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How to Hook a Manufacturer on Your Smartphone Chipset: Offer up Some Other Parts Too

June 13, 2014 - Written By Phil Bourget

Everyone that manufactures smartphones knows that they need all different parts, speakers to camera flashes, besides just the motherboard/main chipset (processor, RAM, etc.), and that can be expensive sometimes, depending on the technologies they need or want to include for the customer, device or software experience.  But chip manufacturers, names like MediaTek and Qualcomm in specific, have been moving towards making their business more appealing as well as cutting costs for the hardware manufacturers with bundles.

Chipset makers have begun offering ‘bundles’ to hardware manufacturers, such as Samsung and HTC, as well as Huawei and ZTE for example, as an incentive to buy chips from them, at a better price due to other included parts of phones that the hardware manufacturers would need to pick up eventually anyway.  Most famous is MediaTek, in china, who make their processors and other components, but have in the past offered all the parts for a smartphone, even a design for the physical body/housing, leaving the hardware people to simply assemble and brand and name it before releasing it to the global community.

Just as famous, as well as the world’s largest chip manufacturer, is Qualcomm, based in the U.S. who have the most processors out there to date.  The company has followed in MediaTek’s footsteps on the bundling front as an incentive for Chinese manufacturers to buy from them, or have them as a truly viable option besides MediaTek, since one in every three devices sold (globally) is in China.

This push for more affordable options for smartphone manufacturers has come at a time when lower-priced, but still feature-rich smartphones are popular, especially since, according to IDC Research, phones prices under $150 were close to 70% of all sold in the first quarter of 2014.  The growth in that end of the price pool is likely to grow, for phones $150 to $300, 14% each year through 2018, while $300+ devices will reportedly only grow 4% until the same year.

As with everything in the technology realm and smartphone domain, everything affects everything, and this bundling trend is no different.  The senior VP or Smartphones at MediaTek, Jeffrey Ju told Reuters that “The smartphone industry is turning into the television market.   If you hide the logo on a television, you really can’t tell the difference.  The smartphone market is getting similar”.  Though higher-end technologies, like fingerprint sensing and LG’s G3’s ‘laser autofocus’ may not fall with the prices, due to various reasons like the userbase not looking to give anyone one of their most personal identifications, and the extra frill of having these features seeming unnecessary to some, if not many, consumers.

The entry-level smartphone market, hallmarked by Motorola’s Moto G and Moto E phones, costing under $200, and still running the best software and still being able to do all that a Samsung Galaxy S III  or HTC One X, $600 or $700 phones at their time and still not too cheap to get.  The lower-end and lower-cost phones that are becoming exceedingly popular as time goes on are being sold to developing nations, with different, sometimes completely opposite, needs and desires from the ‘average’ consumer of Europe or North America, just simply looking for a smartphone that works and works well, affordably.