitron.com.
About Arbitron
Arbitron Inc. (NYSE: ARB) is an international media and marketing research firm serving the media—radio, television, cable and out-of-home; the mobile industry as well as advertising agencies and advertisers around the world.  For more information, visit www.arbitron.com.
Wi-Fi® is a registered trademark of the Wi-Fi Alliance.

Background

China becomes world’s top smartphone producer [Xinhua, Jan 16, 2013]

Chinese shipments of smartphones totaled 224 million units in 2012, making the country the world’s largest smartphone producer, official data showed Wednesday.
In 2012, over 730,000 Chinese apps were launched on the iPhone, iPod Touch and iPad platforms, and the number of apps in China Mobile’s online Mobile Market approached 150,000, according to a statement from the China Academy of Telecommunication Research under the Ministry of Industry and Information Technology.
Beijing-based research firm Analysys International predicted that China’s mobile Internet market will reach 429.6 billion yuan (68.19 billion U.S. dollars) in 2015.
China added 50.9 million Internet users in 2012, bringing the total to 564 million at the end of last year, according to data released Tuesday by the China Internet Network Information Center.
The number of mobile Internet users increased 18.1 percent to 420 million, with mobile phones becoming the primary channel for using the Internet in China.

More information:
Huawei challenges Apple, Samsung with world’s biggest smartphone [Xinhua, Jan 7, 2013]
Lenovo seeks top smartphone spot [in China] [China Daily via Xinhuanet, Jan 5, 2013]

China’s ZTE unveils latest Android smartphone in Indonesia [Xinhua, Dec 19, 2012]
Smartphones give family ties the busy signal [Xinhua, Oct 18, 2012]
Smartphones in use top 1 bln worldwide: report [Xinhua, Oct 17, 2012]

The number of smartphones in use in the world has risen to over 1 billion, 16 years after they were first put into market, report from Strategy Analytics showed on Wednesday.
According to the third quarter figures released by the research firm, the number of smartphones in use increased by around 330 million from the third quarter of 2011 and by 79 million from the second quarter of this year.
Executive Director at Strategics Analytics Neil Mawston said one in seven people in the world now has a smartphone.
Mawston pointed out that there will be more smartphone penetration in the future because of the “huge scope for future growth, particularly in emerging markets such as China, India and Africa.”
It is calculated that although 16 years were needed for the first billion smartphones to come into use, it will need just three years for that number to double to 2 billion.

China’s e-commerce revenue hits over 1 trillion yuan in 2012: minister [Xinhua, March 8, 2013]

China’s booming online commerce industry is expected to reap more than 1.1 trillion yuan (about 175 billion U.S. dollars) in revenue in 2012, Minister of Commerce Chen Deming said on Friday.
“The total revenue of online commerce is estimated to be around 1.1 trillion yuan (about 175 billion U.S. dollars) to 1.2 trillion in 2012,” said Chen, noting that the exact figure was not available.
China’s online commerce has experienced rapid growth in recent years, with its total revenue expanding from 25.8 billion yuan in 2006 to 780 billion in 2011, the commerce minister told a press conference held on the sidelines of the ongoing national legislature.
“Online shopping is changing people’s way of life and consumption, taking advantage of the huge potential of China’s industrialization and urbanization,” Chen said.
The commerce minister said the growth dwarfed that of many western countries, attributing to the fact that China’s commerce industry was not as developed in the first place, and online shopping could serve to reduce the cost of logistics by a huge margin.

More information:
Chinese booming e-commerce nibbles traditional retailers [Xinhuanet, Feb 18, 2013] with internal headlines: online business booms + traditional retail industry threatened
Conference updated on China’s regulation of e-commerce [Xinhua, Nov 27, 2012]
Securing China’s e-commerce growth [Jeff Liao, country manager of Visa China on Xinhuanet, Nov 20, 2012]

Between June 2011 and 2012, China’s Internet population reached 538 million, of which some 194 million had shopped online. Online retail sales in China have soared in recent years and are expected to hit 360 billion U.S. dollars by 2015 – up from about 121 billion dollars in 2011 – according to The Boston Consulting Group.
Impressive as the numbers are, there’s another set of statistics that’s even more striking: Nearly one-third of the online shoppers in China fell prey to fraudulent websites during that period, costing them 4.7 billion dollars, according to the China Electronic Commerce Association.
<quite worth to read after that>

China’s top microblog site boasts 500 mln users [Xinhua, Feb 20, 2013]

Sina Weibo, the Chinese equivalent of Twitter, had attracted over 500 million users by the end of 2012, a year-on-year increase of 74 percent, Sina Corp. announced on Wednesday.
Sina Weibo’s active daily users have exceeded 46.2 million, the company said.
The site’s revenues totaled 66 million U.S. dollars in 2012, of which 23 percent came from surging income from value-added services.
The other 77 percent came from advertising, the revenues of which exceeded 50 million U.S. dollars.
The company plans to further improve its user experience and expand its services while veering its focus to mobile Internet, said Cao Guowei, CEO and president of Sina.
Some 75 percent of Sina Weibo’s active users log in using mobile devices.
Sina also issued financial reports for the last quarter and full fiscal year of 2012 on Wednesday, showing that its net revenues hit 529.3 million U.S. dollars with a year-on-year increase of 10 percent.

Web China: Xi Jinping fan microblog triggers curiosity [Xinhua, Feb 6, 2013]

… a personal microblog on Sina Weibo, the Chinese equivalent of Twitter, which has released exclusive photos and other news regarding China’s top leader Xi Jinping, has raised eyebrows with its candid coverage.
Netizens have become increasingly curious about the blog, titled “Xuexifensituan” (“Learning From Xi Fan Club”), which covers the latest moves made by Xi, general secretary of the Communist Party of China (CPC) Central Committee, during his inspection tours.
Entries on the blog are often written in the style of a tabloid, with brief phrases (“he’s returned to the hotel”) describing Xi’s whereabouts. However, the posts are exclusive and always come ahead of reports from official media.
Sometimes there are rare first-hand pictures — distant shots of Xi dozing in a van or photos taken by a shaky camera while Xi walks through a crowd of people.
The microblogger refers to Xi as “Xi Dada,” a term that translates as “Uncle Xi” in some parts of China. “Pingping,” a dual-syllable nickname often used by intimate friends or relatives, is also used to describe China’s top leader.
The blog has attracted nearly 500,000 followers since going online in November 2012. Although the information contained in the blog has interested the public, netizens are also curious about the real identity of the blog’s owner.
The blog does not feature a “V” emblem, a mark which indicates that the blog owner’s identity has been verified by Sina Weibo. The only clues are profile details stating that the blog’s owner is a female from northwest China’s Shaanxi province.
The mysterious blog is suspected to be maintained by someone very close to Xi, as the information it contains is supposed to be unavailable to the public and some of its photos were shot from vantages close to Xi.
The blog’s owner has denied claims that he or she is close to Xi. “I am just an ordinary office worker, not a CPC member, nor an official,” an entry on the blog said.


China
expected to issue 4G licenses this year: minister
[Xinhua, March 6, 2013]

China is expected to start licensing telecom operators to offer services on its fourth-generation (4G) mobile phone network within 2013, a senior official has said.
“China has made breakthroughs in R&D of 4G technologies, but is still facing restrictions in commercial use,” Miao Wei, minister of industry of information technology, said on the sidelines of the ongoing annual session of the country’s national legislature.
China needs to speed up base station construction and provide more terminal products, which require greater financial and technological input, he said on Tuesday.
“We will promulgate supporting policies at an appropriate time to guide the construction and development of the 4G network,” Miao added.
In early February, two cities in east China’s Zhejiang Province launched a 4G mobile phone network for commercial use on a trial basis, marking a new age of high-speed mobile Internet in the country.
With a 500-yuan (80 U.S. dollars) deposit, subscribers to China Mobile in Hangzhou, capital of Zhejiang, and Wenzhou, can access the service.
China Mobile, China’s largest mobile operator, employs TD-LTE technology, or Time Division Long Term Evolution, one of two international standards, for the 4G network. Its maximum Internet speed is up to 10 times faster than 3G.
4G user should be able to download a 10-megabyte piece of software in two seconds, and a two-gigabyte HD movie in just several minutes.
With the advancement of 4G technology, 4G wireless cards and 4G mobile phones are expected to be ready for commercial use this year.
China Mobile began building a trial 4G network in several Chinese cities, including Hangzhou, in 2011. The city is currently home to over 2,400 4G base stations, covering an area of around 500 square km.
The minister also reiterated that China will further encourage private investment in the telecom industry.

More information:
China Mobile expands 4G trials to Zhejiang [China Daily via Xinhuanet, Feb 6, 2013]
East China cities launch commercial 4G network [Xinhua, Feb 4, 2013]
Preparing for a 4G network across China [China Daily via Xinhuanet, Nov 19, 2012]

… The ministry officially defined the TD-LTE spectrum – 2,500-2,690 MHz – in China in October, paving the way for future TD-LTE network commercial use.
Xi Guohua, chairman of China Mobile, said in June that China Mobile plans to have a total of more than 200,000 TD-LTE base stations through new builds and upgrades by 2013.
Rumors have circulated in Chinese media that China Telecom, the nation’s smallest mobile carrier, will probably adopt TD-LTE technology when it starts to deploy its 4G network. If true, it would be a great boost for the TD-LTE industry both at home and abroad.

ZTE leads in 4G wireless networks [China Daily via Xinhuanet, July 22, 2012]

ZTE Corp revealed on Friday that it has gained an upper hand over rivals in the construction of fourth generation TD-LTE wireless networks globally, after it grabbed more than 70 percent of the world’s contracts of this kind by May.
“We had absolute advantages … since the number of ZTE’s TD-LTE projects accounted for more than 70 percent of the world’s total,” said [ZTE Vice-President] Liu [Peng].
“We had absolute advantages … since the number of ZTE’s TD-LTE projects accounted for more than 70 percent of the world’s total,” said Liu.
ZTE announced on Thursday that it had been selected as one of two telecom equipment suppliers by China Mobile Hong Kong Ltd, a subsidiary of the world’s largest mobile operator China Mobile Ltd, to build a seamless converged LTE TDD and LTE FDD network in Hong Kong. The other selected supplier was Sweden-based Telefon AB LM Ericsson.
It is also the first commercial TD-LTE network set up and operated by China Mobile, and because of that, it will play a critical role in China Mobile’s overall plan to promote TD-LTE technology both at home and abroad, analysts said.
Chen Jinqiao, deputy chief engineer of the China Academy of Telecommunication Research, said: “It is a real, tangible commercial TD-LTE network, and China Mobile will learn operating experience from it and may do a better job in the commercial use of TD-LTE technology in the Chinese mainland.”

Implications of ZTE’s $20 Billion Credit Line [TBRIChannel YouTube channel, Feb 21, 2013]

ZTE’s new $20 billion credit line, awarded on Dec. 4 by the China Development Bank (CDB), is timely for the struggling China-based vendor and has breathed new life into the firm; however, it portends more woes for close competitors such as Alcatel-Lucent and Nokia Siemens. On Wednesday, Feb. 20, analyst Chris Antlitz recorded a webinar that delved into how and why ZTE’s massive credit line is a game changer in the telecom vendor market, and discusses how it will reshape the industry over the next few years. Specifically, this webinar will cover three key topics: •How will the money help ZTE streamline its internal operations and regain traction in the marketplace? •How will competitors be affected by ZTE’s resurgence? •How will this loan reshape the telecom vendor landscape over the next few years?

EU telecom demands raise tensions with China [CNTV.cn via Xinhuanet, Feb 3, 2013]

According to a report in the Financial Times, Europe’s top trade official has urged China to grant it a bigger share of the Chinese market in telecoms network equipment.
The EU trade commissioner, Karel De Gucht, is reported to have requested a 30 percent share of China’s telecoms market to EU suppliers in return for dropping a highly contentious EU investigation into alleged subsidies to Chinese companies.
It’s also claimed De Gucht is insisting that Chinese telecom suppliers Huawei Technologies and ZTE Corp raise the price of their exports by 29%. The case centres on Brussels’ contention that Beijing has awarded illegal export subsidies to the two companies in order to fuel their growth in foreign markets.
A delegation from China’s Ministry of Commerce met with top EU trade officials on Friday to seek a way to settle the issue without sparking a trade war.
The EU is currently carrying out its biggest ever anti-dumping investigation into Chinese solar panel exports. It’s expected to make a formal decision on whether to impose temporary duties by the end of May.

China has till June for solar, telecoms trade deal: EU [Reuters, Feb 27, 2013]

China has until June 7 to negotiate a deal with the European Union on state subsidies for solar panels and mobile telephone networks or face possible punitive measures, the EU’s trade chief said on Wednesday.
European Trade Commissioner Karel De Gucht told a Reuters Summit on the future of the euro zone the Chinese had told Brussels they wanted to negotiate an amicable solution to EU concerns over alleged trade distortions in the two cases.
“It is the Chinese who have requested that we would have negotiations on a possible amicable solution. We have already have contacts, we have already sent people to Beijing, and the Chinese already came to Brussels,” he said.
The hi-tech telecoms case is less advanced but potentially far bigger in political and economic impact.
The EU is collecting evidence to prepare a possible case against Chinese network equipment makers Huawei (002502.SZ) and ZTE (000063.SZ) over state subsidies, but has not received a formal complaint from European industry.
De Gucht said the Commission had the power to initiate proceedings on its own authority even if no European competitor came forward.
A complaint is the normal starting point for an investigation, but European manufacturers Ericsson (ERICb.ST), Alcatel-Lucent (ALUA.PA) and Nokia Siemens Networks NOKI.UL have remained silent because trade experts say they fear retaliation against their business in China.
The case over mobile network equipment makers would dwarf that in size. The European telecoms industry accounts for an estimated 4.8 percent of the EU’s gross domestic product.
Such self-initiated cases can be awkward for the Commission, as it appears to be both complainant and judge and still needs evidence from EU producers and approval from EU member states, which ultimately vote on Brussels’ proposals to impose duties.
De Gucht said that talks over alleged state subsidies by China to the telecom firms were running in parallel with negotiations to avoid duties on Chinese solar panels.
There were also “serious security concerns” involving mobile telecom networks, which had become the backbone of modern European society, he said, noting that the United States and Australiahad effectively shut Huawei out of their markets.
Diplomats said EU countries are divided in their approach to Huawei, with Britain and the Netherlands embracing the Chinese firm as a major job provider while others are more wary of Chinese inroads into such a sensitive sector.
A leaked internal EU report last year said that action against Chinese telecom equipment makers was needed because their increasing dominance of mobile networks makes them a threat to security.


