Are mobile phones in Rome cheap?

Is the MediaTek mobile platform the reason why China phones are so cheap?

• China smartphones are very cheap. A friend who works in the phone industry told me it is because China phones use the MediaTek platform which is very cheap and does not require much R&D to come out with something impressive. Is the MediaTek mobile platform the reason why China phones are so cheap? Can it threaten Qualcomm's leadership in the near future?

• Answer:

  That's one reason.  What Mediatek does is to create an entire set of specs and products so that you can assembly a cell phone with relatively few people.  With so many off-brand cell phone manufacturers in Shenzhen, smartphones are incredibly cheap and fast moving.  Qualcomm has tried to compete with Mediatek, but they don't seem to move fast enough for the shanzhai manufacturers.  One issue here is chicken and egg.  Mediatek has designed their business model completely around supporting the Shanzhai manufacturers, whereas Qualcomm really doesn't have the ability to do that.  The competition between cell phone manufacturers in China is *killer* and you have product life cycle times of about a month. Also Mediatek has tried to expand overseas, but the problem is that US/EU IP law makes the Chinese smartphone manufacturing model impossible to replicate outside in developed markets.  If you tried to set up a tiny cell phone assembly plant in California, Apple and Samsung would sue you to death.  The other thing is that you have branding/marketing/distribution issues.  Mediatek based phones are not branded at all since the companies cannot afford marketing budgets.  Because there is no branding QA is handled at the retail level (i.e. the retailer knows what phones are good and the customer has the relationship with the mom-and-pop retailer rather than the "brand").  The other issue is that because the phone is cheap, some people are less annoyed if there is a QA problem (i.e. I've never had a mediatek smartphone without some major bug, but since I buy a new phone every six months, it doesn't matter.) I've never seen Mediatek phones being used with a carrier subsidy, and there are big electronics chain stores in both HK and mainland China that follow the Western model of cell phones sales, and I've never seen a Mediatek cell phone there. So the entire supply chain, logistics system, marketing system is different, and it's very difficult to see how it can be translated to the United States (although there is a ton of money out there if someone can figure out how). Huaqiang Bei Lu is a *must visit* for anyone that is a gadget geek.  It's also a major corrective to all of the "the Chinese economy is doomed" stories you hear from time to time.