Huawei's forbearance and ambition behind the hotte

2022-08-18
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Behind the cross authorization with Ericsson: Huawei's forbearance and ambition

if we ignore its time window, it is difficult to see the real logic behind it

for example, Huawei and Ericsson renewed the patent cross Agreement three days ago. However, the media explained that just like Huawei officials, innovation and intellectual property rights should be protected. Paying reasonable compensation for the use of others' intellectual property rights is crucial to promoting technology innovation, sharing and standardization of technology, driving and accelerating industrial progress

this is a bit serious. Obviously, the statement does not reflect the deep meaning of cooperation and game behind the two sides. In fact, since Ericsson's terminal business has been shrinking for many years, the so-called cross patent licensing is more about Huawei paying huge patent fees for the terminal business

an unconfirmed statement is that Ericsson's patent fee standard is about 1% of the signatory's sales. The general licensing agreement cycle is 4 to 7 years. If it is signed in five years, Huawei's terminal revenue in 2015 is about $20billion, and it needs to pay a patent fee of $1billion. If Ren Zhengfei's goal of achieving $100billion in terminal revenue in the next five years is considered, Huawei may have to pay $5billion at that time. Comprehensive conversion, Huawei may have to pay $3billion

I believe the data will eventually differ. But this is not the focus of my analysis. My question is why Huawei announced this news at this moment; Why are you willing to pay so much; Behind the signing of the agreement, what game content is implied by the two giants and what pattern transformation is involved; What enlightenment and influence does it have on the whole industry, especially China's local peers

a subtle time point

must be combined with time. This is the beginning of 2016. Huawei terminals have just experienced a rapid development in 2015. The annual shipment of terminals exceeded 100million, and a celebration has just been held for this; On the just concluded ces in the United States, Huawei terminal made a sound; Soon, the Pakistan exhibition, which Huawei makes a voice every year, will be unveiled again, and the voice of Huawei terminals is indispensable

on January 13, Ren Zhengfei, the founder of Huawei, delivered a speech at the group's market work conference, putting forward globalization goals for the three business departments. In particular, Huawei's terminal business should dare to exceed $100billion in sales revenue within five years, and at the same time, it should build a medium and high-end brand to drive the sales of medium and low-end through the medium and high-end

I believe you can feel the urgency of this giant. That is, Huawei Group is in a critical globalization cycle, which is related to its strategic layout in the next 5 to 10 years. The patent cross licensing agreement with Ericsson should be the first reflection of Huawei's globalization strategy in 2016 and many years after, and of course, it is more related to its terminal business

to realize Ren Zhengfei's words: the terminal has exceeded US $100billion in five years, which may not be a myth for Huawei terminals, because in addition, Huawei terminals will definitely carry out horizontal layout and involve more product lines. However, this sentence cannot be ignored. At the same time, we should build medium and high-end brands and drive the sales of medium and low-end through medium and high-end. It means that Huawei's terminal brand needs to be further improved and must be among the middle and high-end in the world

in this goal, there is an unspeakable heart disease, which is also a major obstacle. That is, after years of struggle to become the world's largest communication equipment enterprise, Huawei still has no real sense of participation in the U.S. market

my view is that in the next five years, Huawei Group will experience a more influential globalization process. If it cannot break through the U.S. market and establish a higher brand in the United States, Europe, Japan and, of course, China, a market area with strong consumption, even if the end business achieves the sales target, Huawei is still difficult to be called a truly globalized enterprise

the key force for breakthrough should come from Huawei terminals in the short term. Compared with the operator business that focuses on infrastructure, hydropower, coal and pipeline value, Huawei terminals that focus on consumption are easier to eliminate the ideological scrutiny of the U.S. government and are less sensitive

to break through the U.S. market, cover the world and truly jump into the global competition of medium and high-end brands, we must first remove technical barriers. The patent cross licensing agreement with Ericsson is the key strategy for Huawei to eliminate the biggest market risk patent risk in the bud

on November 30 last year, the day after Huawei launched mate8, I wrote the article "behind mate8: Huawei's ambitions, boundaries and bottlenecks". It is mentioned that due to Huawei Group's continuous drive for upstream Google and arm innovation, the rapid shipment of terminal business may cause value chain players to be vigilant. I have a strong hunch that Huawei may encounter a patent war in Samsung, Qualcomm, apple or oblique thorn in the next one to two years. Huawei has deep patent reserves, but it mainly focuses on the field of communication equipment and chips, and has not widened the gap in software and terminals

it must be admitted that I ignored more oblique stabbing power. In the upstream of the communication terminal industry chain, in addition to Google, arm, Qualcomm, apple, Samsung, there are many core players such as Ericsson, Microsoft, Intel, MediaTek, and even contract manufacturers such as Foxconn have a considerable say

why not Sweden Ericsson

here you may ask, what energy does Ericsson have that Huawei must hand in hand? Moreover, even if Huawei has strong demands to break through key markets such as the United States in the medium and short term, what does it have to do with a Swedish enterprise

