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Marketing Issues

Page history last edited by PBworks 16 years, 2 months ago

Marketing Issues

Discussion Board for Marketing Issues


__Who are our primary customers?__


Electronic Manufacturing Services (EMS's) and Original Design Manufacturer's (ODM's).


EMS's are manufacturing outsourcing providers who take a design from Original Equipment Manufacturer's (OEM's) and mass manufacture the handset devices. They are largely located in South East Asis and have an advantage over other regions on providing low cost manufacturing services. The OEM's use them so as to cut down the cost of the handset's.


The ODM's on the other hand are design houses who have in house R&D facilities and work along with EMS providers for manufacturing. They conceive and design generic handsets which are eventually used by OEM's for customization and marketing. They work with chipset provider OEM's and specialized software providers to design the handset.


__How does the market chain work?__


There are three models in the market.


__Fully Integrated__: The OEM conceives, design's and manufacturer's inhouse. The best example of this is Nokia.


Semi Integrated: The OEM conceives and design's the handset but outsources the manufacturing to EMS's. Additionally they also manufacture some models in house. The best example of this is Motorola. They have some inhouse R&D, design and manufacturing but they outsouce around 37 % of thier manufacturing to South Asian OEM's.


__Brand OEM's__: They have minimal R&D and no manufacturing facilities. They depend upon the ODM's for handset design and production and just add their brand name to the finished product from the OEM's. At most they add some software customization for look and feel. The best example of this is Sony Ericsson whose most handsets are designed and developed by ODM's.


The ODM's are the rising force of the handset markets. Thier market share is estimated to be around 40 % of the total and its expected to grow in the future. The biggest advantage they provide to OEM's apart from their cost effectiveness is spreading of the Risk associated with a particular product. Since they service more then one OEM's they have the inherent ability to make up for losees for a failed product. It works in favour of the OEM as well.


Another noteable trend is of Telecom Operator's playing the role of OEM's. The Operators always wanted to produce their own handsets so as to further their brand loyalty amongst customers but could not till now because of the high entry barrier and the relucatnce of OEM's to dilute their own brand. Due to the emergence of ODM's they are able to acheive this goal. They can procure a suitable handset direclty from the ODM, add their own brand to it and bundle it along with their service plans. It works especially well for MVNO's.


How do ODM's design and manufacture handsets?


The ODM's have in house R&D facilities with both hardware and software experitse. They procure the hardware from chipset ODM's (eg. TI and Phillips) and the software from the various third parties. Their work mainly is to design the handset (look and feel), choose a particular hardware (as per the OEM's requirment or their won choice), integreate the software, test and finally use in house or EMS for mass manufacturing. They basically come out with various products depending upon their own perception of the market or contracts from OEM's. The OEM's in turn shop around for the best fit for their own requirement and just add their brand name to the finished product from the ODM's. The ODM's make around 10 to 15 % margin in this process.


Where does our product come in this chain?


Our software and hardware reference design offers cost effectiveness and single integrated to solution which is tuned for a basic mobile phones. This can be used to reduce the cost by a large factor. The demand of the low cost basic mobile phones are increasing because of the emergence of the BoP markets. The biggest demand there is to reduce the cost of the mobile phone.


What are the advantages of our product?


Our product we offer's a unique proposition wherein we provide a fully integrated and tested soultion for a basic mobile phone. The innovation in our software is that we bring in the power of the mid range phones to basic phones. This further adds value for OEM's and Telecom Operators since it offers them powerful features on cheaper hardware. With our product the role of the ODM is just to design the look and feel of the product (plastic's) and mass manufacture which saves a lot of operational cost for them. We also provide a single window service and they do not have to procure the software from multiple vendors. Since we use a L4 Linux based microkernel OS, it also increases the time to market since all the peripheral drivers are tasks on the OS and not a part of the kernel. Linux also opens up a wide range of text based UNIX applicaitons that can be ported to the handset easily.


What are the assumptions in our strategy?


  • The ODM's do not have a reference design which uses FOSS software and COTS hardware.
  • The ODM's license the hardware and software from multiple vendors.
  • The ODM's do not have their own propreitary reference design.
  • The ODM's have to pay license fees for every handset manufactured.
  • The ODM's have both software integration, testing and hardware design capabilities.
  • The ODM's do not manufacture basic mobile phones using COTS.


Do we manufacture handsets?


No. We specialize only on our hardware and the software which is derived from open sources. We provide services to thrid party manufacturer's so that they can cut down their costs significanlty.

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