China’s mobile phone users reach 1.11 bln
[Xinhua, Jan 25, 2013]

The number of Chinese mobile phone users reached 1.11 billion as of the end of 2012, according to official data unveiled Thursday.
The Ministry of Industry and Information Technology (MIIT) said in a statement that mobile phone users represent 80 percent of all phones users in the country.
The number of mobile phones owned by every 100 people reached 82.6 by the end of 2012, up by nine from a year earlier, according to the statement.
Last year, the country recorded 125.9 million new mobile phone users, among whom 104.38 million were 3G mobile phone users, bringing the total number of 3G users to 232.8 million, the MIIT said.
The ministry said the number of Internet users rose by 51 million to 564 million people, among whom 74.5 percent, or 420 million people, surf the Internet with their mobile phones.
The Internet penetration rate reached 42.1 percent by the end of last year, up 3.8 percentage points from a year earlier.

China market: Samsung takes up 22.5% of 2012 smartphone sales, says iiMedia Research [DIGITIMES, March 7, 2013]

There were 169 million smartphones sold in the China market in 2012, hiking 130.7% from 2011, and Samsung Electronics was the largest vendor with a market share of 22.5%, according to China-based consulting company iiMedia Research.
Lenovo was the second largest vendor accounting for 10.7% of the smartphone sales volume, followed Huawei Device, Coolpad and ZTE with 9.9%, 9.5%, 8.9% respectively, Apple with 7.7%, GiONEE with 6.4%, HTC with 4.7%, Motorola Mobility with 3.5% and Nokia with 3.1%.
In terms of operating system, Android occupied 68.6% of the smartphone sales volume, followed by iOS with 12.8%, Symbian with 12.4% and Windows Phone with 3.8%.
There were 380 million smartphone users in the China market at the end of 2012, increasing 72.7% from a year ago.

iiMedia: Percentage breakdown of smartphones
sold in China by price, 2012

Price range (CNY)
Market share
Below 1,000 (US$158)
34.9%
1,000 to below 2,000
42.2%
2,000 to below 3,000
14.6%
3,000 to below 4,000
5.2%
4,000 and above
3.1%

Smart phones cover 70 pct of mobile market: report [Xinhua, March 6, 2013]

Seventy-million smart phones were shipped in China in the last quarter of 2012, covering 73.2 percent of the country’s mobile market share, newly released statistics showed Wednesday.
The volume of smart phone shipments saw a 112.1 percent year-on-year increase, according to statistics by the International Data Corporation (IDC), a global market research, analysis and advisory company.
Figures showed that shipments of mobile phones in the last three months of 2012 stood at 96 million, a 1.6 percent year-on-year rise.
Total shipments of mobile phones in China last year reached 362 million, among which smart phones recorded 213 million, a year-on-year increase of 135 percent, said IDC.
The corporation said that strong demand, subsidies from phone operators and new smart phone arrivals were the driving force behind the boom.
“Producers’ heavy investments in smart phones also contributed to the success,” said Wang Jiping, an analyst with IDC’s China subsidiary.
The company forecasts that the country’s smart phone industry will witness steady growth in the next few years.
It said smart phone shipments are expected to reach 460 million in 2017, which will take up 90.1 percent of the country’s total mobile phone sales.

More information:
China smartphone shipments to rise to 460 million by 2017-IDC [Reuters, March 7, 2013]
Smartphones Expected to Outship Feature Phones for First Time in 2013, According to IDC [IDC press release, March 4, 2013]

… Smartphone shipments to China, Brazil, and India will comprise a growing percentage of the device type’s volume in each forecast year. Smartphone demand is burgeoning in these large, populous nations as their respective economies have grown; this has made for a larger middle class that is prepared to buy smartphones. China, which supplanted the U.S. last year as the global leader in smartphone shipments, is at the forefront of this shift.
“While we don’t expect China’s smartphone growth to maintain the pace of a runaway train as it has over the last two years, there continue to be big drivers to keep the market growing as it leads the way to ever-lower smartphone prices and the country’s transition to 4G networks is only just beginning,” said Melissa Chau, Senior Research Manager, IDC Asia/Pacific. “Even as China starts to mature, there remains enormous untapped potential in other emerging markets like India, where we expect less than half of all phones shipped there to be smartphones by 2017, and yet it will weigh in as the world’s third largest market.”
Brazil is another market where smartphone growth will remain high over the course of the forecast as its economic fortunes improve. “Brazilians have yet to turn in their feature phones for smartphones on a wholesale basis,” said Bruno Freitas, Consumer Devices Research Manager, IDC Brazil. “The smartphone tide is turning in Brazil though, as wireless service providers and the government have laid the groundwork for a strong smartphone foundation that mobile phone manufacturers can build upon.” …

Android powers a third of all mobile phones shipped in 4Q12, says Canalys [DIGITIMES, Feb 8, 2013]

Canalys: Worldwide smartphone shipments and share by vendor, 4Q12 (m units)
Vendor
4Q12 shipments
Market share
Samsung
62.9
29%
Apple
47.8
22.1%
Huawei
11.5
5.3%
ZTE
10.1
4.7%
Lenovo
9.5
4.4%
Others
74.7
34.5%
Total
216.5
100%
Source: Canalys, compiled by Digitimes, February 2013

Canalys: Worldwide smartphone shipments and share by OS vendor, 4Q12 (m units)
OS vendor
4Q12 shipments
Market share
OHA (Android)
149.8
69.2
Apple
47.8
22.1%
BlackBerry
7.6
3.5%
Microsoft
5.1
2.4%
Nokia
3.2
1.5%
Others
3.0
1.4%
Total
216.5
100%
Source: Canalys, compiled by Digitimes, February 2013

More information:
Mobile device market to reach 2.6 billion units by 2016, says Canalys [DIGITIMES, Feb 26, 2013]
Entry-level smartphone sales expected to stay strong in China throughout 2013 [DIGITIMES, Jan 2, 2013]

Google controls too much of China’s smartphone sector: ministry [March 5, 2013]

Google Inc has too much control over China’s smartphone industry via its Android mobile operating system and has discriminated against some local firms, the technology ministry said in a white paper.
The white paper, authored by the research arm of China’s Ministry of Industry and Information Technology, also said China had the ability to create its own mobile operating system. (here)
“Our country’s mobile operating system research and development is too dependent on Android,” the paper, posted online on Friday but carried by local media on Tuesday, said.
While the Android system is open source, the core technology and technology roadmap is strictly controlled by Google.”
The paper said Google had discriminated against some Chinese companies developing their operating systems by delaying the sharing of codes. Google had also used commercial agreements to restrain the business development of mobile devices of these companies, it added.
A Google spokesman in China declined to comment.
The ministry did not recommend any specific policies, regulatory actions or other measures.
Analysts said the white paper, which lauded Chinese companies such as Baidu Inc, Alibaba Group and Huawei Technologies for creating their own systems, could be a signal to the industry that regulations against Android are on the horizon.
“In China, regulators regulate regularly especially where they can position the regulations as helping out domestic companies,” Duncan Clark, chairman of technology consultancy BDA, said in an email to Reuters.
“Ironically, Android’s success has underpinned a lot of the growth in China smartphone vendors in recent years,” Clark said. Home-grown companies had failed previously in China’s market for simple handsets, he said, due to weakness in software and operating systems.
South Korea’s Samsung Electronics Co Ltd, the world’s largest smartphone maker, uses the Android system, as do Chinese manufacturers Huawei and ZTE Corp.
Last September, the launch of a smartphone between Acer Inc and a unit of Alibaba Group was cancelled due to what Alibaba said was pressure from Google on the Taiwanese group. Representatives for Acer and Google declined to comment on the matter at that time.
Technology research firm IDC has estimated that China surpassed the United States as the world’s biggest smartphone market in 2012, accounting for 26.5 percent of all smartphones shipped.
In 2010, Google conducted a partial pullout from China on the basis of censorship and after it suffered a serious hacking episode that the company said emanated from China. Since then, Google’s search market share in China has fallen from almost 30 percent to 15 percent at the end of 2012. Android has been Google’s bright spot in China.
In the third quarter last year, Android accounted for 90 percent of all mobile operating systems in China while Apple Inc’s iOS system was at just 4.2 percent.

Too late for China to develop own mobile operating systems, say Taiwan makers [DIGITIMES, March 7, 2013]

While China Academy of Telecommunication Research under the Ministry of Industry and Information Technology in its white paper calls for China’s development of own operating systems for use in smartphones, tablets and other mobile terminal devices to lessen existing heavy reliance on Google Android, sources with Taiwan-based handset supply chain makers pointed out that it is too late for such development because of difficulties to develop related technologies and establishing necessary ecosystem as well as lack of relevant patents.
It will take at least three to five years for a new mobile operating system to become competitive in market, and if China-based companies – such as device vendor Lenovo, Huawei Device, ZTE and Coolpad, and Internet service providers Alibaba and Baidu – only begin to develop own mobile operating systems now, it is already too late to catch up with competitors, the sources indicated.
Instead of developing own mobile operating systems, China-based companies can ask Google to loosen its regulations on using Android, for example, to allow development of various operating system versions based on the Android architecture, the sources said. In addition, the China government can encourage China-based companies to provide rich mobile services and develop various mobile applications based on not only Android but also iOS, Windows Phone and other operating systems, the sources indicated.

China handset makers hope to reduce reliance on Android [DIGITIMES, March 6, 2013]

The China Academy of Telecommunication Research for the Ministry of Industry and Information Technology has published a white paper stating that China’s handset industry has been relying heavily on the Android platform. In fact, China’s handset industry has been hoping to reduce its reliance on Google’s Android platform by switching to other platforms such as Windows Phone, Tizen, and Firefox OS. Industry sources believe the percentage of products using the Android platform is likely to fall continuously in China.
Android is an open platform, and with price advantages, many handset makers in China are using the Android platform. Currently, Android has more than 80% of share in the China smartphone platform market. The heavy reliance has been causing concerns in China.
Some China-based handset brands have been seeking cooperation with other platform developers. ZTE and TCL are the first two firms to cooperate with Mozilla and plan to introduce new products with Firefox OS platform in mid-2013. The new products are aimed at emerging markets such as Central and South America and Eastern Europe. Huawei is cooperating with Mozilla and Tizen.
However, handset makers believe China-based firms are unlikely to massively adopt other platforms in the short run as Android continues to be the most attractive and mature open platform on the market.
Handset firms noted that most China-based handset brands face the problem of relying heavily on the Android platform, which is the same problem for Samsung and HTC, but Samsung has been putting effort into diversifying by acquiring MeeGo, integrating Bada and developing Tizen while other handset makers simply do not have the resources and time to do the same.


China to modify plan to open up mobile telecom sector
[Xinhua, Jan 23, 2013]

The government is considering adjusting a plan that will allow privately-owned companies to enter the mobile telecommunications sector, a government official said on Wednesday.
Zhang Feng, director of the telecommunications development department of the Ministry of Industry and Information Technology (MIIT), said at a news briefing that the ministry is reviewing opinions collected from the public and will improve the plan based on its review.
In early January, the MIIT created a pilot plan that will allow Chinese-funded private companies to buy basic mobile telecom services from the country’s major operators, add their own services and then sell the services to customers through their own brands.
Private companies will not have to build mobile telecoms infrastructure, but only set up a customer service system and other supporting networks if necessary, the plan said.
The ministry said the pilot program aims to allow private capital to further enter the telecom industry and give full play to the flexibility and creativity of private firms, as well as promote market competition and improve mobile telecom services.
The plan was published online on Jan. 7, with public opinions to be solicited until Feb. 6.
At present, China’s mobile telecom sector is dominated by the state-owned companies China Mobile, China Unicom and China Telecom.

More information:
News Analysis: China to open up mobile telecom sector [Xinhua, Jan 15, 2013]

… Shi Wei, an expert with the Institute of Economic System and Management under China’s top economic planner, said that private firms participating in the program must strive to make innovations in their services, or else they will become just agents for major carriers.
“Private companies should develop more innovative applications and provide differentiated services to win their share of the market,” Shi said. …
… The pilot program is designed to last for two years.
Private enterprises can send applications to telecom authorities within the first year of the program.
China has attached great significance to encouraging private investment, as it plays an important role in creating jobs, boosting domestic consumption and maintaining sustainable economic growth.
In 2010, China’s State Council, or the Cabinet, announced policies to open a range of government-run industries to private investment, including water projects, power generation, mining, as well as the telecommunication sector.
To help implement those policies, the MIIT made a detailed plan for guiding private capital to enter the telecom industry in June 2012.

So there are wider reasons for such a change of attitude as well:
2012 profits slow at China’s central SOEs [XinHua, Feb 8, 2013]
Private, collective businesses’ trade outpaces SOEs [Xinhua, Jan 3, 2013]

Private and collectively-owned businesses saw their foreign trade expand faster than that of state-owned enterprises (SOEs) and foreign-funded companies in the January and November period, according to the national economic planner.
In the first 11 months, foreign trade at private and collectively-owned companies totaled 1.09 trillion U.S. dollars, up 18.1 percent year on year, according to data released by the National Development and Reform Commission on Thursday.
The total figure included 687.32 billion U.s. dollars in exports, up19.4 percent, and 402.75 billion U.S. dollars in imports, up 15.9 percent, the data showed.
In contrast, foreign-funded firms saw foreign trade rise 1.9 percent year on year to reach 1.72 trillion U.S. dollars between January and November.
Meanwhile, trade for SOEs dropped 1.1 percent from a year earlier to 685.9 billion U.S. dollars in the first 11 months, as exports declined 4 percent in the period while imports posted a slight increase of 0.9 percent, the data showed.
The General Administration of Customs previously released disappointing trade data for November due to slackened external demand. China’s exports grew just 2.9 percent year on year in November, while the growth of imports remained unchanged from a year earlier.

