Those Years When I Was Forced to Top the Forbes List

Chapter 368 The Qilin Heads East
Vodafone KK, Vodafone's Japanese subsidiary, has been renamed SoftBank Mobile, but the service brand will temporarily remain "Vodafone".

Japan's three major telecommunications operators today, NTT Docomo, KDDI, and SoftBank Mobile, are comparable to China's China Mobile, China Telecom, and China Unicom.

The market share is relatively evenly distributed, with SoftBank Mobile being the smallest, but still close to 30%.

When Chen Xuebing mentioned Vodafone Japan, Masayoshi Son laughed: "I almost forgot that you are also a telecommunications equipment manufacturer. But unfortunately, our 3G base stations are already mature and we don't need too much equipment. Of course, I heard that you are very capable in China and have won some mobile base station construction orders. If you invite me to come to China and cooperate with you on WCDMA, I would be happy to do so."

Chen Xuebing grinned.

It's not that I almost forgot, I remember it perfectly clearly.

Telecommunications companies worldwide are now all eyeing China.

The world's two most populous countries, China and India, are facing challenges. India's 3G rollout is still a long way off, and it suffers from severe local protectionism and a lack of government financial resources. In contrast, China's consumer market strength is gradually emerging, and its government is the richest in the world, bar none.

Ericsson, Siemens, and even equipment suppliers like Motorola and Lucent, all made a fortune in this market during the 2G era when they partnered with China to build base stations.

However, their subsequent developments have all changed.

Chen Xuebing raised his eyebrows: "Our subsidiary Spreadtrum focuses on TD-SCDMA and will not participate in WCDMA orders. I know you look down on TD technology, but I believe that once TD's dynamic allocation of uplink and downlink time slots, high-frequency spectrum utilization, and beamforming enhancement features are brought into play, coupled with China's economies of scale, it will definitely become the No.1 in the 4G era. We have already invested in research and found a base station technology direction for a smooth evolution from 3G to 4G. Our 4G technology may not be slower than Japan's. If you are willing to cooperate in the next era, I can invite you to come to China for inspection."

He wasn't there to deliver business, nor was he seeking cooperation with Japan on TD.

Japan's telecommunications standards are determined by the government, which in turn is determined by the United States. Therefore, using the TD standard is virtually impossible.

Masayoshi Son's refusal only applies to communication equipment; as for communication standards, no one thinks that way.

To promote the internationalization of the TD standard, we need to seek more support from countries within the ITU international framework, rather than directly cooperating with operators in a particular country. Even if we want to cooperate unilaterally, we need to approach the government.

More importantly, it is necessary to achieve a genuine technological advantage, or to gain an absolute cost advantage when the technologies are roughly equal.

There are also safety concerns.

These things require an international image and basic technological strength as a foundation, which China will gradually acquire. Chen Xuebing is not in a hurry; he simply made a promise and planted a seed along the way.

Masayoshi Son smiled, not taking Chen Xuebing's boasting too seriously.

Chen Xuebing didn't dwell on the topic, but pointed to the Qilin on the table, making his intention clear.

"What I want to talk about is the collaboration on this phone."

Masayoshi Son was taken aback: "You just said that this is a TD-SCDMA phone."

Chen Xuebing explained it very clearly when introducing the Qilin.

Japan has completely abolished 2G, and only WCDMA remains.

"I can make it WCDMA. I'm doing TD because I don't want to work with Qualcomm, not because I can't do TD. Huawei's WCDMA patent portfolio is enough for Spreadtrum to make dual-mode chips. Moreover, we can reduce co-channel interference through smart antennas and joint detection technology, and also improve spectrum utilization. We can design an adaptive frequency hopping algorithm for the 2100MHz band of Japan's WCDMA, which may even have better mobile phone signals than some international companies."

Masayoshi Son shook his head again: "You can't escape Qualcomm's patent wall either."

Chen Xuebing smiled and said, "Of course we can't escape it, but with your and ARM's support, we will have a basis for countering Qualcomm's patents."

Masayoshi Son paused for a moment: "What do you mean? Qualcomm is a communications chip manufacturer."

"They just launched the MSM series chip, which is a combination of an ARMv6 architecture CPU, an ATI GPU, and a 3G baseband. It is a single-chip integrated system, professionally called a SOC. They want to focus on such SOC chips and force mobile phone manufacturers using Qualcomm basebands to use their CPUs and GPUs through binding. In other words, they want to make their own CPUs. Therefore, ARM's patents are irreplaceable for their plans."

"What?" Masayoshi Son jumped to his feet. "Are you sure?"

This is a big deal.

