Typography

Mobile chipset/platform manufacturer Qualcomm plays an important role in facilitating the next generation mobile technology platform and the internet of things (IoT). As a leading partner of original equipment manufacturers (OEMs), Qualcomm enables emerging smartphone brands and connected device manufacturers to expand their global market and product footprint beyond phones into connected ecosystems, explains Jay Srage, President East Europe and MEA, Qualcomm, speaking to Telecom Review.

As an OEM partner for smartphone makers and other connected technologies, can you discuss some of the changes in the sector and Qualcomm's growing relationship with Chinese manufacturers?
Looking at the market dynamics in the Middle East, Saudi Arabia and the UAE are the dominant and largest markets for the smartphone business in MEA. But with Egypt experiencing significant growth, it will make it the largest smartphone market in Africa by early 2018. OEMs have been targeting the GCC with high end and premium range device platforms and have consolidated to only very few major players. However, we are seeing now the rise of mid-range device segment.

This segment has been quite fragmented over the years, but now we're starting to see consolidation happen with the emergence of new Chinese OEMs coming into the region who have targeted the mid-range segment. The main growth driver for this segment has been the advent of high quality devices at affordable prices. And the volume of demand is large enough to allow other players to enter the market.

We are currently experiencing the rise of three emerging OEM players from China: Xiaomi, Oppo and Vivo. These three manufacturers are now considered global smartphone suppliers and they are competing head-to-head with the traditional players.

These companies are now seeking new growth opportunities and each is establishing its own differentiated value proposition to the consumer. China has experienced double digit smartphone growth from 2013 till now, but this growth can only continue by the OEMs going global. Huawei was the first Chinese smartphone manufacturer to go global and they spent significant investments to establish a presence across multiple markets. Huawei has proven that a Chinese brand can succeed globally. This provided momentum for other Chinese OEMs in the same league to consider the same.

Xiaomi, with a brand that is going viral now in emerging markets like India, Russia and Indonesia, is now emerging as one of the top global players in the smartphone industry because of its unique vision of how to address the sector. Xiaomi today has claimed the spot of #2 smartphone vendor in India in a short period of time.

What competitive advantage does an emerging OEM have over traditional brands in the market?
Chinese brands have adopted two different strategies to expand their global presence. The first is to invest in their brands and presence themselves, and the other is acquiring and reviving once trusted brands. Lenovo, for instance, revived the Motorola brand, and TCL revived Alcatel.

These companies have taken existing brands that were once at the top and revived them with new products that aim to recapture their customer base. The real challenge, however, is for these companies to capture the attention of customers who aren't familiar with these once prominent brands and re-establish loyalty with those who are.

For a brand like Xiaomi growing globally, they have a strategy to set a price/quality ratio that sets them apart. They also have taken another step in their vision, to provide user experience, in addition to quality, at an affordable price. For instance, you can have a high quality product at an affordable price, but often it's difficult to use.

Xiaomi is now looking at its smartphone business as part of an ecosystem, offering quality at an affordable price - combined with an ecosystem of services and products around the smartphone platform. For example, Xiaomi now has four core businesses: smartphone, TV, laptop and routers. In addition, Xiaomi sells smart home accessories and more. Xiaomi has expanded its device portfolio from smartphones to a range of connected devices that will become the ecosystem for consumers - the first step towards IoT.

What is Qualcomm's role in facilitating this move towards IoT?
Qualcomm approaches IoT from two angles: one is from the technology angle and one is from the go-to-market angle. From the technology angle, we are working towards 5G. The evolution towards 5G includes gigabit per second (Gbps) class LTE networks that can go up to 2Gbps, before we reach 5G in 2020.

Today, networks are being deployed with 1Gbps speeds with devices availability from quite a few OEMs. The complexity of such networks now requires us to work much closer with OEMs and network operators to allow them, particularly those like Xiaomi who are entering new unfamiliar markets, to align on features and network requirements and ensure the high performance and speeds to the consumer optimized to the network.

We then assist with pre-testing to discover any product flaws before they go to market. This is important because what works in China or India might not necessarily work at the same level of performance in Saudi Arabia. We then continue to monitor the performance of those devices after they're launched continuingly striving to provide the best experience to consumers.

This strategy is important for new OEMs that want to enter new markets and haven't set up yet the full investment. This allows them to gradually set up the presence and increase their investments as their success grows without having to put that investment upfront.

Then there's also the go-to-market angle. For marketing, we have established various marketing tools from sales incentive platforms to social media, and more importantly training programs for retail sales associates to familiarize them with the new products new OEMs like Xiaomi are launching. This strategy, simply put, drives sales. So we have a comprehensive approach with our OEM partners that cover engineering, marketing and business development.

