According to Digitimes Research's findings, Qualcomm's development in the high-end market is not stable in 2015 and facing MediaTek and Spreadtrum's fierce competition in the mid-range and entry-level segments, the chip supplier's shipment performance in China has been weakening, causing some of its application processors (APs) to see inventory buildup.
To digest the inventory and maintain its market share, Qualcomm has cooperated with Microsoft closely over the Windows Mobile 10 platform and is planning to release a solution for the fourth quarter, designed specifically for US$80 or even cheaper smartphones. Qualcomm also partnered with China-based Allwinner Technology to release a solution for the tablet with phone functionality, targeting Europe, the US and emerging markets and to enter mass production in the third quarter, Digitimes Research's findings showed.
China's 4G LTE market had surging growth in 2014. Qualcomm's solutions, thanks to their maturity and the company's well-managed roadmap, had strong demand from China vendors in the year and acquired close to 80% share in China's 4G market at the peak.
However, MediaTek and Spreadtrum's competitive 4G solutions plus the company's misoperation in the mid-range and high-end product lines have both caused Qualcomm to see declining market share since the beginning of 2015 despite the company's aggressive promotions on its advanced technologies such as carrier aggregation.
To maintain its market share, Qualcomm has aggressively cooperated with Allwinner to push Windows Mobile 10-based entry-level smartphones and tablets with phone functionality, looking to improve its shipment performance by expanding its market base via more broad partnerships over platforms.
Qualcomm is planning to use its MSM8909 entry-level solution for the Windows Mobile 10 platform and since vendors do not need to pay any licensing fees to Microsoft for using the operating system, the overall costs for the combination will be much more competitive compared to Android-based entry-level solutions and for the entry-level smartphone market that is gradually seeing less profitability, such a solution is rather attractive to vendors.
As for Qualcomm's partnership with Allwinner, Allwinner has currently decided to release several tablet with phone functionality solutions using Qualcomm's 4G/3G products. The high-end 4G solutions will target Europe and the US markets and in addition to white-box orders, the China-based player will also look to sell its solutions to telecom carriers.
The 3G solutions will target emerging markets. Since most emerging markets were still slow in establishing 4G stations, most consumers in the markets still mainly use 3G or even 2G networks. Allwinner is planning to compete against MediaTek and Spreadtrum for these markets with help from Qualcomm's products.
However, Qualcomm's strategies still have some potential risks. Windows Mobile 10 is a brand new operating system and consumers have no knowledge about it. Although the operating system features a runtime allowing it to operate Android-based apps, whether the system's interface is able to satisfy consumers' demand is still uncertain and need more time to observe.
As for Allwinner, since the China-based chip supplier had left the tablet with phone functionality market for a while after losing to MediaTek, the company will need to re-nurture its partnerships with clients and supply chain players in order to return to the market. Since Qualcomm also has some clients using its solutions for their tablet with phone functionality products, how to avoid competition between its clients and Allwinner's clients and jointly compete against MediaTek is also a major task for the two.