4M[bps] broadband to cover 70 percent of Chinese users in 2013 [Xinhua, Feb 26, 2013]

More than 70 percent of China’s Internet users will enjoy access to broadband Internet services in 2013, the Ministry of Industry and Information Technology (MIIT) said Tuesday.
The percentage of users with access to 4M[bps] or faster services climbed 23 percentage points to 63 percent in 2012 from the previous year, said Miao Wei, minister of industry and information technology.
Fiber-to-the-home (FTTH) services will cover 35 million households this year, as FTTH households grew by 49 million to reach 94 million in 2012, Miao said.
The government also hopes to add more than 25 million new fixed-line broadband subscriber households, as the number of fixed-line broadband subscriber households rose by 25.1 million to 175 million in 2012, Miao said.
Other goals expanding the number of public wireless hot spots by 1.3 million, Miao said.
FTTH refers to a form of fiber-optic communication delivery that reaches one living or working space. The fiber extends from a central office to the subscriber’s living or working space.

Broadband network expansion in the pipeline [China Daily via Xinhuanet, March 31, 2013]

China is expected to have 20 million new broadband Internet subscribers this year and a total of 250 million subscribers by the end of 2015, the country’s top industry regulator said on Friday.
“The nation needs to improve broadband speed. Our aim is to install fiber-to-the-home (FTTH) broadband connections for 35 million families this year,” said Industry and Information Technology Minister Miao Wei.
The announcement came after an investigation of two domestic telecom giants over alleged monopolistic practices in November.
[see: China Telecom, China Unicom pledge to mend errors after anti-monopoly probe [Xinhua, Dec 2, 2011]]
The broadband development plan is a part of China’s 12th Five-Year Plan (2011-15), which is to increase the country’s average broadband speed to 20 megabytes per second by the end of 2015.
China had 156 million Internet broadband users in 2011, 83 percent of the users’ Internet speed exceeding 2MB/s. About 45 million families were covered by the FTTH network, and the Internet surfing fee decreased by 30 percent compared with 2005.
However, Wu Hequan, vice-president of the Chinese Academy of Engineering, said in an earlier report that the average download speed of China’s broadband is 1.15MB/s, half of the global speed.
China’s three telecom carriers will implement the plan and invest more in the industry.
As the major provider of China’s Internet broadband infrastructure, China Telecom will invest 40 billion yuan ($6.3 billion) to build the FTTH network this year, and attract 25 million new FTTH users, bringing the total number to 55 million, said Wang Xiaochu, chairman of China Telecom.
Xi Guohua, China Mobile‘s new chairman, said the company has built a broadband network for 4,100 villages and that number is expected to reach more than 8,000 by the end of this year. He also said the company will add 1.4 million WLAN wireless hotspots this year, and 1.2 million new Internet users.
China Unicom has more than 44 million broadband users, 90 percent of them connected at more than 2MB/s. The company has injected 60 billion yuan into broadband development in the past three years, said its Chairman Chang Xiaobing.
Sixteen Internet giants, including Baidu and Sina, attended the meeting and promised to improve their services online.

China Unicom’s 3G subscribers hit 76.46 mln [Xinhua, Jan 19, 2013]

China Unicom [W-CDMA], the country’s second-largest mobile operator by subscribers, said in a latest report that it added 3.13 million 3G subscribers in December, bringing its total 3G users to 76.46 million.
The carrier’s 2G subscribers totalled 163 million as of the end of December, a decrease of 36,000 from November, according to the report filed with the Shanghai Stock Exchange.
The operator’s Internet users with broadband access amounted to 93.87 million as of last year, the statement said.
Statistics from the Ministry of Industry and Information Technology (MIIT) showed China’s 3G users had reached 220 million by November.
The MIIT said China will add an estimated 100 million new 3G subscribers this year.

H2CY13: Upcoming next-gen Nexus 7, the ASUS MeMO Pad HD 7 “re-incarnation” at reduced by $50 price, dual/quad-core mid-range tablets from white-box vendors starting from $65

(while entry level will start from $40) … with that there would be tremendous pressure on low-volume tablet supliers (branded or white-box alike), as well as Samsung and Apple. Meanwhile China strengthens its position as the world leading PC Market.

Complementary post reminder:
Eight-core MT6592 for superphones and big.LITTLE MT8135 for tablets implemented in 28nm HKMG are coming from MediaTek to further disrupt the operations of Qualcomm and Samsung [‘Experiencing the Cloud’, July 20, 2013] from which the following excerpts I will include here as the ones directly related to the content given here as well:

At the end of July the launch of a tablet chip is expected: the MT8135, with 2xA15 +2xA7, still using an Imagination GPU, and mainly targeting the high-end tablet market. If Google OS will be closed and converged that will have a huge impact on us.
We will use Windows as a second priority, while using Firefox [OS] and HTML5 as a secondary backup, by keeping track of them. Because we judge that the [Android] OS convergence from Google profitability point of view is very low, therefore our vote for these two emerging open OS’s is in the ‘not so urgent’ category, in addition to and outside of Android. The other focus is again on Windows Phone 8.  For the moment, however, WP8 hardware configuration requirements are still higher (mainly memory), power consumption – after optimizing the gap with Android – is not too large.
End of the complementary post reminder

Rumor: New Nexus 7 specs, features and launch details mentioned in chat with Asus rep [Android Authority, June 30, 2013]

AE: The Tablet should be released before the ending of Q2
C: when exactly is before Q2?
AE: That will be before the ending of July

AE: There has not been confirmed specification as yet, but here is some basics specification , that you can look at:

7 inch LED with 1980*1200 resolution
Qualcomm Snapdragon 600 Quad Core CPU / Snapdragon APQ8064 CPU
2GB of RAM
32GB internal storage
5Mpx rear camera and 1.2Mpx front camera
Android 4.3
4000mAh battery
Wifi a/b/g/n,Bluetooth 4.0 and NFC enabled
LTE / WCDMA / GSM support

This is not confirmed specifications but you can review it

vs. the first one: Nexus 7: Google wanted it in 4 months for $199/$245, ASUS delivered + Nexus Q (of Google’s own design and manufacturing) added for social streaming from Google Play to speakers and screen in home under Android device control [‘Experiencing the Cloud’, June 28, 2012] which already has an ASUS only “reincarnation:

Experience MeMO Pad HD 7 [asus YouTube channel, June 16, 2013]

The MeMO Pad HD 7 is a stylish and portable 7-inch value tablet with a [1.2GHz] quad-core [MediaTek MT8125] processor, stunning HD IPS panel. It has dual cameras and stereo speakers.

Some specs:

  • 7-inch HD [1280 x 800] tablet with a wide-view angle IPS display for stunning visuals
  • Rear 5MP and front 1.2MP dual cameras to capture the moments
  • Dual stereo speakers with Sonicmaster Technology for incredible sound effect.
  • Ultra light, weighs only 302g
  • Up to 10 hrs battery life to make it through your day

ASUS Announces MeMO Pad HD 7 and MeMO Pad FHD 10 Tablets [press release, June 3, 2013]

ASUS MeMO Pad HD 7 — the value tablet for mobile entertainment
ASUS MeMO Pad™ HD 7 has a quad-core processor and 1GB RAM for smooth and responsive performance with apps of all kinds. The 7-inch display has a 1280 x 800 native resolution for crisp text and images, and IPS technology for accurate, vibrant colors with 170-degree wide viewing angles. MeMO Pad™ HD 7 also features high-quality stereo speakers with enhanced sound, courtesy of ASUS SonicMaster audio technology.MeMO Pad™ HD 7 has a 1.2-megapixel front-facing HD camera that can capture 720p HD videos and models are also available with a rear 5-megapixel camera. Just 10.8mm thick and 302g, the feature-packed MeMO Pad™ HD 7 has a lithium polymer battery that lasts for up to 10 hours with 720p video playback. Models are available in four colors — black, white, pink and green.
MeMO Pad™ HD 7 has 16GB of storage and a MicroSD card slot, plus 16GB ASUS WebStorage free for one year. Together with the ASUS WebStorage Office, users can view, create, edit and share Microsoft Office documents online.
AVAILABILITY & PRICING
ASUS MeMO Pad™ HD 7 has an MSRP of US$129 for 8GB capacity and US$149 for 16GB [a “follow up” to the $199 Nexus 7 tablet developed jointly by Google and ASUS and announced a year ago], and will be available starting in July 2013.

Asustek and HP enter China tablet market with entry-level models [DIGITIMES, July 1, 2013]

Asustek Computer and Hewlett-Packard (HP) are both set to enter the China tablet market with new cheap tablet models: the Asustek 7-inch 8GB MeMO Pad HD 7, priced below CNY999 (US$163) and HP Slate 7, priced at CNY999 [$163], according to sources from channel retailers.

Asustek’s 8GB MeMO Pad HD 7 will be supplied to the China market exclusively and is expected to appear later in July.

Prior to Asustek and HP, Acer already offered its 7-inch Iconia B1-A71 tablet [1.2GHz dual-core MT8317T based] at CNY699 [$114], while Lenovo is pushing its A1000 for a price of CNY999 [$163].

Compared to first-tier vendors, most China-based white-box tablet players are offering their products at prices between CNY299-500[$49-81.5], giving them advantages in pricing, but first-tier vendors still outmatch white-box players in product quality, specifications and after-sales service, the sources said.

Currently this is the best 7” quad-core offering from purely mainland China technology:
7” quad-core Allwinner A31s based Onda tablets for $65 (v701s) and $81 with IPS (v711s) in China, while for $89 and $99 outside [‘USD 99 Allwinner’, June 22, 2013] for which here is the Onda V711s Quad Core A31s 7″ IPS Tablet PC In-depth Review [dealsprime YouTube channel, June 24, 2013]

Onda V711s 7-inch IPS screen Android 4.2.2 Tablet PC with quad core Allwinner A31 CPU review. We check out the pre-installed apps and do some web browsing. Check out full specs and where to buy here: http://dealsprime.com/onda-v711s-quad-core-android-4-1-1-tablet-pc-7-ips-1024-600-a31s-1-5ghz-8gb.html

With and 1280×800 resolution Onda V712 quad-core version is available from April 8, 2013. The current price for Onda V712 Quad Core RAM 2GB 7 Inch IPS Screen Android Tablet 16GB outside China is $139 (699 yuan, $114 inside). It has 0.3MP front and 2MP back camera (vs. 1.2MP front and 5MP rear on ASUS MeMO Pad HD 7), but its video capability is 4K.

Meanwhile the cheapest dual-core mid-range tablet from white-box vendors is the new ICOO D70PR03 for 399 yuan i.e $65. This is with 1.2GHz Allwinner A20 SoC and 1024×600 IPS screen.

China white-box tablet players seeing success in landing government procurement orders [DIGITIMES, July 1, 2013]

China-based white-box players are gaining the upper hand in the competition with first-tier brand vendors for tablet procurement orders from Asia Pacific governments due to their advantages in pricing, while improved product quality and stability also helped the white-box players to narrow their gap with first-tier players, according to sources from tablet players.

The government in Thailand recently released procurement orders for 1.6 million education-purpose tablets which were mostly taken by a China-based white-box player, and first-tier vendors are having trouble competing due to considerations about profitability, the sources noted.

The sources pointed out that the white-box maker landed orders for a total of 800,000 tablets from the Thailand government worth NT$1.57 billion (US$52.35 million), equivalent to a price of NT$1,900-2,000 [US$63-67] for each device.

However, even with such a low price, the sources believe the white-box maker is still profiting from the orders.

Currently, an entry-level 7-inch tablet from a China white-box player is priced at about US$50 and can go up to US$70-90 in the retail channel, giving them strong advantages in price competition.

Although first-tier brand vendors are also aggressively trying to enter the entry-level tablet market, white-box players are still expected to achieve shipments of 120 and 170 million units in 2013 and 2014, respectively.

Thailand school kids get tablet computers [Aljazeera via AussieNews1 YouTube channel, Aug 23, 2012]

It is only a matter of time before tablet computers replace text books in school classrooms.

Surprise auction winners [Bangkok Post, June 29, 2013]

Dark horses Shenzhen Yitoa Intelligent Control Co of China and Supreme Distribution (Thailand) won yesterday’s bidding for the second phase of the One Tablet per Child scheme to supply 1.22 million tablets, beating out Shenzhen Scope Scientific Development.
image
The Chinese firm clinched the bid for the first and second zones, while the Thai company won the contract for the third zone.
The Office of the Basic Education Commission (Obec) held an e-auction for the tablets yesterday seeking bidding winners to supply 1.63 million tablets.
Education Minister Phongthep Thepkanchana said Shenzhen Yitoa won a bid to supply 431,105 tablets for Prathom 1 students worth 842 million baht for the first zone in central and southern provinces.
The company offered a price of 1,953.12 baht [$63] per tablet, 28.2% lower than the median price set at 2,720 baht each.
According to earlier information: “The tablet will have government specifications of a seven-inch display with a camera resolution of 1024×600 pixels, a minimum 1.5-gigahertz dual-core processor unit, one gigabyte of RAM, eight gigabytes of storage memory, 3,600 milliampere hours of lithium polymer battery life, and continuous Wi-Fi internet access for at least three hours.
The Chinese firm also won the bid to supply 373,637 tablets for Prathom 1 students worth 786 million baht for the second zone in the northern and northeastern provinces.
The company offered 2,103.64 baht [$67.5] per unit, 22.7% below the median price.
Supreme Distribution, meanwhile, proposed the lowest price for tablets in the third zone, covering Mathayom 1 students in the central and southern provinces, at 2,908.24 baht [$93], down slightly from the median price of 2,920 baht.
The Thai computer assembly firm will supply 426,683 tablets worth 1.24 billion baht.
Obec postponed the bid for the fourth zone – covering some northern and northeastern provinces – to July, as Shenzhen Yitoa was the only bidder in the auction. The conditions require at least two bidders in competition.
Mr Phongthep said purchasing contracts are expected to be sealed in the week ahead. All winners are obliged to deliver their tablets within 90 days of signing contracts.
Panuwat Khantamoleekul, the managing director of Supreme Distribution, said the company could not offer a sharp rate cut since Mathayom 1 specifications are higher than those for Prathom 1.
He said his company will build its own factory in Thailand to assemble materials sourced from China.
It set up a local office here two decades ago and also won an earlier bid to supply tablets in Russia.

