Nalini Muppala

Analysis, observations, perspectives on mobile space

MediaTek (Part 4): In The Smartphone Era

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Smartphones are selling hot even in this market slump, and handset vendors are moving heaven and earth to get a bigger share of this burgeoning market segment. But the price of a smartphone is still beyond the reach of many price-conscious consumers. Thanks to the recently announced Gphone Nexus One, the idea of paying in full for a phone (instead of getting a subsidy in return for locking oneself into a service agreement with the carrier) might gain greater momentum. The idea is not new: users in most markets find this to be the only way to buy a phone, and Nokia has been pushing this idea for a while in the United States. It remains to be seen if the force of Google will add momentum to this idea. More people now realize the true, unsubsidized cost of a smartphone.

Some even predict that the term “smartphone” will lose significance, since most phones will become capable of performing functions that today’s smartphones boast. While that might be a stretch, it is true that all phone designs are evolving to emulate smartphone features. Handset makers and, in turn, handset semiconductor providers, now face increased pressure to deliver more value at cheaper prices. MediaTek has big plans to tap into this market sentiment. Having mastered low-cost play, it is uniquely placed to do so. The company let the public in on its plan to bring down the mid-range smartphone cost to $200 from the current level of around $400.

A slew of products announced recently show that MediaTek wants to be a serious contender in the smartphone market. It recently announced the MT6516 for low-cost smartphones; MT6253, the company’s first GSM/GPRS smartphone chip; and MT6268, its first 3G processor. A lot is riding on the success of MT6253 – MediaTek hopes to ship 100 million of them this year.

If MediaTek has big plans for application processors, it has kept them secret. It is disappointing to see that the company does not appear to have a promising roadmap for an application processor. This is especially true given that it had access to ADI’s Blackfin DSP architecture. MediaTek has taken the integrated approach by putting an application processor alongside the baseband in some of its powerful chipsets; this makes sense for the low-cost pioneer. It remains to be seen if the company does not lose some designs for lack of powerful application processor capabilities.

Multimedia capabilities are a defining characteristic of MediaTek chipsets. Part of this can be attributed to the company’s legacy. To extend this advantage into the smartphone market, MediaTek recently licensed ARM’s Mali graphics processor core.

Conspicuously absent from the portfolio and roadmap is an 802.11n solution. It is not clear whether the company is betting against 802.11n taking off in mobile phones. Of course, one can use a solution from other vendors, but that would go against MediaTek’s current model of being a one-stop solution for mobile phones. It might have to lose that tag as it moves up to serve top-brand handset makers.

MediaTek has captured 20% of the DTV chipset market. While the target device requirements are quite different from those of handsets, MediaTek should leverage its DTV know-how to provide a credible alternative to Qualcomm’s FLO TV, which has seen a good uptake recently.

MediaTek realizes that it does not have everything it needs to address the smartphone market and has made some strategic alliances to overcome this handicap. In the concluding post, we will delve into this aspect.

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Written by Nalini Kumar Muppala

February 11, 2010 at 7:13 am

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