How does Qualcomm help OEMs market their products to unfamiliar regions?
Brand recognition comes with marketing campaigns - there's no other way. But there are multiple ways we can provide support. One of the key areas we can support a new OEM is working with carriers to provide their endorsement of specific high performance affordable devices.

Network operators want devices with good reputations on their network to provide the best experience the network can handle, so they end up endorsing products without having to procure them. These endorsements take OEMs a long way in terms of branding and marketing events.

For example, in Etisalat's Dubai store on Sheikh Zayed Rd, there is a 'Mi' store featuring Xiaomi's connected living room products. As an Etisalat customer, the first thing I think when I enter the store is 'Who is Xiaomi? Why are they selling TVs in an Etisalat office?' That's when someone from Etisalat explains the value proposition from Etisalat and Xiaomi, which will then entice the customer to buy a Xiaomi phone or connected product because of the joint branding and trust factor.

So, our work extends beyond OEM marketing campaigns and touches on "smart campaigning".

A brand like Xiaomi grew quickly in new markets like India because the company played to the needs of its customers by getting to know their needs and then offering the hardware and services to match those needs.

How are Qualcomm's mobile platforms tailored to meet the specific needs of OEMs?
Cameras are a key driver for some consumers, so some OEMs want to focus strongly on camera capabilities, while some will want to focus strongly on video capabilities. Cybersecurity is also important for some OEMs, such as UAE security firm Dark Matter which recently launched the KATIM device designed to offer premium security.

Whether an OEM wants to focus on camera capabilities or cybersecurity, they will use the same Qualcomm Snapdragon mobile platform, but at the end it's about the optimization and making full use of the features available on the core that's dedicated to a particular feature. For example, there's a core dedicated to security, a core dedicated to camera and ISP, a core dedicated to graphics and gaming, and so on. This allows OEMs to customize their products based on how they want to target their product.

It's not about the number of cores we have and it's not about the speed of those cores. It's about the performance of the cores and the function that the cores deliver - which specific feature of a product it can optimize.

Are OEMs bracing themselves for 5G yet?
5G is not for everyone today. It's starting out with carriers that have access to the right size of spectrum and with the right network and engineering capabilities to deploy. These carriers are definitely at the forefront and they will lead the innovation of 5G which will then propagate to others. Qualcomm announced an MoU this year with Etisalat to work together on advancing 5G.

In terms of devices and the rest of the ecosystem, it will have to follow once 5G is established. The 5G momentum created a significant traction even ahead of the technology being ratified by 3GPP, and our recently introduced Snapdragon X50 5G modems contributed a lot to this momentum. We will be ready for 5G by 2019.

By 2020 there will be multiple devices with 5G capabilities, so that's when the ecosystem will start to pick up. Until then, 4G Narrowband (or NB-IoT) will create scale for IoT, and Gbps LTE with ultra low latency will bridge to 5G.

How does this relate to Qualcomm's developments in areas such as virtual reality, augmented reality and artificial intelligence?
Qualcomm started venturing into these technologies in order to kick-start the ecosystem to adopt them. We are starting to see this adoption become prevalent particularly in the high end premium consumer space, which is a great place to start because that's where it will propagate from after.

Virtual reality has now been picked up by multiple OEMs and we are working with them to drive it into mainstream. We saw the technology as a key trigger at the consumer level for next generation devices, so we moved forward with it because there was no one else investing in it. Once we established the technology, OEMs picked up on it and now we count on them to drive it towards the consumer.

Taking calculated risk is a fundamental part of Qualcomm culture to drive innovation. We have a very strong R&D (research and development) department - almost $3 billion was spent last year.

Let's take a look into the future. Our CEO, Steve Mollenkopf, recently spoke in an interview about the investment Qualcomm is making in artificial intelligence and deep learning. Qualcomm started looking into AI ten years ago, back in 2007, when we were looking at brain-inspired computing and neural networking. If Qualcomm was working on that back in 2007, you can imagine what our R&D team is working on today!

Artificial intelligence can be used for many functions in a smartphone, from security, to facial recognition applications and photos classification, but these are actually very basic and early stage applications. We need to start looking at expanding the scope of scale of those applications and implement new ones.

AI and deep learning will be the connector of IoT in the future because machines are going to be able to learn from each other and they're going to interface in a much more intelligent way with consumers. There's no doubt we are heading towards an AI-driven world and we need to invest in it now to establish a new world 15-20 years from now.