Shenzhen Yitoa Digital Appliance Co. Ltd [Global Sources, April 14, 2013]

Offering a Wide Range of Electronic Products
Shenzhen Yitoa Digital Appliance was founded in 2007, which is affiliated to Shenzhen Yitoa Intelligent Control Co., Ltd. We are a nationally known enterprise designing, developing, manufacturing and selling intelligent controllers of digital equipment. Our main products include e-book readers, MIDs, tablet PCs and other devices.
Releasing Three New Products Monthly
Every year, we invest $800,000 in our R&D department to innovate and renew users’ digital life. This gives our 100 experienced engineers the resources they need to add up to three new products a month. Simply send us your OEM/ODM requirements, and we’ll complete a sample for you in as fast as one week. Now our company cooperates with Aigo, Newsman, Skyworth and other national famous companies.
Recipient of International Certifications and Recognitions
With a 16,000-square-meter factory, 100 engineers, 1,600 workers and 25 assembly lines, our monthly capacity is over 1 million pieces. For your assurance, all of our products carry CE, CQC, CCC, UL and VED approvals, and are manufactured under ISO 9001:2000 and ISO 14001:2004 guidelines. Moreover, we have been recognized as a hi-tech enterprise in 2004, one of the top 100 Shenzhen Software Enterprises in 2005, and one of the top 20 Shenzhen Software Export Enterprises in 2006.

Leading Tablet PC Brands Reduce 2013 Targets [DisplaySearch blog, June 27, 2013]

We recently pointed out [Smaller Tablets to Get Even More Popular in the Second Half of 2013 [DisplaySearch blog, June 18, 2013]] that 2013 would be the year in which smaller tablet PC shipments (especially 7” and 8”) would surpass larger tablet PC shipments (such as 9.7” and 10.1”). Tablet PCs are starting to overlap with larger smart phones, as well as with ultra-slim notebook PCs. 

Our latest forecast for the tablet PC market in the Quarterly Mobile PC Shipment and Forecast Report is for 67% Y/Y growth – from 153.6M in 2012 to 256.5M in 2013. Within this growing market, the share held by the top 12 brands, including Apple, HP, Acer, Dell, Lenovo, ASUS, Samsung, Toshiba, Sony, Amazon, Google, and Microsoft, is falling because the whitebox market [iPad-sized Tablets No Longer Driving Panel Growth Momentum [DisplaySearch blog, June 27, 2013]], especially in China, is growing faster. We estimate that the top brands, which shipped a combined 104.2M units in 2012, have reduced their 2013 shipment plans from 172M forecast in April to 167M forecast in June.

Apple’s iPad series accounted for 67M units in 2012 and remains the market leader, but is also the leading example of this trend. We estimate that Apple originally planned to ship 88M iPads in 2013, has reduced its target to 74M, including 31M iPads and 43M iPad minis.

We estimate that Samsung’s total tablet PC and phablet business plan is nearly 50M units in 2013, a big jump from 15.6M in 2012. Samsung plans include 39.5M tablet PCs, and 10M Galaxy Mega series (5.8” and 6.3”; while Samsung defines these as phablets, we classify them as smart phones).

Other tablet PC brands expect to grow their business in 2013. Among them, Lenovo, Microsoft, HP, and Acer are the most aggressive. Lenovo has two product lines for its tablet PC – X86 and ARM series. In 2013, Lenovo is planning for 3M X86 and 8M ARM.

Tablet PCs and Touch Adoption Expected to Drive Mobile PC Shipments Through 2017, According to NPD DisplaySearch [press release, May 6, 2013]

SANTA CLARA, CALIF., May 6, 2013—The mobile PC market is expected to increase from 367.6 million units shipped in 2012 to 762.7 million globally by 2017, driven by touch-enabled form factors, according to the NPD DisplaySearch Quarterly Mobile PC Shipment and Forecast Report. The majority of this shift will come as tablet PCs begin to replace notebook PCs this year as the dominant mobile PC form factor, and touch becomes a key feature in mobile PC adoption.   

“The mobile PC industry is undergoing significant change this year,” said Richard Shim, senior analyst with NPD DisplaySearch. “The rapid rise and establishment of white box tablet PCs (tablets made by small local brands, mainly in China) is putting pressure on traditional notebook PCs. These low-cost tablets are reaching further into emerging regions where notebook PC penetration rates have remained low, resulting in cannibalization by tablet PCs.”

Tablet PC shipments are forecast to increase 67% Y/Y to 256.5 million in 2013, and reach 579.4 million by 2017. White box tablet PCs accounted for one-third of tablet PC shipments in 2012 and will maintain at that level for the next several years.

Notebook PC shipments are expected to decline 10% over the next four years, from 203.3 million in 2013 to 183.3 million in 2017, but there will be pockets of growth. Shipments of notebooks with touch capabilities are expected to grow 48% Y/Y in 2014. In the notebook category, touch will be used mainly in ultra-slim PCs, which includes Intel-specified Ultrabooks, the MacBook Air, and other slim form factor notebooks. Ultra-slims, which are at the premium end of the notebook market, are forecast to account for two-thirds of touch-enabled notebooks in 2013. By 2017, they will be 80%. Intel’s recent mandate that third-generation Ultrabooks (using the company’s next generation Haswell processors) must include touch will also help adoption.

Figure 1: Global Mobile PC Shipments, 2012-2017

image

Source: NPD DisplaySearch Quarterly Mobile PC Shipment and Forecast Report

New operating systems such as Windows 8 are unlikely to be a major driver of touch adoption. Rather, penetration of touch in notebook PCs will be driven by a reduction in cost and new form factors, such as hybrids, sliders, and convertibles.

“Thus far, Windows 8 has had a limited impact on driving touch adoption in notebook PCs, due to a lack of applications needing touch and the high cost of touch on notebook PCs,” added Shim. “Form factors aimed at differentiation from standard clamshell notebooks will help to drive consumer adoption of touch-enabled notebook PCs, starting in the second half of 2013.”

The NPD DisplaySearch Quarterly Mobile PC Shipment and Forecast Report covers the entire range of mobile PC products shipped worldwide and regionally. With analysis of global and regional brands, the Quarterly Mobile PC Shipment and Forecast Report provides an objective, expert view of the market with insight into historical shipments, revenues, forecasts, and more. For more information about the report, please contact Charles Camaroto at 1.888.436.7673 or 1.516.625.2452, e-mail contact@displaysearch.com or contact your regional NPD DisplaySearch office in China, Japan, Korea or Taiwan for more information.
About NPD DisplaySearch
NPD DisplaySearch, part of The NPD Group, provides global market research and consulting specializing in the display supply chain, including trend information, forecasts and analyses developed by a global team of experienced analysts with extensive industry knowledge. NPD DisplaySearch supply chain expertise complements sell-through information from The NPD Group, thereby providing a true end-to-end view of the display supply chain from materials and components to shipments of electronic devices with displays to sales of major consumer and commercial channels. For more information, visit us at http://www.displaysearch.com/. Read our blog at http://www.displaysearchblog.com/ and follow us on Twitter at @DisplaySearch.
About The NPD Group, Inc.
The NPD Group provides global information and advisory services to drive better business decisions. By combining unique data assets with unmatched industry expertise, we help our clients track their markets, understand consumers, and drive profitable growth. Sectors covered include automotive, beauty, consumer electronics, entertainment, fashion, food/foodservice, home, luxury, mobile, office supplies, sports, technology, toys, and video games. For more information, visithttp://www.npd.com/ and npdgroupblog.com. Follow us on Twitter: @npdtech and @npdgroup.

China [branded] smartphone vendors to foray into tablet segment [DIGITIMES, July 1, 2013]

China-based smartphone vendors, including Huawei, ZTE, Lenovo and Xiaomi Technology, all will step up their efforts to penetrate the tablet market, according to industry sources.

Huawei plans to launch a new 7-inch tablet in the third quarter of 2013, and together with a 10.1-inch model released in early 2013, Huawei is sourcing about two million flat panels from China-based Truly Opto-electronics currently, the sources indicated.

Meanwhile, Huawei also purchases a portion of displays used in its new tablets from Innolux. However, the Taiwan-based flat panel maker declined to comment on orders from individual clients.

Lenovo also unveiled its Windows 8-based tablet, the Lenovo Miix10, recently. The Lenovo Miix, which is expected to hit the market in the third quarter, is equipped with a 10.1-inch 1366 by 768 IPS display and is power by an Intel dual-core Atom processor.

Xiaomi reportedly will step into the tablet segment by unveiling its first tablet in mid-August, the sources revealed, adding that Xiaomi will utilize tablet chipset solutions from MediaTek.

White-box vendors expected to lower prices for entry-level 7-inch tablets to US$40 in 2H13 [DIGITIMES, June 7, 2013]

The market for 7-inch tablets is seeing intense competition and white-box vendors are expected to further reduce prices for entry-level models to US$40 in the second half of 2013, according to Taiwan-based supply chain sources.

Entry-level white-box tablets are expected to continue selling well in markets such as China, and supply chains are able to increasingly decrease pricing for entry-level components, said the sources.

Meanwhile, Digitimes Research predicts that 254 million tablets will be sold in 2013, up 63.9% on year.

China-based white-box 2013 tablet shipments likely below forecasts [DIGITIMES, June 14, 2013]

China-based white-box tablet vendors’ shipments in 2013 were originally forecast at 120 million units, but actual shipments may fall short due to strong competition from inexpensive models launched by brand vendors, according to supply chain sources.

In addition to brand vendors, the white-box tablet vendors also face increasing competition from entry-level large-size smartphones, the sources said, adding that smartphones sized 5.7- to 6-inch are posing some of the biggest challenges.

Pricing for both the inexpensive brand models and entry-level large-size smartphones are becoming more similar to white-box tablet vendors’ products and that trend is expected to continue, causing the shipments to be less than expected in 2013, the sources added.

Digitimes Research: China mobile AP market to expand in 2013 [press release, June 14, 2013]

The China mobile application processor (AP) market will expand over 60% in 2013 to 506 million units, with smartphone-use APs accounting for 77.4% of total shipments, Digitimes Research said in its new report.

The market for smartphone APs in China climbed to 241.5 million units in 2012, up significantly from 69 million in 2011, according to Digitimes Research. The number will increase to 391.7 million units in 2013.

Shipments of China-made smartphone APs are forecast to account for 34% of the global smartphone AP market in 2013, compared to 26% in 2012 and around 10% in 2011, Digitimes Research noted.

As for China-made tablet APs, the market will reach a size of 115.2 million units in 2013, compared with a mere 10.5 million units [in 2011], Digitimes Research indicated.

Dual-core processors will overtake single-core chips to become the mainstream spec for tablets produced by China’s brand and white-box companies in the second half of 2013, while the penetration of quad-core powered tablets will also expand substantially, Digitimes Research pointed out.

China-based mobile AP vendors will ship a combined 506 million units in 2013, while the global mobile AP market will come to a size of 958 million units, Digitimes Research projected.

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Prices of smartphone and tablet solutions to drop 10-20% in 2H13 [DIGITIMES, June 18, 2013]

Prices of chipset solutions for smartphones and tablets are expected to decline 10-20% sequentially in the second half of 2013 due to competition between MediaTek and Qualcomm, according to industry sources.

Qualcomm is scheduled to host its annual QRD (Qualcomm reference design) forum in Shenzhen on June 20, which is expected to attract participants from China-based branded as well as white-box smartphone and tablet vendors, the sources noted.

While showcasing its new solutions for the second half of the year, the forum also aims to grab smartphone and tablet solution orders from MediaTek, which has been prevailing in China’s solution market using a variety of reference designs, said the sources.

Qualcomm said earlier that over 40 OEMs have launched more than 200 new smartphones and tablets in 14 countries recently, mounting increasing pressure on MediaTek, said the sources.

China-based solution vendors such as Spreadtrum Communications have also joined the price competion, driving the unit price of quad-core smartphone solutions to below US$10 in China recently, the sources revealed.

China market: White-box tablet makers approaching MediaTek for quad-core solutions [DIGITIMES, May 27, 2013]

China-based white-box tablet makers are reportedly approaching MediaTek for the purchase of the chipmaker’s integrated MT8125 and [the upcoming] 8135 [to be based on A15 + A7 “big.LITTLE” architecture] quad-core application processors for tablets, according to industry sources.

The move by the white-box tablet makers comes after branded tablet vendors in China and Taiwan have begun using the MT8125 and 8135 solutions for tablets targeting the US99-149 segment, the sources noted.

White-box tablet makers currently purchase quad-core solutions mainly from China-based IC vendors including Allwinner Technology and Rockchip Technology, while buying Wi-Fi and Bluetooth chips from Realtek Semiconductor and RDA Microelectronics.

The 28nm quad-core solutions from Allwinner and Rockchip are priced at US$4-5, or about 50% lower than the comparable quad-core chips offered by MediaTek, since the chips offered by Allwinner or Rochchip do not support voice communications, said the sources.

In order to compete effectively in China and other emerging markets and differentiate products, white-box tablet makers have been forced to adopt MediaTek’s quad-core solutions, commented the sources.

