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China: What's at the Core of This Smartphone War?
Source: shanghaidaily.com
Source Date: Wednesday, December 05, 2012
Focus: Institution and HR Management
Country: China
Created: Dec 11, 2012

HOLIDAY shoppers with a smartphone on their gift list may face a dilemma of choice. The latest iPhone with dual-core chip costs about 5,000 yuan (US$806), while a Lenovo-brand smartphone with quad-core recommended by many shop owners costs only half as much.

The number of cores on the chip creates a new battlefront in the Chinese mobile phone market that is probably unique in the world. It has been dubbed the "core war."

Industry experts, however, warn that more cores on the chip do not necessarily equate to a better quality phone. Instead, it looks more like a marketing strategy for chip and phone vendors to expand their market share.

In the past two months, about a dozen quad-core smartphones have debuted in China, offered by Samsung, Lenovo, Xiaomi, ZTE, Huawei and Meizu. Compared with Samsung's Galaxy Note 2, priced at about 5,000 yuan, most China-brand models cost about 2,000 yuan each.

"Chinese consumers are crazy about the cores of phones even if they don't know exactly what they mean," said Li Yi, secretary-general of China's Mobile Internet Industry Alliance. "But quad-core strategy works here."

A multi-core processor is a single computing component (chip) with two or more independent actual central processing units (cores). Generally speaking, the multiple cores can run multiple instructions at the same time, increasing overall speed for programs amenable to parallel computing.

Originally developed
Processors were originally developed with only one core. A dual-core processor has two cores while a quad-core processor contains four.

Meizu, a Zhuhai-based company, launched its new quad-core MX2 phone in Beijing last week. That raised eyebrows and attracted buyers. The MX2 sells at a starting price of 2,499 yuan.

Another China-brand, Xiaomi, said its 200,000 quad-core Xiaomi phone sold out within 18 minutes during an online sale last week.

Lenovo Group Ltd, whose majority smartphones are quad-core models costing less than 2,000 yuan, generated 17-fold growth in mobile phone sales in the third quarter, compared with a year ago. It's an integral part of the company's PC Plus strategy, said Yang Yuanqing, Lenovo chairman.

Yang said he also expects the company to continue expanding in the mobile Internet and digital entertainment sectors as part of its PC Plus strategy.

Lenovo's share of the Chinese smartphone market in the third quarter was 14.8 percent, lagging only behind Samsung's 16.7 percent and ahead of Apple's 6.9 percent, according to Gartner Inc.

Gartner, the United States-based IT research firm, said it expects Lenovo to become the No. 1 player in the market by the end of next year.

ZTE Corp - which has just launched a quad-core phone globally, costing 1,999 yuan - said it hopes the quad-core model will help it expand in the medium- to higher-end of the market.

"We seldom sell phones priced at more than 1,500 yuan," said Ma Lulong, ZTE's marketing director for mobiles. "The quad-core is an obvious opportunity for us."

Though the quad-core is well under way, a chip with eight cores has been developed in the lab and is expected to debut next year, according to chip giants like Qualcomm Inc and Mediatek.

"The promotion and marketing for core numbers, the so-called 'core war,' is uniquely effective in China. We had experienced similar scenes in the PC market," said Li.

Computer chip market
The computer chip market used to be a battlefield of core numbers. Giants like Intel and AMD both promoted their products with powerful cores - from single-core to dual-core to quad-core products. Most PC buyers regard the core number as the first thing to consider, even if they aren't tech geeks.

After several years' development, consumers have become more mature in choosing personal computers. They consider a wider range of features, including screen, chip, memory and the power to user experience, especially after the rise of Apple.
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