Sep 19

Future of MTK6573 (Edition Ⅱ)

MTK6573, a SOC for 3G smartphone, has been successfully equipped in A60, Lenovo’s latest smartphone model sold at CU and priced at RMB960 (approximately $150).
The performance of AP is pretty good as expected, witnessed by the wonderful user experience of playing “Angry Bird”.
On the downside, unstable modem/RF seems to a trouble. Quite a few people told me that sometimes no wireless connection was displayed on A60 while other phones with the same SIM card at the same place worked normally. It is highly likely to take one to two months to stabilize RF/modem to compensate for the inadequate field testing.
MTK’s Strategy
T2 Customers: MTK aims to support limited number of handset makers. If MTK failed to grab Tier-1 customers, MTK would support Tier-2 customers ranking between No.10 and 20. MTK would leverage its strong capability of local customer support with over 1000 team members to serve Tier-2 customers who are ignored by Qualcomm.
Royalties Evasion: There is a rumor that 6573 could be sold in the name of 2G chipset. Users can easily update 6513 to 6573 by a software switch.
Qualcomm’s Strategy
Ambitious Pricing Strategy: Although Qualcomm did not disclose any material information about the trend of chipset pricing and gross margin of QCT, it was said that the CFO privately told Qualcomm’s partner that Qualcomm would take any aggressive pricing strategy only in an aim to squeeze the market share of MTK.
Enhance Tier-2 Customer Support: It was said that in September Qualcomm and Thundersoft would establish a support center in Shenzhen. The number of the support staff is expected to reach 200 by the end of this year. Qualcomm used to maintain customer relationship by itself. It is not easy for Qualcomm to make such transformation. Moreover, a HV Lab would be setup for hardware authentication in Shanghai by Qualcomm and Thundersoft in attempt to reduce the difficulty of debugging for SME. Qualcomm focuses in RF and modem while Thundersoft in other peripherals such as sensors and cameras.
Persistent Optimization of Reference Design: The previous reference design by GIGA for QRD caused high cost. Now according to Qualcomm, if excluding main chipset, the total PCB cost of Qualcomm’s reference design is only $1 higher than that of MTK’s.
Internal Coordination: Since the finance department in Qualcomm not only is very independent but also participates in strategy making and evaluation, it is usually very powerful. It was said that lots of innovative projects were denied by the department. Moreover, the legacy finance system is too complex to revise easily. However, such situation is going better under the approaching threat of Asian rivals.
From the perspective of technology and pricing, the advantage of 6573 is weak. However, from the perspective of customer support, 6573 gains momentum in short term. It is likely that MTK6573 would surpass 7227 and secure around 30% market share in the first half of next year. Nevertheless, Qualcomm’s tactics would take effect in second half of next year and hence cast an enormous shadow on the future of MTK6573.