MediaTek Introduces New Quad-Core Application Processor for Fast-Growing Tablet Market [pres release, May 29, 2013] used in ASUS MeMO Pad HD 7 shown earlier

TAIWAN, Hsinchu – 29 May, 2013 – MediaTek Inc., a leading fabless semiconductor company for wireless communications and digital multimedia solutions, today announced the availability of the new quad-core application processor – MT8125 designed for the fast growing global tablet markets. The new tablet platform is an extension of the company’s highly successful quad-core portfolio, it integrates a power-efficient quad-core Cortex™- A7 CPU subsystem with speed up to 1.5GHz, PowerVR™ Series5XT Graphics that delivers compelling multimedia features and sophisticated user experiences.  To simplify product design and speed time-to-market, the MT8125 supports 3G HSPA+, 2G EDGE and Wi-Fi versions, all of which are pin-to-pin compatible, allowing device manufacturers to easily expand their portfolios with a full range of tablets by leveraging the existing or planned design requiring no additional rework.
Inheriting MediaTek’s technology breakthrough of quad-core SoC platform and high-end multimedia capabilities, the MT8125 incorporates premium multimedia features, supporting up to Full HD 1080p video playback and recording, 13MP camera with integrated ISP and Full HD (1920 x 1200) displays. The new tablet SoC also delivers ground breaking visual quality powered by the leading picture quality technologyMiraVisionTM, derived from MediaTek’s extensive experience in the Digital TV market.
The MT8125 includes full support for MediaTek’s leading 4-in-1 connectivity combo that converges Wi-Fi, Bluetooth 4.0, GPS and FM, bringing highly integrated, best-in-class wireless technologies and expanded functionality to high-performance multimedia tablets. The MT8125 also provides support for Wi-Fi certified Miracast™ which makes multimedia content sharing between devices easier.
“During the last two years, application processors used in tablets have taken a fast evolution from single-core 1GHz to quad cores, clocking over 1.5GHz. Competition will force chipset vendors to maintain pace – by implementing more advanced features while reducing the system cost by increasing the level of integration*,”said Gartner Research Director Roger Sheng.
“MediaTek’s team has worked closely with Lenovo to integrate their solutions into our design process, helping us accelerate the development and introduction of new, innovative tablets. In turn, this allows us to fulfill our commitment to delivering the outstanding user experience our customers demand. The tablet market is moving fast, and Lenovo aims to be at the forefront of tablet innovation. MediaTek helps us do that,” commented Wayne Chen, vice president and head of mobile business unit for Lenovo.
“We’re confident that our comprehensive reference designs will be the industry benchmark, particularly benefiting the mid-to-high-end tablet market. It is an innovative, cost-effective and definitely faster time-to-market solution.” said Joe Chen, GM of Home Entertainment Business Unit, MediaTek. “By taking advantage of our strengths in the multimedia field, mobile communications and multi-screen technologies, we offer a complete multi-core processor family for smartphones and tablets, enabling a significant difference in performance and power efficiency – all while ensuring seamless streaming performance across the array of devices when users are consuming entertainment and information. ”
The MediaTek quad core tablet SoC is now being widely adopted by MediaTek’s global customers including Lenovo IdeaTab S6000 series.

Lenovo S6000 10.1″ MediaTek MT8389 [Charbax YouTube channel, March 4, 2013]

Note:
1. According to LinuxGizmos.comIt appears, however that Lenovo’s 10-inch, quad-core S6000 Android tablet uses a scaled down, 1.2GHz version of the MT8125 called the MT8389. … The MT8389 also appears to have a lesser PowerVR SGX GPU, according to All-RSS.com. As a result, the Lenovo S6000 has more limited 1280 x 800-pixel resolution and a 5-megapixel camera.
2. Quad-core SoC competition in as per this:

image

MT8125 / 8389
Quad-Core Cortex-A7 1.5GHz + CPU Tablet Platform [May 29, 2013]

Overview
MT8125/8389 is an extension of MediaTek’s highly successful quad-core portfolio, it integrates a power-efficient quad-core Cortex™- A7 CPU subsystem with speed up to 1.5GHz, PowerVR™ Series5XT Graphics that delivers compelling multimedia features and sophisticated user experiences.
Features
High-end Multimedia Capabilities
•  Supporting up to Full HD 1080p video playback and recording, 13MP camera with integrated ISP and Full HD (1920 x 1200) displays
• Delivering ground breaking visual quality powered by the leading picture quality technology – MiraVisionTM, derived from MediaTek’s extensive experience in the Digital TV market.
Best-in-class Connectivity Technology
•    Including full support for MediaTek’s leading 4-in-1 connectivity combo that converges Wi-Fi, Bluetooth 4.0, GPS and FM, bringing highly integrated, best-in-class wireless technologies to tablets
•   Providing support for Wi-Fi certified Miracast™ which makes multimedia content sharing between devices easier
Supports 3G HSPA+, 2G EDGE and Wi-Fi
•   MT8125/ 8389 supports 3G HSPA+, 2G EDGE and Wi-Fi versions, all of which are pin-to-pin compatible, allowing device manufacturers to easily expand their portfolios with a full range of tablets by leveraging the existing or planned design requiring no additional rework.

MT8377
1 GHz Dual-Core Tablet Platform [May 29, 2013]

Overview
The MediaTek MT8377 features a dual 1GHz Cortex™-A9 application processor from ARM, a PowerVR™ Series5 SGX GPU from Imagination Technologies, MediaTek’s proven 3G/HSPA/Edge modem, and runs the Android 4.0 “Ice Cream Sandwich”. y integrating a dual-core application processor architecture widely deployed in the majority of today’s premium tablets, the MT8377 boosts application and browser performance by up to 40% compared to single-core platform.
Features
Richest Multimedia Features
•   Providing rich multimedia features including a 8MP camera and high-definition 1080p video playback
•   Supporting high-resolution displays of up to HD720 (1280×720) resolution
•   Integrating built-in stereo 3D panel support and DTV-grade display picture quality
Best-in-class Connectivity Technology
•    Including full support for MediaTek’s leading 4-in-1 connectivity combo that converges Wi-Fi, Bluetooth 4.0, GPS and FM

MediaTek allocating more resources for development of tablet solutions [DIGITIMES, June 10, 2013]

MediaTek is relocating its tablet solution unit from its wireless communications group to the home entertainment group, meaning that the Taiwan-based top IC design house is looking to put more of its hardware and software resources into developing chips for tablet applications, according to industry sources.

The move echoes company president Hseih Ching-chiang’s statement that MediaTek aims to roll out new chips for tablet applications on a quarterly basis in the next few years.

The emphasis on the development of chips for tablets indicates that MediaTek believes that tablets will become the next-generation killer application and that the global tablet market is likely to continue to grow robustly in the coming years, commented the sources.

Meanwhile, MediaTek has adopted a strategy to push sales of its tablet solutions to non-Apple branded vendors in China and Taiwan, which have been focusing on promoting mid-range tablets for the US$99-199 segment, the sources indicated.

Given the high price/performance ratio and reliability of MediaTek’s chipset solutions, more and more entry-level tablet vendors in China are likely to queue up for table solutions from MediaTek, said the sources.

MediaTek is expected to ship a total of 20 million chipsets for tablets in 2013, accounting for 15% of the global non-iPad tablet market, estimated the sources.

MediaTek 2Q13 performance beats guidance [DIGITIMES, July 5, 2013]

MediaTek has reported consolidated revenues of NT$9.77 billion (US$323.52 million) for June, down 10.6% sequentially but up 24.6% on year.

MediaTek’s second-quarter revenues totaled NT$33.28 billion [US$1.1B], increasing 38.8% sequentially and surpassing the company’s guidance of NT$30-31.6 billion set for the quarter.

For the first half of 2013, revenues amounted to NT$57.25 billion [US$1.9B], up 33% from a year earlier.

Digitimes Research: China mobile AP shipments rise in 2Q13 [press release, June 24, 2013]

The China mobile application processor (AP) market is forecast to reach a total of 114.5 million units in the second quarter of 2013, up 9.6% sequentially and 88.6% from the 60.7 million units shipped a year ago, Digitimes Research said in its new report. Smartphone-use APs continued to account for the majority of total shipments.

The market for smartphone APs in China will amount to 92.3 million units in the second quarter, representing a 16% increase compared to 79.6 million units in the first quarter, whereas that for tablet-use APs declined 10.8% on quarter to 22.2 million units, according to Digitimes Research.

The China mobile AP market, which consists of smartphone- and tablet-use APs, is set to total 219 million units in the first half of 2013, said Digitimes Research. The top-5 suppliersMediaTek, Qualcomm, Spreadtrum Communications, Allwinner Technology and Rockchip Electronics – contributed as high as 192 million units, or 87.7%, to the overall shipments, Digitimes Research indicated.

MediaTek has enjoyed robust growth in its SoC shipments for smartphones and tablets with shipments for the first half estimated at 84 million units, while Qualcomm‘s shipments to China’s mobile AP market are set to total about 42.7 million units, Digitimes Research predicted. Meanwhile, Spreadtrum with its low-price strategy is expected to ship 38 million units in the first half of 2013, Digitimes Research said.

Specializing in tablet-use SoCs, Allwinner and Rockchip will both report significant on-year growth in their shipments for the first half of 2013, Digitimes Research indicated. Allwinner‘s shipments will climb to 18 million chips in first-half 2013 from only 4.7 million units a year earlier, while Rockchip‘s shipments for the same period will reach 10 million chips compared with the 5.5 million units shipped in the first half of 2012.

image

Note: Out of 47.1 million units used in tablets for H1CY13 28 million came from Allwinner and Rockchip, which is almost 60%. 38% belongs to Allwinner, 21% to Rockchip.

Digitimes Research: TSMC expanding in China [press release, June 20, 2013]

Taiwan Semiconductor Manufacturing Company (TSMC) has significantly expanded its presence in China’s IC industry, as the foundry’s technology advantages and manufacturing capabilities help it ride the wave of smartphone and tablet growth in the local market, according to Digitimes Research.

TSMC has received a pull-in of orders from a number of China-based IC design houses, which specialize in mobile SoCs such as application processors and place a heavy emphasis on demand domestically. Their booming businesses have boosted TSMC’s sales coming from the China market, said Digitimes Research.

TSMC saw sales generated from the total orders placed by its China-based clients climbed to US$820 million in 2012 from US$510 million in 2011, an about 61% increase. Sales are set to rise further to top US$1.4 billion in 2013, Digitimes research forecast.

China-based Semiconductor Manufacturing International (SMIC) has also enjoyed growth in its sales coming from the local market, Digitimes Research indicated. Sales generated from orders placed by SMIC’s local China-based clients arrived at the highest quarterly level for a third consecutive quarter in the first quarter of 2013, Digitimes Research said.

In addition, Digitimes Research noted that China’s IC design sector has entered a new phase of development. The number of China-based IC design companies exceeded 500 in 2012 with their combined output value ranked third worldwide.

IHS Boosts Tablet Panel Shipment Forecast as White-Box Products Storm the Market [press release, July 2, 2013]

EL SEGUNDO, Calif.(July 2, 2013)—Boosted by orders from unbranded, white-box Chinese manufacturers, global demand for tablet panels is exceeding expectations, spurring IHS to increase its forecast for displays by 6 percent for 2013.

A total of 262 million displays for tablets are forecast to be shipped in 2013, compared to the previous forecast of 246 million, according to the May Edition of the “LCD Industry Tracker—Tablet” report from information and analytics provider IHS (NYSE: IHS). This will represent 69 percent growth from 155 million in 2012, as presented in figure 1 attached.

image

“Competitive dynamics in the tablet market have changed dramatically this year as Chinese white-box smartphone makers have entered the tablet market in droves,” said Ricky Park, senior manager for large-area displays at IHS. “These companies are producing massive quantities of low-end tablets that appeal to consumers in China and other developing economies. Because of this, the white-box manufacturers are driving up demand for tablet panels, particularly smaller displays using the older twisted nematic (TN) technology, rather than the newer screens using in-plane switching (IPS).”

Unbranded tablet makers purchased 40 percent of all tablet panels in April, up from just 17 percent in the first quarter of 2012, as presented in figure 2 attached.

image

Partly because of the rise of white-box makers, shipments of smaller 8- and 9-inch tablet displays will rise by nearly 200 percent in 2013. In contrast, larger displays in the 9-, 10- and 11-inch range will suffer a 5 percent decline.

The boom in white-box tablets is being driven the introduction of turnkey designs offered by processor makers. The designs make it easy for new, inexperienced market entrants to offer tablet products.

The Chinese white-box manufacturers hold certain advantages over the major incumbent tablet manufacturers. The white-box manufacturers are able to produce tablets at lower cost, more quickly and with greater flexibility in production. These companies also have the capability to manufacture both unbranded tablets, and make products for the major brands on a contract manufacturing basis.

Such white-box players also have been agile enough to take advantage of the current high availability and low-cost of tablet panels. Makers of displays for the shrinking PC market have switched over to the tablet market, spurring a glut that has depressed pricing. As prices have fallen, the white-box makers have demonstrated enough flexibility to boost production of low-cost tablets.

“Playing to their strengths, the white-box manufacturers are set to continue to increase their presence in tablets and propel the expansion of the overall tablet market,” Park said.

IHS believes the strong growth of tablet panel demand continued in the second quarter. The arrival of more turnkey tablet design solutions will drive up demand for 7- and 8-inch panels throughout the year.

The 8-inch panels are becoming an increasingly large segment of the tablet market, with a display area more appealing to users than the 7-inch size. In all, the 8-inch panels accounted for 11 percent of panel shipments in April, with Samsung and Acer having recently launched new tablets in that size. With more introductions likely coming in the third quarter, IHS expects a substantial market share for the 8-inch by the end of this year.

The market for larger-sized, 10-inch and bigger tablet panels may begin to enjoy a recovery in shipments with the launch of the new Intel Corp. Atom microprocessor, code-named Bay Trail. This new device could help reduce the cost of x86 microprocessor-based tablets and improve battery life. Bay Trail also could generate opportunities for hybrid-form tablets that include keyboards.

The x86 tablets, with Microsoft Corp.’s new Windows 8 operating system, would have functionality better suited to the needs of the commercial and business worlds than either the Google Android- or the Apple  iOS-based tablets, which are designed with the consumer in mind.

About IHS (www.ihs.com)

IHS (NYSE: IHS) is the leading source of information, insight and analytics in critical areas that shape today’s business landscape. Businesses and governments in more than 165 countries around the globe rely on the comprehensive content, expert independent analysis and flexible delivery methods of IHS to make high-impact decisions and develop strategies with speed and confidence. IHS has been in business since 1959 and became a publicly traded company on the New York Stock Exchange in 2005. Headquartered in Englewood, Colorado, USA, IHS is committed to sustainable, profitable growth and employs 6,700 people in 31 countries around the world.