The world has long suffered under Qualcomm's influence, especially Japan, which was the first to popularize WCDMA and has been ripped off by countless patent fees during the construction of 3G networks.

Last year, when SoftBank Mobile acquired Vodafone, it had to pay Qualcomm a high patent fee to inherit its CDMA network. Moreover, Qualcomm required SoftBank to charge a licensing fee of 6% of the selling price of CDMA handsets.

SoftBank even got into a lawsuit with Qualcomm because of this.

Chen Xuebing had done his background check on this, and this was originally one of the reasons he persuaded Masayoshi Son to acquire ARM. Unexpectedly, Son agreed right away, so it was only brought up now.

"Their first MSM7200 uses dual-mode CDMA and UMTS (the predecessor of LTE technology) wireless standards, and calls the ARM11 + baseband DSP configuration a dual-core. Although the product has not yet been installed in mobile phones, the pre-launch publicity has already begun, which you can find online. As for why we believe that they are on this route, we have our own analysis. You just need to pay attention to the intensity of their subsequent publicity, and time will prove it."

At this point, Chen Xuebing said with a hint of jealousy, "To be honest, I envy you a little. With ARM, SoftBank has the opportunity to avoid many of Qualcomm's patent fees in the 3G era of communications development."

He realized when he decided to acquire ARM from Masayoshi Son that there was a chance to make a crucial step for Kirin to go to Japan.

While SoftBank may not have complete control over who gets to license ARM's patents after acquiring ARM, it can certainly decide who it doesn't license to.

Without an ARM license, Qualcomm's bundling plan will be crippled.

Qualcomm Snapdragon is nothing but a one-eyed dragon.

“I know that SoftBank’s market share has dropped by about 20% since it acquired Vodafone. You urgently need an exclusive product to change market sentiment and help you retain users. Isn’t it a great idea for us to cooperate in acquiring ARM and competing with Qualcomm?”

Masayoshi Son's eyes lit up for a moment, then dimmed:

"No, no, no, ARM is just the sharpest axe, not the only one. Qualcomm's patents are the only way to 3G. Our confrontation is not equal. If Qualcomm develops its own architecture and charges higher patent fees for our phones, then SoftBank Mobile will be on the verge of collapse."

Despite the Qualcomm sanctions, the base stations left by Vodafone will not actually become invalid.

However, newly manufactured WCDMA phones are still under Qualcomm's control.

In the 3G era, without your own customized handset, it's easy to lose market share. The Japanese telecommunications industry was fiercely competing for customers, and the war for subsidized customized handsets had reached a fever pitch. Chen Xuebing wanted to enter the Japanese market to take advantage of the subsidized handset benefits, but seeing the deep fear in Masayoshi Son's eyes, he couldn't help but sigh.

“I didn’t ask you to fight Qualcomm head-on. I just hoped to use this as an opportunity to negotiate with them. Developing your own architecture sounds simple, but it’s impossible without several years of work. They wouldn’t dare to declare war on you easily. With Kirin phones and the Kunlun system, do you know what that means? A new era.”

Masayoshi Son's eyes flickered, and he sat down again, slowly saying, "I admit that ARM is a good negotiating condition, and it may bring benefits to SoftBank Mobile, but frankly speaking, we have better options and do not need to import your Kirin."

Chen Xuebing instantly realized something: "You signed with Apple?"

"Yes, I have reached an agreement with Jobs."

“They are 2G phones,” Chen Xuebing retorted.

Masayoshi Son smiled enigmatically and did not reply.

Chen Xuebing also realized what was happening and cursed inwardly.

Damn, Apple might already have 3G phones.

It was he who pushed for it.

Apple must have finalized a mandatory cooperation agreement with AT&T in the past few months before daring to make a commitment to Masayoshi Son.

The sword is indeed a double-edged sword. Apple's delayed launch gave it the opportunity to expand its supply chain and also created a more powerful competitor.

Chen Xuebing could only change his approach, saying, "Masayoshi, I know you have some connection with Jobs, but you don't know Apple better than I do. We share the supply chain. The suggestion to modify the 3G solution for iPhone was made to him by me. Since they want to use 3G, they need to optimize the system in many ways, which will take a long time. Their phones will officially go on sale at least in November, and they will be launched first in the North American and European markets. Then it will be your turn, at least by February next year. My Kirin chips can be supplied to you within seven months. There are seven months in between, which is an important opportunity for you to regain market share."

"Furthermore, Apple's system is closed-source, while my system is open-source. Do you know what an open-source system means? It means that SoftBank's contract phones can all use our KOS."

Masayoshi Son's expression shifted slightly: "Since it's open source, can't it be used with contract phones from other telecom operators?"

