Telegent bucks the digital trend in mobile TV

Shanghai. December 5. INTERFAX-CHINA - Mobile companies are rushing towards 3G in China, and scrambling to offer more services to secure more customers. However, could they be losing sight of that central business tenet: know thy customer?
Cathy He, business development director of Telegent Systems Co. Ltd., is someone who believes so. She spoke to Interfax recently about the business opportunities offered by the analog TV chips her company makes - a technology that may be deemed "out-of-date" by those rushing to embrace its digital counterpart.
Telegent has developed its business worldwide, shipping over 20 million mobile TV chips in the last two years.
According to He, just 5 percent of the world's population is covered by digital TV signals. "When other companies are fighting for the 5 percent of digital mobile TV users, our company focuses on the remaining analog users," He said. "We are the first and probably the only company in the world that focuses on analog mobile TV chips."
He, who holds an MBA from the New York Institute of Technology and is a company management tutor with years of experience in handset sales, believes the first thing for a business is to know its target users and how to influence them.
"In China, many digital mobile TV chip manufacturers think of their consumers as high earners. However, our research shows that 80 percent of mobile TV users are migrant workers," He said.
"Many companies are working on digital mobile TV services, thinking that white collar people should be given the most advanced technology, such as digital mobile TV. However, the most advanced technology isn't necessarily the most profitable technology. These digital mobile TV companies found that, while their adverts were put in high-end magazines, their chips were often used in Shanzhai handsets [low price handsets that ape famous brands and models]."
The reason for this, according to He, is that white collar workers are the wrong group to be targeting.
"White collar workers have TVs, they have Internet access, so they don't have to watch TV on such a small screen. On the other hand, after visiting hundreds of factories in China and talking to migrant workers, Telegent found that migrant workers like mobile TV because they have no other way to watch TV. It does not matter if it is analog or digital - the main users are always migrant workers. They don't care whether the technology is advanced or how clear the image is; they will be satisfied as long as they can watch TV easily and hopefully free of charge, as these workers may only earn several hundreds of Renminbi [RMB 100 = $14.53] per month."
He gave her assessment of the three methods of delivering mobile TV - analog TV, digital TV and mobile Internet streaming TV.
"The disadvantage of mobile Internet streaming is that availability is limited when too many people use a service at once. What's more, data fees are expensive," He said.
"As for mobile digital TV, which in China means using the CMMB standard, deployment has not been very fast. The plan is to expand CMMB TV services to 300 cities by the end of 2009, which means that it will take five to seven years for the service to reach all of China's 2,000 cities. What mobile TV option is there for people in cities with no access to CMMB mobile TV over this period?"
For He, analog mobile TV is currently the best method of delivery for reaching a wide audience at minimal cost. With the widespread coverage of analog TV signals across most countries, handsets with the ability to receive analog TV signals can be used in most parts of the world.
According to customer research conducted by Telegent, after three months of trial use of the analog TV handsets, 85 percent of customers classified analog TV as "very practical". The company also found that those surveyed used the analog TV function of their handsets an average of three times per week, while the frequency of using the MP3 and camera functions was less than once a week.
Telegent was established in the United States in 2004 and began mass chip production in 2005. To date, the company has shipped over 20 million chips, with monthly shipments of around 2 million at present.
The company conducts its R & D at its U.S. headquarters, and manages the sale of its chips to handset companies from its Shanghai, Beijing and Shenzhen branches. Telegent also works with Chinese handset manufacturers to sell handsets globally. It has cooperated with Chinese handset companies such as ZTE, Konka, K-Touch and Gionee, as well as large international handset companies. Two of the five largest international handset makers in the world are expected to release new products using Telegent chips in 2009, He said. Telegent claims that its analog mobile TV chips can be included in handsets without significantly increasing the retail price.
"Many foreign telecom operators come to China to purchase analog TV handsets powered by our chips," He said. "For example, there is a huge handset market in Dubai, where handsets won't sell unless they include an analog TV function."
Telegent even negotiates handset sales with foreign telecom operators on behalf of Chinese handset companies.
"We may be the only chip company that has a handset sales team," He said. "Our analog TV chips have helped Chinese handset companies to take market share from big international brands in places such as South-East Asia, the Middle East and South America." 
As a comparison, He said that Telegent ships more analog mobile TV chips per month than the number of DVB-H digital mobile TV chips that have been shipped in Europe over the past few years.
The current global economic climate may also serve to boost Telegent's sales even further, He said.
"With the global financial crisis, people have less money, but they will not stop using handsets. Instead, they will choose cheaper and lower-end models," He said. "The two advantages of Chinese-made handsets are their low price and integrated functions."
Opportunities will also increase for Chinese handset makers in general.
"Chinese handset companies should pay more attention to handset quality and services in order to seize this chance," she continued. "When users find that these cheap Chinese handsets are good to use, they will go on using them even when the economic downturn ends."
However, many Chinese handset companies neglect to do market research. According to He, about two-thirds of the handsets that contain Telegent's chips are currently exported. However, as foreign currencies have devalued, many Chinese handset companies have chosen to halt all exports, He said.
He gave the example of the Brazilian Real, which has dropped heavily, while the Argentine Peso has dropped by a far smaller degree. "So why halt exports to Argentina?" He said.
"At first, we did not get involved in the handset market. When we found that many handset companies lacked a clear market strategy though, we started doing research on the handset market on their behalf," He said. "That's also why these companies like us."
Although the migration from analog to digital TV is an aim shared by many countries, by 2012 around 88 percent of the world's population will still only have access to analog TV signals. Even if China finishes digital TV migration in 2015, the majority of the world's population will still only be covered by analog TV signals.
Digital mobile TV also faces the hurdle of covering its costs. With China's CMMB digital mobile TV likely to be a paid-for service, handset companies that incorporate CMMB chips will have to convince users that mobile TV - an unfamiliar service - is worth paying for. He believes that the widespread use of analog TV-enabled handsets could serve to popularize the use of mobile TV in general, paving the way for users to upgrade to paid-for digital mobile TV in the future.
Although analog TV users will eventually become digital TV users, there is still long time to go before this process is complete, so the company will spend its time developing new profitable functions.
"We are now considering cooperating with operators to have the SMS function while watching mobile TV, which can enable people to directly vote for their idols while watching some star-making programs," He said.

source:www.interfax.cn