Flexible Display Market to Reach Nearly 800 Million Unit Shipments by 2020 [IHS press release, June 5, 2013]

EL SEGUNDO, Calif. (June 5, 2013)—Demand for flexible displays is set to undergo massive growth during the next seven years, with a broad variety of applications—ranging from smartphones to giant screens mounted on buildings—driving a nearly 250 times expansion in shipments from 2013 through 2020.

Global shipments of flexible displays are projected to soar to 792 million units in 2020, up from 3.2 million in 2013, according to a new IHS report entitled “Flexible Display Technology and Market Forecast” . Market revenue will rise to $41.3 billion, up from just $100,000 during the same period, as presented in the attached figure.

image

“Flexible displays hold enormous potential, creating whole new classes of products and enabling exciting new applications that were impractical or impossible before,” said Vinita Jakhanwal, director for mobile and emerging displays and technology at IHS. “From smartphones with displays that curve around the sides, to smart watches with wraparound screens, to tablets and PCs with roll-out displays, to giant video advertisements on curved building walls, the potential uses for flexible displays will be limited only by the imagination of designers.” 

Generation flex

IHS classifies flexible displays into four generations of technology. The first generation is the durable display panels that are now entering the market. These panels employ a flexible substrate to attain superior thinness and unbreakable ruggedness. However, these displays are flat and cannot be bent or rolled.

Second-generation flexible displays are bendable and conformable, and can be molded to curved surfaces, maximizing space on small form-factor products like smartphones.

The third generation consists of truly flexible and rollable displays that can be manipulated by end users. These displays will enable a new generation of devices that save space and blur the lines separating traditional product categories, such as smartphones and media tablets.

The fourth generation consists of disposable displays that cost so little that they can serve as a replacement for paper.

Starting small

With their thin, light and unbreakable nature, flexible displays initially are expected to be used in smaller-sized products, such as mobile phones and MP3 players. However, once large-size displays are available, flexible technology will be used in bigger screen-size platforms, such as laptops, monitors and televisions.

The largest application for flexible displays during the next several years will be personal electronic devices. This segment will be led by smartphones, with shipments climbing to 351 million units by 2020, up from less than 2 million this year.

Flexible stars at SID

Flexible displays were a major topic at the Society for Information Display (SID) Display Week event in Vancouver in May.

During an SID keynote address, Kinam Kim, president and CEO of Samsung Display Co., discussed his company’s flexible organic light-emitting diode (OLED) display technology. Kim said that the technology will be suitable for wearable electronics devices like Google Glass.

Also at SID, LG Display showed a 5-inch OLED panel constructed out of plastic that was both flexible and unbreakable.

Furthermore, Corning at SID showed its Willow Glass, which can be used as with both OLEDs and liquid-crystal displays (LCD) in mobile devices such as smart phones, tablets and notebook PCs. Because of its thinness, strength and flexibility, Willow Glass could enable future displays to be wrapped around a device or a structure.

IHS predicts OLEDs will be the leading flexible display technology during every year for the foreseeable future, accounting for 64 percent of shipments in 2020.

How Intel Can Enable a Successful $200 PC in the Age of the Media Tablet [IHS press release, May 20, 2013]

Vancouver, British Columbia (May 20, 2013)—Can PC makers produce ultrathin, touch-screen PCs that are appealing to consumers—and that are priced at just $200?

The astounding answer seems yes—if microprocessor Intel Corp. is willing to cut the price of its semiconductor components to PC makers, according to a PC Dynamics Market Brief from information and analytics provider IHS (NYSE: IHS).

Speaking at the IHS/SID 2013 Business Conference, held May 20 in Vancouver, Canada, Zane Ball, Intel vice president and general manager, Global Ecosystem Development, is presenting his company’s plan to empower the PC industry to produce low-cost notebooks incorporating touch technology. Craig Stice, senior principal analyst for compute platforms at IHS, believes Intel has a shot at success.

“A price point that low seems far-fetched considering the mobile PC prices of today, with Ultrabooks and other ultrathins going as high as $1,000 or more,” Stice said. “However, the small laptops known as netbooks saw their prices reach down into the $200 range at the height of their popularity a few years ago, and a cost analysis of netbooks shows how such a low level of pricing can be used to support a no-frills type of ultrathin PC.”

The cost estimate for a standard netbook, based on the IHS Compute Systems Cost Analyzer that calculates the major components of a netbook on a third-quarter 2013 timeline, comes out to $207.82, as shown in the attached table.

image

“Hitting this kind of price point is not impossible for the PC industry, already a cutthroat market accustomed to razor-thin margins,” Stice said. “Such a possibility was stated by outgoing Intel CEO Paul Otellini, who during Intel’s first-quarter earnings call in April made the bold prediction that touch-enabled, ultrathin Intel-based notebooks using non-core processors could be available by the end of this year.”

Intel holds the cards

The key factor that could make this happen is Intel, which can control up to 33 percent of the total bill-of-materials cost for the PC through the central processing unit (CPU) and motherboard. If Intel decides to provide a price break for just these components, PC original equipment manufacturers could see their margins improve, allowing them to drive down prices for the retail market. With PC competition so fierce, it takes only one PC manufacturer to find a price point that sells—and others are bound to follow suit shortly afterward.

Intel could also be instrumental in introducing an even more powerful ultrathin-type mobile PC than netbooks, which have now been overtaken by media tablets and are on their way out of the market altogether.

Intel’s next-generation Atom processor, called Bay Trail, has the potential to deliver a performance boost that will clearly separate the traditional netbooks of old from the new generation of mobile and ultrathin PCs.

Avoiding netbooks’ fate

While netbooks had limited computing power and were regarded more as devices for content consumption, the new and much more economical ultathins, in contrast, would possess considerably more power and be categorized as content-creation devices. Such a perceptible enhancement could increase their chances of survival in the marketplace, unlike the short-lived netbooks.

Much depends on Bay Trail, which Intel says will move from two processing cores to four to provide beefed-up performance. Along with Bay Trail, Intel’s own high-definition embedded graphics and an extended battery life for improved power will yield a processor bearing similar performance to the chipmaker’s renowned family of Core processors. All these traits could be part of the new, less expensive ultrathin being projected.

What PC manufacturers also must do

What these developments portend for the PC industry is significant. If the PC industry is able to get down to the $200 price point, and Intel’s Bay Trail processor delivers what it claims to do, then the PC market will have its much-needed shot in the arm. Such a turn of events could then spark the mobile PC market, which has been losing steam to flashier rivals like smartphones and tablets.

Besides Intel’s willingness to cut its own price point to make chips available at a lower cost to customers, a second important factor involves the PC makers themselves. For their part, PC manufacturers also need to find a way of getting to the magic price point of $200—and possibly sacrifice even more margin in exchange for the greater amount of volume that they seek.

All told, the scenario above—merely hypothetical at this point—is not entirely out of reach. A strong second half is already being forecast for PCs this year: add in the potential for lower-priced next-generation ultrathin systems, and the PC industry may finally have a valid competitor to lower-priced media tablets.

China Becomes World’s Leading PC Market in 2012 [IHS press release, April 29, 2013]

EL SEGUNDO, Calif. (April 29, 2013)—China rose to the top of the PC market for the first time ever on an annual basis last year, relegating the United States to second place with a lead of more than 3 million units, according to an IHS iSuppli PC Dynamics Market Brief from information and analytics provider IHS (NYSE: IHS).

PC shipments in 2012 to China amounted to 69 million units, exceeding the 66 million total reached by the United States. Only a year earlier in 2011, the United States was the leading global destination for PCs.

Beyond its large size, China’s PC market exhibits distinct characteristics that set it apart from the computer trade elsewhere, possessing a vast untapped rural market and unique consumer-purchasing patterns. While desktop PC shipments lagged notebooks around the world, the two PC segments were on par in China in 2012, with an even 50-50 split, as shown in the attached table.

image

“The equal share of shipments for desktops and notebooks in China is unusual, since consumers in most regions today tend to prefer more agile mobile PCs, rather than the bulky, stationary desktops,” said Peter Lin, senior analyst for compute platforms at IHS. “The relatively large percentage of desktop PC shipments in China is due to huge demand in the country’s rural areas, which account for a major segment of the country’s 1.34 billion citizens. These consumers tend to prefer the desktop form factor.”

The market will change gradually as desktop PCs face rising competition from the high value proposition presented by notebooks. Notebooks will then surpass desktops in the country by 2014, tracking more closely with the worldwide desktop-to-notebook PC ratio of 36 to 64 percent.

The desktop vs. notebook pattern of consumption in China is only one example of the distinctive hallmarks of the country’s dynamic PC market. In another indicator, China also has approximately a 50-50 proportion in consumer vs. commercial PCs, compared to the 65-35 percent ratio for the rest of the world.

A third pattern unique to the China PC market is the preferred notebook display size of 14 inches, which accounts for more than 70 percent of notebook PC shipments in the country. For the rest of the world, the 14-inch makes up less than 30 percent.

A fourth pattern of note is the attach rate of PCs with a pre-installed operating system, especially for notebooks. While mature PC markets in other parts of the world claim a 90 percent attach rate, the proportion for China comes out to lower than 50 percent, with the ratio even lower in the desktop PC market.

Despite such exclusive behavior, the China PC space shares one common trait with the worldwide PC market. Like the rest of the world, demand in China remains weak as consumers migrate to using mobile devices like cellphones. China’s PC market is projected to grow only by 3 to 4 percent this year.

Even so, a vast market opportunity continues to exist for PCs in the country, in the form of potential first-time buyers mostly residing in the countryside. The government already plans this year to invest some 40 trillion yuan—equivalent to some $6.4 trillion—to build rural infrastructure in the next 10 years, and PC original equipment manufacturers can take advantage of the initiative to build out and expand from the cities, IHS believes.

China is also on track to retain its position as the largest PC market in the world for the foreseeable future unchallenged and alone—further providing PC brands a rare opportunity for expansion, counter to the myriad travails they face in the rest of the world.

Spreadtrum is to be acquired by a Chinese high-tech investment enterprise owned by the state and also belonging to the leading Tsinghua University with microelectronics research interests

The top 10 SoC design enterprises of Mainland China had US$3.8B revenue in 2012. Out of that Spreadtrum had US$725.2M which is not less than 19%. On the ‘Experiencing the Cloud’ I’d reported extensively on the reasons:

It is also notable that this (together with MediaTek offerings) lead to Qualcomm’s SoC business future is questioned first time [May 1, 2013].

Update: TrendForce: Mediatek and Spreadtrum Advance in China Market while Qualcomm’s Chip Usage Declines [press release, June 27, 2013]

Mediatek has been making an impressive run lately; not only is the Taiwan-based chip manufacturer commanding its way in the mid-to-high end smartphone space, it has also successfully penetrated the 4G mobile market thanks to its recently announced 4G chip. According to the latest statistical data compiled by TrendForce, a global market research firm, Mediatek’s processors have been used by over 50% of China’s branded smartphones since the MT6575 chip was introduced in 2012. Due in large part to factors such as high pricing and the lack of hardware and software compatibility with various Chinese-made devices, Qualcomm’s chip usage rate has been gradually declining in China, and shrunk to as low as 33% in 2013. With Qualcomm and Mediatek both devoting their attention towards the mid to high end smartphone consumer segment, much of the low-end smartphone space has been left to Spreadtrum, which has recently unveiled a processor intended for low end hardware devices. In 2013, Spreadtrum’s chip usage rate in the Chinese market grew to approximately 11%.
imageFigure-1 2013 Smartphone processor market share in China’s smartphone market
Source: DRAMeXchange, June, 2013

Despite being an indisputable leader in the high end smartphone market, Qualcomm’s MSM8X30, MSM8X26, and MSM8X25Q processors are still facing a lot of stiff competition in the low-to-mid end mobile sectors. A way Qualcomm may reverse its struggles in China is by taking advantage of the country’s rapidly growing 4G/LTE developments. The company will have a good chance of emerging as a major LTE market leader should China’s 4G business opportunities appear early next year.  

Although Mediatek has generally been known to promote two new items on an annual basis, this year the Taiwan-based company has chosen to break away from tradition by announcing a total of four different products. The first –the MT6589– was announced during 1H13, and is intended for the mid-to-high end smartphone market; the remaining three products—all of which are smartphone chips—are expected to be introduced at some point during 2H13. Among the new processors, the duo core, Cortex A7-based MT6572 chip stood out as particularly noteworthy given its potential to exert a lot of impact on the low end smartphone market. The said chip is unique in that it supports China’s TD SCDMA system, is priced in a notably affordable range, and sports a good degree of compatibility with various low cost components (which could help push manufacturing costs down to as low as $US 40). All in all, this chip provides a perfect opportunity for Mediatek to compete against the low-end smartphone chips that are designed by Spreadtrum. The MT6575 is expected to become popular within the mid-to-low end smartphone market and should help Mediatek cement its position within the low end sector.
Following the release of the MT6589 chip, which is expected to open up new opportunities in the mid-to-low end market, Mediatek aims to introduce the quad core MT6580 and MT6582 in 2H13. MT6582 is considered a more affordable version of MT6589, and supports both qHD resolution and 8MP camera. These features are expected to help the company redefine the boundaries of a mid-end smartphone as well as increase its overall consumer appeal. The MT6580, on the other hand, is intended to be a viable alternative to a Qualcomm chip. Other than supporting 1.5Ghz speed, HD resolution, and 13MP camera, the chip is able to work with the kinds of high-quality hardware that are typically compatible with Qualcomm processors. According to TrendForce, if Mediatek is indeed successful in enhancing its presence in the high end market, a price war involving high-end processors is likely to ensue. Should this happen, both consumers and smartphone manufacturers will benefit, and the boundaries among high end smartphone devices will become less and less clear.    
With China’s recent plans to expand the TD-LTE coverage for its 500 million users by 2020, and with the 4G industry growing at a tremendously rapid pace, the LTE ecosystem in China is set to become more and more mature in the foreseeable future. Qualcomm is very likely to benefit from such a trend given its priority on the 4G/LTE business. Following the high end chip pricing war, the 4G/LTE market will likely become next battlefield for chip makers.

