Shanzhai! Mediatek and the “white Box” Handset Market

ISOM 5020

Shanzhai! MediaTek and the “White Box” Handset Market

Q1: Discuss the characteristics of the mobile telephone handset industry in China, particularly in terms of competition and technology. Where role does MediaTek play here?

A1: Over the last two decades, mobile telephone handsets grew from a high-end niche market to become the most pervasive electronic devices on the planet. Industry estimates suggested that 1.2 billion to 1.4 billion units were shipped in 2009, with east and south Asia being by far the largest markets,

Shenzhen, China was considered as the largest manufacturing center for mobile phones in the world, as Shezuan also provided and soon it grew further especially in the production of low quality , low cost and innovative phones that distributed to huge segment of the market and serviced certain niches that most tire 1 mobile and smart phone companies didn't provide. This has emerged a huge competition within the smaller tire markets whom all utilized the same standardized motherboard however competed against each others in regards to features and innovations.

Media Tek distinguished its self from its competitors as a power house in the handset industry starting with first generation phones and with the advancement of the industry and transition of the market to 3G phones, it was able to answer a need in the market with a 2.5G or 2.75G solutions that were not the most advanced technologically, but packed with features that were leading edge and was quickly utilized by many shanzhai makers and thus Media Tek had grown to become one of the top-three global suppliers of wireless chipsets.

Q2: The case has mentioned about the White-Box model. How does the White-Box model work? What are its advantages over a Black-Box model?

A2: White box module was first introduced in PCs by Intel as known today by the ATX platform. The module similarly to that in phones worked as company would produce a standardized Mother boards in case of PCs or a chipset in case of phones that would be distributed to microprocessor and hardware suppliers and gave their customers the freedom to innovate and customize their final product to their requirements.

Thus it presented the advantages vs. black boxes in the following points:

-allow for innovation by consumers and availability to underserved markets.

-lower production costs and time and easier shipment for the company

-Allowed expansion of industry and employment

- Maximization of profits

Q3: Do you think the “shanzhai ji” facilitated by MediaTek has disrupted the market for tier 1 incumbents such as Nokia, Apple, or Sony