the history of this enterprise proves its technological accumulation. Sweden Ericsson was founded in 1876, mastered the machine manufacturing technology the next year, and launched its own brand in November 1878. More than 100 years later, when the digital era began, it soon became the leader in the 2g/gsm and 2.5g/gprs fields. Its business covered network equipment, professional services, technology licensing, mobile terminals, etc. it is a truly global communication giant. It controls many key technologies for 2G, 3G, 4G generations, involving many chains such as equipment and terminals. Among them, 3G WCDMA has the largest market share in the world. In the 4G era, its LTE patent status is also leading. In fact, LTE is the 4G standard first proposed by Ericsson and first confirmed by the international standards organization 3GPP. Since 2009, it has deployed more than 100 4G LTE networks worldwide

of course, Ericsson's own business, after many years of glory, was released from Sony in 2012, and Ericsson withdrew from the industry, focusing on networking equipment and professional services, but its technical patents in the terminal field are still very strong. After integrating the core technology of Nortel, it has applied for more than 35000 patents worldwide, especially in the United States and Europe

take a look at what Ericsson CEO Hans Wei said four years ago: by 2015, two thirds of the world's consumer electronic devices will more or less realize wireless access. At that time, any company or manufacturer that wants to enter this market needs to reach a cooperation agreement with Ericsson first

look at another detail: up to now, most of the leading and leading giants in the terminal field have suffered from its technology board: from Motorola, Nokia, Samsung to apple. China's ZTE and Xiaomi have also been sued by it. In fact, a few years ago, Ericsson and other overseas giants also issued an overall deterrent against the Chinese camp. In this process, Ericsson's technology has received a lot of licensing opportunities

a layout that must be mentioned is that as early as 2001, Ericsson established Ericsson mobile platform company to provide 2.5G and 3G technology licensing to global equipment manufacturers, which is later Ericsson technology licensing platform. In 2011, the technology patent business of this giant has begun to become a money making machine for the whole company

this is the position of Ericsson. Of course, Huawei can't get around it. Huawei telecom equipment has strong strength, and has a considerable number of patents in the three generations of 3G, 4G and 5g. However, due to its past positioning in B2B business, patents are more concentrated in the field of network equipment. Huawei's processors, operating systems and other core links have been independent, but from 2G to 4G terminals, there are many global standards, and patents are scattered. Huawei can't eliminate more risks only by independent innovation

if the U.S. market and globalization goals, the brand strategy in the next five years, and even the strategic vision in the next 10 years or even further are taken into consideration, it is also cost-effective for Huawei to pay $3billion for this

Huawei's forbearance and ambition: capital for technology, trust and rhythm

Huawei can certainly eliminate technical risks by investing heavily in the use right of Ericsson patents. But I think this action has more meaning

speaking of entering the United States, Huawei terminals have actually begun. Although this business is not as sensitive as the operator business, the ideological thinking of Lao Mei cannot be completely eliminated. It is more like using political pretexts to block Huawei from landing

although Huawei has grievances, in order to enter this key market, you have to bear it and continue to show your sense of transparency in exchange for trust. Signing such a long-term and costly patent agreement with Ericsson is also very beneficial to Huawei's image building. It shows that China's giant follows international norms. In order to enter the market, it is willing to pay for global innovation and intellectual property rights, rather than playing tricks. I believe that this kind of engine room components will leave a deep impression on the industry and the governments of regional countries, especially the governments of the United States, India and many other countries, and continue to build trust

I believe Huawei's medium and short-term global market public relations intention is very urgent. But from the perspective of long-term strategy, another game may be more ambitious. That is, the game between Huawei and giants such as Ericsson will undergo subtle changes with this patent cross licensing: Huawei pays a huge bill for GSM (2G), UMTS (3G) and LTE (4G) cellular standards, which is to clear the key roadblocks for its 5g era and be willing to endure in order to compete for the market position of the next generation

this intention is by no means my guess. This is one of Huawei's visions for the next five to ten years

the year before last, I wrote that in the 2G era, China has no standard voice; In the 3G era, TD-LTE, which is dominated by China, has the rise of one of the three major international standards. It is still a spectator in the market, and WCDMA standard is the most widely used. The bottom patents are dominated by Ericsson, Nokia Siemens Networks and Arum. Huawei and Qualcomm also have many in their respective segments

this pattern affects the downstream competitiveness of China's communication industry. The patent game of apple, Samsung and HTC, as well as the game of Ericsson, Qualcomm, Google and Microsoft behind it, and of course, the integration case in the global communications industry and wireless chip field, all show the cruelty of the patent game

in order to achieve transcendence, Huawei began to develop 4G as early as 2002. 4G LTE standardization began at the end of 2004. At that time, the joint objects of Huawei were Ericsson and Qualcomm, which listed 4G projects in 3GPP. After that, Huawei began to produce products. At the end of 2008, the first commercial product came out. At that time, 3G in Chinese Mainland was really open. In 2009, Huawei deployed the world's first LTE commercial network in Oslo, Norway, and jointly built it with the Nordic operator teliasonera

in the next five years, Huawei's accumulation in fdd-lte and tdd-lte has increased

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