End of the update

Tsinghua University investment arm makes buyout offer for Spreadtrum [Asian Venture Capital Journal, June 24, 2013]

Spreadtrum [展讯] Communications [处在], a Chinese mobile chip manufacturer backed by NEA, has received a [non-binding] buyout offer from a unit of Tsinghua Holdings, an investment entity controlled by Beijing-based Tsinghua University. The offer values Spreadtrum at $1.35 billion.

According to a regulatory filing, Tsinghua Unigroup will pay $28.50 in cash for all outstanding American Depository Shares – a 20% premium on the stock’s previous closing price. Spreadtrum’s stock jumped more than 16% in response to the announcement, closing Friday at $25.91.

As of year-end 2012, NEA owned 10.4% of the company, having initially participated in the $19.8 million Series B round in 2002. Spreadtrum went public on NASDAQ in 2007, raising $124.6 million. Silver Lake bought a 13% stake for $40 million in 2010 but exited the following year.

In 2011, Spreadtrum also came under fire from short-seller research firm Muddy Waters over alleged accounting discrepancies. The company denied any wrongdoing.

“We believe that an Acquisition by Tsinghua Unigroup [紫光集团有限公司], which is majority-owned by Tsinghua University, a central player in China’s technology and R&D sectors, would provide compelling strategic synergies and position the company for additional value creation in key wireless communications markets in China and elsewhere going forward,” Unigroup CEO Weiguo Zhao said in a letter to shareholders.

Tsinghua Holdings has committed to guarantee full equity or debt funding up to the total purchase price of $1.5 billion.

Spreadtrum was founded in 2001 and develops mobile chipset platforms for 2G, 3G and 4G wireless communication standards. Customers include handset manufacturers selling into China and other emerging markets. The company posted a net income of $92.4 million for 2012, down from $134 million the previous year, although revenues jumped 7.6% to $725.2 million.

Tsinghua Holdings is a state-owned company responsible for managing the majority of Tsinghua University’s commercial assets. As of year-end 2012, Tsinghua Holdings had approximately RMB70.4 billion ($11.5 billion) in assets and a net income of RMB1.45 billion. Unigroup focuses on high-tech, biotech, real estate and urban infrastructure investments.

Tsinghua Science Park Venture Capital, which also ultimately falls under the control of Tsinghua Holdings, participated in Spreadtrum’s Series A and B rounds.

Note that this shows the strong determination by the Chineses State because:
我国大陆IC产业发展面临三大障碍 Mainland China IC industry is facing three major obstacles [Hexun.com, June 22, 2013] as translated by Google and Bing with manual edits

Summary:

What are the essential elements in the development of the IC industry or power? The industry generally believes that strong government support, pragmatic policies and systems, building good infrastructure and abundant human resources, are the key elements how the IC industry in developing countries and regions may come from behind.

The operating efficiency of the Innovation Alliance, of the official mechanisms for collaboration, research, and industry R&D is not high, which is one of the significant factors restricting the rapid development of mainland China’s IC industry.

Mainland China’s IC industry in recent years gained rapid development, and some of the advantages of the competitiveness of enterprises began to appear. Taking the fastest-growing design industry as an example, in 2011 the overall IC design industry sales continued to maintain a high growth rate, reaching 47.374 billion yuan [US$7.7B], an increase of 30.2% year on year. In 2012, total sales for the top 10 design enterprises in China reached 23.117 billion yuan [US$3.8B], an increase of 2.97 billion yuan [US$484M] over the previous year. 10 companies accounted for 33.97% of total industry sales, 2.21% increase over the 31.76% in the previous year. First business sales reached $ 1.183 billion.

Spreadtrum Communications [展讯通信], RDA [锐迪科], HiSilicon [海思], Zhuhai Allwinner [珠海全志] and so on, i.e. the SoC enterprises have made great achievements in the field. But compared with Taiwanese and Korean enterprises there is still relatively slow development, the products are low-tech, and the competitiveness of the enterprises is weak. Price is also the company’s main business strategy, “design” is still not a mainstream, the situation of slow building of the base capability had not improved. Industry-wide sales may also be less than the sum of the sales of the world’s top-ranked design firms.

Note that out of the US$3.8B revenue of the top 10 design enterprises in 2012 Spreadtrum had US$725.2M which is not less than 19%. This data alone shows how important is the Spreadtrum acquisition in order to speed up the further development of the IC industry by putting the company together with the Tsinghua University which has a Research Institute of Circuits And Systems as well as an Institute of Microelectronics (IMETU), see here and here:

IMETU, the Institute of Microelectronics of Tsinghua University, was founded in 1980 on the basis of the Semiconductor Research Division, which was a research division of the Department of Electronic Engineering established in 1957. The mission of IMETU is to educate top level professionals and deliver scientific innovations in the domain Micro/Nano-electronics. During the past 30 years, IMETU has made significant contributions and key achievements for the development of China’s semiconductor and integrated circuit industry. Its faculty members and students won 8 national awards, more than 20 province or ministry level awards, as well as 136 granted patents. The institute consists of four divisions, Solid-State Devices and Integration Technologies, IC & System Design, Micro/Nano Devices and Systems, and CAD Technology. Up until March 2012, IMETU has 94 faculty and staff members, among which there are 14 professors and 46 associate professors. After 30 years of development, IMETU has been China’s leading research and education base in the area of Micro/Nano electronics. It has established a high-quality research infrastructure for microelectronics comprising of two major research directions, Micro/Nano electronics and IC & System Design. Meanwhile, alumni of IMETU have become the backbone of China microelectronic industry.

which is also the premier university partner of The Institute of Microelectronics of Chinese Academy of Sciences.

Major shareholders of Spreadtrum (with more than 5%): source Annual Reports

 
March 15, 2008
March 15, 2009
March 31, 2010
Feb 28, 2011
Feb 29, 2012
Feb 28, 2013
Scott Sandell [also includes New Enterprise Associates 11, Limited Partnership shares]
15.42%
15.71%
14.92%
14.4%
10.9%
10.4%
Entities affiliated with New Enterprise Associates 11, Limited Partnership
15.36%
15.61%
14.76%
14.2%
10.7%
10.1%
Entities affiliated with Fortune Venture Investment Group
6.31%
6.29%
       
Entities affiliated with Pacific Venture Partners
5.21%
5.30%
       
Entities affiliated with Silver Lake Partners
   
12.47%
5.8%
   
The Bank of New York Mellon Corporation
   
5.45%
 
5.2%
 
FMR LLC and Edward C. Johnson 3d
     
5.3%
   
FMR LLC
         
9.9%
Waddell & Reed Group
         
5.3%

image
source: Yahoo! Finance SPRD Major Holders

Tsinghua Unigroup Announces Offer to Buy Spreadtrum Communications [press release, June 21, 2013]

BEIJING–(Marketwired – Jun 21, 2013) – Tsinghua Unigroup Ltd. (“Unigroup”) today confirmed that it has made a non-binding offer to acquire Spreadtrum Communications, Inc. (NASDAQ: SPRD) (“Spreadtrum” or the “Company”) for $28.50 in cash per American Depositary Share (the “Transaction”). Spreadtrum is a leading fabless semiconductor provider in China with advanced technology in 2G, 3G and 4G wireless communications standards. The offer represents a premium of 20.1% over the closing price of the Company’s shares on June 19, 2013, the day preceding the delivery of the offer and 44.3% over the volume weighted closing price of the Company’s shares for the 30 trading days preceding the delivery of the offer.

Unigroup is an operating subsidiary of Tsinghua Holdings Co. Ltd., a solely state-owned limited liability corporation funded by Tsinghua University, one of the most prestigious universities in the world. Tsinghua Holdings owns and manages a substantial majority of the commercial assets of Tsinghua University. As of December 31st, 2012, Tsinghua Holdings had total assets of approximately 70.4 billion RMB [$11.45B], EBITDA of approximately 4.07 billion RMB, and net income of approximately 1.45 billion RMB for fiscal year 2012. Tsinghua Holdings’ corporate credit rating is AA+ according to CCXI, the Chinese domestic JV partner of Moody’s and the leading credit rating agency in China. Additional information about Tsinghua Holdings can be found at (http://www.thholding.com.cn/english/simpleindex.aspx). 

According to the preliminary non-binding proposal letter, Tsinghua Holdings has committed to guaranteeing the aggregate purchase price, which may be funded through a combination of equity and debt financing. 

Unigroup is excited about the proposed acquisition of Spreadtrum and the strategic opportunity this Transaction provides given the strength of this leading China-based business. Mr. Zhao Weiguo, the Chairman and CEO of Unigroup, commented, “We are enthusiastic about Spreadtrum’s business and market position globally and here in China, and we see Spreadtrum as an excellent strategic fit with Unigroup’s overall commercial objectives. We look forward to working together on the details of our proposed acquisition.” 

Unigroup’s proposal is non-binding and is subject to, among other things, satisfactory due diligence with respect to Spreadtrum and the execution of acceptable definitive agreements. There can be no assurance that Spreadtrum will support the Transaction, that any definitive binding offer will be made by Unigroup with respect to the Transaction, that any agreement with respect to the Transaction will be executed, that any conditions, including with respect to regulatory approval, will be satisfied, or that this Transaction or any other transaction, on the proposed terms or on any other terms, will be approved or consummated. Unigroup does not undertake any obligation to provide any updates with respect to this Transaction or any other transaction, except as required under applicable law.

About Tsinghua Unigroup Ltd.

Tsinghua Unigroup Ltd. (“Unigroup”) is an operating subsidiary of Tsinghua Holdings Co. Ltd., a solely state-owned limited liability corporation funded by Tsinghua University in China. Tsinghua Holdings Co. Ltd. is the controlling shareholder of Unigroup. Unigroup’s business lines include high-technology, bio-technology, science park development, and urban infrastructure construction.

About Spreadtrum Communications, Inc.

Spreadtrum Communications, Inc. (NASDAQ: SPRD) (“Spreadtrum”) is a fabless semiconductor company that develops mobile chipset platforms for smartphones, feature phones and other consumer electronics products, supporting 2G, 3G and 4G wireless communications standards. Spreadtrum’s solutions combine its highly integrated, power-efficient chipsets with customizable software and reference designs in a complete turnkey platform, enabling customers to achieve faster design cycles with a lower development cost. Spreadtrum’s customers include global and China-based manufacturers developing mobile products for consumers in China and emerging markets around the world. For more information, visit www.Spreadtrum.com.

This press release does not constitute an offer to sell or the solicitation of an offer to subscribe for or buy any security, nor is it a solicitation of any vote or approval in any jurisdiction, nor shall there be any sale, issuance or transfer of the securities referred to in this press release in any jurisdiction in contravention of applicable law.

Note that with June 27, 2007 Spreadtrum IPO on Nasdaq the company had $125.9M initial market capitalization which a year later became $209.41M; the quarterly revenue at IPO time was US$38.6M:

image

image

Data is in US$

Spreadtrum Closes $35.2 Million Series C funding [press release, June 4, 2004]

Sunnyvale, California – June 4, 2004 – Spreadtrum Communications Inc., a leading fabless semiconductor company developing and marketing innovative digital wireless communications products, today announced the completion of $35.2 million Series C financing led by New Enterprise Associates (NEA) with additional participation from existing investors, Fortunetech Investment Fund, Pacific Venture Group, Vertex, Legend Capital, HuaHong International and more.

“Proceeds from this financing will be used primarily to expand operations and to develop new product offerings,” said Dr. Ping Wu, President of Spreadtrum. ‘Spreadtrum has gained customers acceptances in the GSM/GPRS markets and is now gaining traction in the 3G area. We are very pleased to be working with these experienced venture capital firms. With their industry knowledge and resources, we are confident we will expand our global reach.
“Spreadtrum has all the components we look for when making an investment,” said Scott Sandell, NEA general partner and Spreadtrum board member. “With its experienced management team and superior technology, Spreadtrum is poised to emerge as one of the world-class fabless semiconductor companies. They continue to demonstrate their ability to develop and market their products while gaining traction in this large, explosive market.”
Spreadtrum is currently shipping GSM/GPRS baseband chipset SC6600 families and GSM/GPRS module SM5100 families. The SC6600 is a highly integrated GSM/GPRS single baseband mixed signal chip containing all digital and analog functionality for a GSM/GPRS wireless phone. The SM5100 provides both voice and data functions, and can be used in GSM/GPRS tri-band cell phones, data modems and other mobile terminal devices. Reference designs for a complete GSM/GPRS handset terminal are available. Spreadtrum also has single and dual CPU solutions for various market demands. More information about Spreadtrum products is available via email at info@spreadtrum.com.

New Enterprise Associates Participates in $20 Million Series D for Spreadtrum Communications [Baltimore Citybizlist. Oct 31, 2006]

Spreadtrum Communications Inc., a Sunnyvale, Calif.-based maker of wireless chipsets, has secured $10 million of a $20 million Series D round, according to a regulatory filing. Return backers include Fortune Venture Group and New Enterprise Associates. The company has several offices in China. www.spreadtrum.com

About Spreadtrum
Spreadtrum Communications was founded in 2001 by a group of innovative entrepreneurs with determination to face any challenge in the future. Under Dr. Ping Wu’s leadership, Spreadtrum successfully set up offices in Silicon Valley and several different cities in China. It grew rapidly within the past a few years and became a raising star in the IC and wireless communications industry. Spreadtrum’s products became the choice of many Chinese and international clients. Spreadtrum focuses on the development and sales of the new generation wireless IC, provides fast-to-market, cost-effective and high-performance solutions for wireless terminal manufactures and design houses.
Our core competitive products are:
  • 2G/2.5G/3G baseband IC: High integration, high performance, great functionalities
  • Communication software: validity, stability, customizability
  • Wireless platform: differentiated value-added open platform, reduced development time, increased product competitive edge
  • Wireless module: Customizable, flexibility, high quality
Spreadtrum not only has complete wireless terminal core chip series and related software and platform solutions that cover from high-end to low-end handset markets, but also has successfully developed world’s first single TD-SCDMA/GSM/GPRS(3G/2.5G) dual mode baseband chip as well as world’s first single integrated multimedia GSM/GPRS baseband chip. By utilizing Spreadtrumer’ expertise and newest design methodology in the industry, Spreadtrum single chips solution possesses the characteristics of higher integration, smaller size, lower power consumption and higher performance and therefore greatly reduces system BOM cost. Spreadtrum is the first IC designs company to develop its own software protocols. Its open platform allows customers to customize their products in order to differentiate themselves among competitors. Spreadtrum provides its customers with warm-hearted support and fast response time to reduce their development cycle and shorten their time-to-market.

