When I found out about the MediaTek press conference, I immediately picked up a ticket and made plans to spend a few days in one of my favorite cities on earth, Shenzhen. MediaTek is one of the fastest growing companies in mobile. But where exactly did this Taiwanese company come from, and how did they come to challenge a company the size and scale of Qualcomm? Mobile Geeks reveal all:
Back in 1997 MediaTek was spun off from United Micro Electronics Corporation, becoming one of Taiwan’s first semi-conductor companies back in 1980. The company began life making chipsets for home entertainment centers and optical disk drives. In 2004 they entered the mobile feature phone market with a unique approach. Instead of just selling processors, they sold complete packages; a chip plus a compatible operating system all ready baked in. Essentially they were one of the first companies to offer modular reference designs.
This approach vastly reduced labor-intensive R&D costs for manufacturers, and more importantly, reduced the barrier to entry for many smaller companies who manufactured and retailed phones under their own brand name. This is why most people have never heard of MediaTek, a company who were content to enable the success of others. This is particularly true in emerging markets like China, where MediaTek where able to leverage the manufacturing powerhouse of China’s Shenzhen.
You can watch me, Nicole Scott tell you all about MediaTek’s rise to prominence with a short video that covers the origins of one of the world’s most disruptive and innovative companies:
MediaTek rose to prominence selling processor and software packages for feature phones, but by 2012 the feature phone market was quickly disappearing. MediaTek had to move on and re-focus on smartphones, and it arguably took them longer then they should have. Regardless, as of 2013 they were applying the same strategy they used to dominate the entry-level smartphone market. They are already in bed with all the significant emerging market players including ZTE, Huawei, Gionee and Alcatel. Getting manufacturers on your side is a great way to gain market share when carriers don’t have much control. Plus unsubsidized handsets sales tend to make people purchase more affordable devices, another key reason for MediaTek’s success and high sales volumes.
Despite its enormous success with entry-level smartphones in emerging markets, MediaTek have yet to make a name for themselves in the West. Fair enough, being known for cheap handsets will create challenges to entering the high-end market, but that hasn’t stopped them from coming out with the world first 4G LTE octa-core processor – announced yesterday – and even setting up shop in Qualcomm’s backyard by opening an office in San Diego. But perhaps we shouldn’t be too surprised, especially when you take into consideration that MediaTek is actually bigger than either Broadcom or Nvidia.
But as MediaTek push into the US, Qualcomm seeks to gain a foothold in China. So let’s take a closer look at that because this race has less to do with System-on-Chips than it does with LTE support. MediaTek’s Octa-core processor with LTE put Qualcomm on alert because they traditionally enjoyed a comfortable lead when it came to LTE integration. I found some stats on Android Authority from Strategy Analytics which describe how in Q3 2013, 66% of their cellular revenue came from LTE. Meanwhile MediaTek claimed second place 12% share, and Intel in third with 7%. Qualcomm even has a relationship with China Mobile to get their LTE devices into the hands of its local market.
Yesterday’s announcement in Shenzhen is a big statement of intent, with the company rolling out a system-on-chip that ticks all the boxes for high-end smartphone integration. A smart combination of performance, LTE support, high-end camera features and much more mean that MediaTek now have a solid high-end offering.
Even still, it is a numbers game and if MediaTek’s SoC performance is at the same level as Qualcomm’s mid range SoC offering, but at a lower price, it won’t take MediaTek long to catch up. But even on a more base level, let me tell you about a meeting that I had in Shenzhen with Gionee. I asked about developing on Qualcomm vs MediaTek. They said, MediaTek will get back to you within the hour, Qualcomm will get back to you the next day. When I mentioned Intel, they just laughed.
Consumers might find it frustrating that MediaTek takes a little longer to come out with the latest version of Android, but the reason is that they are doing all the work for their partners. When you’re competing with a company that understands customer service and software integration better than anyone else right now, it’s going to be hard not to see them as a real threat.