“Open source is relative.” Chen Xuebing smiled slightly. “Our service layer is independent of the open source underlying layer. If other manufacturers want to use our open source project to develop mobile phones, all they will get is a touch screen phone. They cannot obtain KOS’s most powerful Internet features. To create a service layer with the same strength, there are two major hurdles: the developer toolchain and the number of applications. We are already a year and a half ahead in this regard. No one understands the modifications to the underlying system better than us. The concept of this system is ours. It is impossible for them to catch up with us on the same underlying layer.”

Masayoshi Son raised his eyebrows; after all, he started out in the internet and software industries.

"Aren't you being too confident? We know software quite well; Chinese technology isn't as good as you claim."

"Is software based on technology? Then what is your reason for investing in Alibaba?" Chen Xuebing said, pointing to his head. "First, software is based on mindset! I can put this phone in front of you, so there's no need to compare whose mindset is more advanced! Second, software is driven by the market! China is capable of driving the world's largest software market. I can't think of any place that can compare to the Chinese market. KOS has already tied to mobile phone manufacturers with tens of millions of annual sales. In China, this system is invincible. No one can compete with us in this basic market."

Masayoshi Son took a deep breath, rested his chin on his hand, and pondered: "In that case, the Chinese mobile software market also has great potential."

He didn't argue about who was better or worse; instead, he incorporated some investment thinking into his approach.

“You’re right,” Chen Xuebing chuckled. “But if you want to invest, you’d better get on good terms with me. My Kunlun system can, to a certain extent, determine the life or death of a software. Jack Ma is very keen to join us precisely because he sees this as a reason.”

That statement already carried a hint of threat.

Alibaba, Masayoshi Son's most successful asset, will fall within his firing range once the mobile internet era arrives.

Masayoshi Son stepped out of the perspective of a telecommunications company and into the mindset of an investor, and once again smiled at Mr. Chen.

In China's emerging investment market, Mr. Chen has considerable influence, as evidenced by his financial background and the conversation we just had.

“Mr. Chen, I would like to cooperate with you, but in some aspects, we should stick to business on business.”

The situation has reversed.

Chen Xuebing leaned against the armrest and smiled easily: "Cooperation. Besides what I've mentioned, what else can you offer me? Precise investment judgment, or R&D capabilities to stand shoulder to shoulder with me? I think cooperation should be comprehensive, complementing each other's shortcomings. You provide ARM and the Japanese market, while I can provide SoftBank with more precise investment capabilities."

"SoftBank's investments are not limited to the Asian market," Masayoshi Son stated firmly.

"How do you know my investment is limited to Asia?" Chen Xuebing stood up with a smile: "Then let's focus on making ARM successful first. You still have time to consider who benefits more from Kirin entering Japan."

He didn't want to argue too much, because given the Japanese people's tendency to be ungrateful and suspicious, if he talked too much about selling things, they would think he was deliberately trying to scheme against them.

Upon hearing this, Masayoshi Son recalled that the ARM investment was not located in Asia. He glanced at Chen Xuebing's computer on the desk and noticed that the screen appeared to be stock market reports from Europe and the United States.

The entire text is in English, with bright green numbers next to the up arrow key.

It is obvious that the Chinese and Japanese stock markets are showing a pattern of rising stocks and falling stocks, while the European and American markets and those influenced by the West are showing a pattern of falling stocks and rising stocks.

But if you're too far away, the words on it are hard to see.

Masayoshi Son knew the conversation was over, but suddenly he wanted to talk to Chen Xuebing some more, hoping to hear something. Perhaps there were still many opportunities related to mobile internet in the European and American markets that he hadn't discovered.

He also stood up and took the initiative to shake hands with Chen Xuebing.

"According to Chinese etiquette, since I've come to see you, you should treat me to a meal."

Chen Xuebing glanced at the time, shook his head and smiled, "Let's wait until the ARM acquisition is successful, or until Kirin signs a contract with Vodafone. I still have some things to do. Our negotiations with ARM have been waiting for you, and now we should finish them. I also need to hurry to the United States to complete some investments outside of Asia."

He has not only a British visa but also a US visa for this trip.

I need to inspect the data centers in the United States, and there are some other things I need to take care of.

"Invest in what? Aren't you planning to work with me again? Let's talk, maybe I'll be interested too?" Masayoshi Son asked bluntly, rather unceremoniously.

"Let's not do it," Chen Xuebing smiled. "Jack Ma called this investment our 'Pearl Harbor Project.' It might have succeeded against the British, but given your failed precedent of a Pearl Harbor project against the United States, it's best we don't cooperate."

(End of this chapter)