Spreadtrum Communications [InsideChips, 2006]

Based in Sunnyvale, Calif., with most of its engineering operations in China, Spreadtrum Communications is developing chips for China’s large and rapidly growing domestic cellular market. The company is developing single-chip solutions for GSM/GPRS and TD-SCDMA/GSM/GPRS mobile devices, and has integrated all of the analog, digital and power-management functions as well as a full set of multimedia features and interfaces into the chips.

Founded only five years ago, Spreadtrum has already grown to 450 employees. CEO Ping Wu and CTO Datong Chen founded Spreadtrum with Renyong Fan (VP of operations) and Jin Ji in July 2001. The company raised $6.5 million in Series A funding at the time of founding, followed by a $20 million Series B round in Nov. 2002 and a $35 million Series C round in April 2004. The company has more than 30 investors, with the largest including New Enterprise Associates (NEA), Fortunetech Investment Fund, Pacific Venture Group, Vertex, Legend Capital and HuaHong International.

Spreadtrum offers three chip products:
  • SC6600M GSM/GPRS baseband chip – In addition to baseband functionality, the 6600 also supports a number of functions typically implemented separately on different chips. These include support for a 1.3-megapixel digital camera with video recording and playback, 64-polyphonics with stereo sound, MP3 player, USB interface and USB removable memory. Analog I/F features include a wide-range RF interface and power management on chip.

    Spreadtrum began volume shipments of the SC6600 in June 2003, primarily to domestic handset makers including TCL, Ningbo Bird, Amoi Electronics, Hisense and Putian Capitel.

  • SC8800 Single-chip TD-SCDMA/GSM/GPRS dual-mode baseband chip – Powered by the CEVA-Teak DSP core, the SC8800 enables dual-mode 2G/3G phones that operate transparently over China’s TD-SCDMA and GSM networks. As with the SC6600, the chip integrates analog, digital and power management functions on a single chip.
  • SC6800 GSM/GPRS multimedia baseband IC – The SC6800 integrates an ARM9 processor and TeaKLite DSP, 5-megapixel camera controllers, auto-focus controllers, MPEG4 accelerator and MP3 player, and supports TV out and other multimedia application-processing functionalities.
Spreadtrum also offers a wireless module, the SM5100B, which incorporates the baseband chip, RF chipset, combo flash and software. Intended for applications such as wireless desktop phones, mobile phones, remote monitoring and remote meter reading, the module provides all the required functionality for full-featured GSM/GPRS terminals.
Spreadtrum provides its customers with IP and application software, and developed its own protocol stack software. The open platform enables customers to perform high-level development to implement their own IP and value-added features.
Compared with the Europe-initiated WCDMA and U.S.-backed CDMA 2000 3G standards, China’s homegrown 3G standard, TD-SCDMA, arrived late to the game. We even heard that Chinese telecom operators were reluctant to use TD-SCDMA due to that fact. Nevertheless, the Chinese Ministry of Information Industry formally approved TD-SCDMA on Jan. 20, 2006, as the national technology standard for 3G mobile communications.
Spreadtrum projects that shipments of 3G mobile phones in China will grow to 9.5 million units by 2007, up from 3.3 million units in 2004. The Industrial Technology Information Services (ITIS), a unit of Taiwan’s Ministry of Economic Affairs (MOEA), projects subscriptions for 3G services in China will increase from 15 million in 2006 to 80 million by 2008.
However, according to market research firm ABI Research, the establishment of a national 3G network will not greatly change the existing mobile landscape. The Chinese government will provide strong policy support to help TD-SCDMA operators gain time and establish a price lead over other 3G technologies, says ABI, but GSM will continue to be the dominant technology in China over the next five to eight years.
China is conducting its final TD-SCDMA trials in select cities between March and June. These latest trials follow three earlier rounds of tests, and should be the last before commercial use.
Spreadtrum will be competing with fellow TD-SCDMA chipmakers such as Commit (a joint venture involving Nokia, Texas Instruments, LG, Putian, DBTEL and Datang), Chongyou Information Technology, T3G (a joint venture of Datang, Philips and Samsung), Analog Devices and others.
The number of Chinese IC startups has been rapidly growing over the last few years, although many appear to have relatively simple technology, few people, little cash and fairly modest expectations. But a few – such as Spreadtrum – have set their sights higher and are establishing themselves as significant technology companies. We are impressed with Spreadtrum’s high level of integration in its products, as well as its ability to attract major investors and the early establishment of a global presence. We believe the company has a good chance for continued growth and success in China’s telecom market.

Spreadtrum Communications Announces Receipt of Acquisition Proposal [press release, June 21, 2013]

SHANGHAI, June 21, 2013 /PRNewswire-FirstCall/ — Spreadtrum Communications, Inc. (NASDAQ: SPRD; “Spreadtrum” or the “Company“), a leading fabless semiconductor provider in China with advanced technology in 2G, 3G and 4G wireless communications standards, today announced that its Board of Directors has received a preliminary non-binding proposal letter, dated June 20, 2013, from Tsinghua Unigroup Ltd. (“Unigroup“), an operating subsidiary of Tsinghua Holdings Co. Ltd., a solely state-owned limited liability corporation funded byTsinghua University in China, pursuant to which Unigroup proposes to acquire the Company (the “Transaction“) for S$28.50 in cash per American Depositary Share (each American Depositary Share represents three ordinary shares of the Company).  A copy of the proposal letter is attached hereto as Appendix 1.

The Company’s Board of Directors is reviewing and evaluating Unigroup’s proposal and cautions the Company’s shareholders and others considering trading in its securities that the Board of Directors has just received the Unigroup proposal, and has not yet made any decisions with respect to the proposed Transaction, or the Company’s response to the proposed Transaction. There can be no assurance that any definitive offer will be made, that any agreement will be executed or that this or any other transaction will be approved or consummated. The Company does not undertake any obligation to provide any updates with respect to this or any other transaction, except as required under applicable law.

About Spreadtrum Communications, Inc.

Spreadtrum Communications, Inc. (NASDAQ: SPRD; “Spreadtrum“) is a fabless semiconductor company that develops mobile chipset platforms for smartphones, feature phones and other consumer electronics products, supporting 2G, 3G and 4G wireless communications standards. Spreadtrum’s solutions combine its highly integrated, power-efficient chipsets with customizable software and reference designs in a complete turnkey platform, enabling customers to achieve faster design cycles with a lower development cost. Spreadtrum’s customers include global and China-based manufacturers developing mobile products for consumers in China and emerging markets around the world. For more information, visit www.spreadtrum.com.

Appendix 1

Acquisition Proposal Letter

June 20, 2013
The Board of Directors
Spreadtrum Communications, Inc.
Spreadtrum Center, Building No. 1
Lane 2288, Zuchongzhi Road
Zhangjiang, Shanghai 201203
People’s Republic of China
Ladies and Gentlemen:
Tsinghua University, through its subsidiary Tsinghua Unigroup Ltd. (“Unigroup“) is pleased to submit this preliminary non-binding proposal to acquire Spreadtrum Communications, Inc. (the “Company,” and such transaction the “Acquisition“).
We believe that our proposal as outlined below will provide a very attractive alternative to the Company’s shareholders.  Our proposal represents a premium of 20.10% to the Company’s closing price on June 19, 2013 and a premium of 44.3% to the volume-weighted average closing price during the last 30 trading days.
In addition to the premium that our proposal would deliver to Spreadtrum shareholders, we believe that an Acquisition by Tsinghua Unigroup Ltd., which is majority owned by Tsinghua University, a central player in China’stechnology and R&D sectors would provide compelling strategic synergies and position the Company for additional value creation in key wireless communications markets in China and elsewhere going forward.
The terms and conditions upon which we are prepared to pursue the Acquisition are set forth below. We are confident in our ability to consummate an Acquisition as described in this letter.
1. Purchase Price. The consideration payable for each American Depositary Share of the Company (“ADS,” each representing three (3) ordinary shares) will be U.S. $28.50 in cash.
2. Financing. We may finance a portion of the aggregate purchase price with debt. Tsinghua Holdings Co. Ltd., our controlling shareholder, has provided us with a Letter of Support, dated June 20, 2013, a copy of which is attached hereto as Exhibit A, pursuant to which Tsinghua Holdings has committed to guarantee full funding for any equity or debt financing that may be required for the Acquisition, as set forth therein.  For the avoidance of doubt, while we may seek to finance a portion of the acquisition with debt financing, Tsinghua Holdings has agreed to provide equity funding up to the total purchase price of $1.5 billion if satisfactory debt financing is not available.
3. Due Diligence. We will be in a position to commence our due diligence for the Acquisition immediately upon receiving access to the relevant materials.
4. Definitive Agreements. We are prepared to negotiate and finalize definitive agreements (the “Definitive Agreements“) concurrently with our due diligence review. This proposal is subject to execution of Definitive Agreements. These documents will provide for representations, warranties, covenants and conditions customary for transactions of this type.
5.  Confidentiality.  Other than the announcement of this offer letter, we are confident you will agree with us that we have a shared interest in proceeding in an otherwise confidential manner, unless otherwise required by law, until we have executed Definitive Agreements or terminated our discussions.
7. Further Information About Tsinghua Holdings and Tsinghua Unigroup. Unigroup is an operating subsidiary ofTsinghua Holdings,  a solely state-owned limited liability corporation funded by Tsinghua University that is responsible for managing a substantial majority of Tsinghua University’s commercial assets.  As of December 31st, 2012, Tsinghua Holding’s total assets approximated 70.4 billion RMB and Tsinghua had EBITDA of approximately4.07 billion RMB and net income of approximately 1.45 billion RMB for fiscal 2012.  Tsinghua Holdings’s corporate credit rating is AA+ according to CCXI, the Chinese domestic JV partner of Moody’s and the leading credit rating agency in China.  Additional information about Tsinghua Holdings can be found at (http://www.thholding.com.cn/english/simpleindex.aspx).  Other shareholders include Beijing Jiankun Investment Group Co. Ltd. and Beijing Tourism Group. Unigroup’s business lines include high-technology generally, bio-technology, real estate and urban infrastructure construction. 
8.  No Binding Commitment. This letter constitutes only a preliminary indication of our interest, and does not constitute any binding commitment with respect to an Acquisition. Such a commitment will arise only upon execution of Definitive Agreements, and in such case will be on the terms provided in such documentation.
In closing, we would like to personally express our commitment to working together in bringing this Acquisition to a successful and timely conclusion.  We look forward to hearing from you regarding our proposal at your earlier convenience and kindly request that you notify us by June 28, 2013 should you desire to engage in further discussions about our proposal.
Very truly yours,
Tsinghua Unigroup Ltd.
By: /s/ Zhao Weiguo
Name: Zhao, Weiguo
Title: Chairman and President

Exhibit A
TSINGHUA HOLDINGS LETTER
From:
Tsinghua Holdings Co., Ltd.
25F, Building A, S.P Tower
Tsinghua Science Park
Beijing 100084, P.R. China
                                                                                                 June 20th, 2013
To:
Chairman Zhao Weiguo  of Tsinghua Unigroup Ltd.            
10/F, Unis Plaza, Tsinghua Science Park
Beijing, 100084, P.R. China
Subject:  Tsinghua Holdings Co. Letter of Support and Agreement to Guarantee Full Funding for the Acquisition ofSpreadtrum Communications, Inc. by Tsinghua Unigroup Ltd.
Dear Mr. Zhao,
This letter (our “Letter of Support“) is to confirm our official endorsement and commitment to support Tsinghua Unigroup Ltd (“You“) in your bid to acquire Spreadtrum Communications, Inc. (NASD: SPRD) (the “Target” and such transaction, the “Project“) at the price of U.S. $28.5 per ADS for up to USD $1.5 billion (the “Support Amount“) and to guarantee any equity or debt financing that may be required for the Project.
As you know, we own and manage a substantial majority of the commercial assets of Tsinghua University, one of the most prestigious universities in the World. As of December 31st, 2012, our total assets approximated 70.4 billion RMB with 2012 EBITDA of approximately 4.07 billion RMB and 2012 net income of approximately 1.45 billion RMB. Tsinghua Holdings Co.’s corporate credit rating is AA+ according to CCXI, the Chinese domestic JV partner ofMoody’s and the leading credit rating agency in China.  Our corporate website contains further background information about Tsinghua Holdings, and can be found at (http://www.thholding.com.cn/english/simpleindex.aspx).
As the manager of the commercial affairs of the University, we are the parent company to Tsinghua Unigroup Ltd and own 51% of its outstanding capital shares.   We have officially approved the Project and have decided to fully support the Project to facilitate its rapid completion.  Although we have sufficient resources to fund the Project up to the full Support Amount from our own balance sheet, we understand that You may elect to utilize debt financing to fund a portion of the purchase price for the Target.  In any such case, we intend to assist You in obtaining any such debt financing on favourable terms.  In furtherance thereof, we will provide a corporate parent guarantee of such financing up to the Support Amount minus the amount of any equity contribution for the Project (and subject to any applicable government approvals).  In furtherance thereof, we will execute any bank or third-party guarantees and other related documents requested by you in form and substance reasonably acceptable to us and to any lender providing such funding.
At your discretion, this Letter of Support can be shared with parties with whom you are discussing the Project.
This Letter of Support and our agreement to provide a guarantee is a commitment of our broad financial enterprise, and credit support for purposes of the Project.
Yours faithfully,
Tsinghua Holdings Co., Ltd.
By: /s/ Xu Jinghong
Print Name: Xu, Jinghong
Title: Chairman of Tsinghua Holdings Co., Ltd.
To see a full copy of the signed version of these letters, click here:
http://www.prnasia.com/sa/attachment/2013/06/20130621172830287567.2 – Acquisition Offer Letter and Funding Support Letter.pdf
SOURCE Spreadtrum Communications, Inc.
Diana Jovin, ir@spreadtrum.com, +1 650-308-8148