How technology standards power new entrants and market opportunities

Open and collaborative technology standards such as 5G, Wi-Fi and advanced video compression, which are underpinned by related standard essential patents (SEPs), are the cornerstone of today's connected world. These standards bring significant benefits but, above all, they provide new market entrants with access to ready-made technologies that open up new market opportunities and decrease the barriers to entry in hypercompetitive markets, which benefits billions of consumers worldwide.

One of the defining trends of the smartphone market over the last 15 years has been the emergence of a group of Chinese device manufacturers who now dominate smartphone manufacturing, holding seven out of the top ten positions, globally.

Where once the top ten was populated by manufacturers from the U.S. and Europe, it is now China that leads the way with many of the country's OEMs dominating the top ten alongside Apple and Samsung.

I would argue that the success of Honor, Huawei, Oppo, Vivo, Xiaomi, and, more recently, Transsion, is not simply down to their ability to bring great handsets to market but also because of the very clear benefits they derive from standardized technologies.

Take Xiaomi for example, which has emerged over the last decade as one of the top-three global smartphone players and the manufacturer of a growing range of connected devices.

Fortunately for Xiaomi it has not had to invest hundreds of millions or even billions of dollars in R&D to develop its own version of Wi-Fi or 4G and 5G before it could bring a handset to market. Xiaomi combines cutting-edge product design with savvy marketing and competitive pricing to challenge the likes of Apple and Samsung.

Thanks to the decades of research that have gone into each generation of cellular wireless and because of the open, global standards system, 4G and 5G technology is readily available for a manufacturer like Xiaomi. This means that Xiaomi, and future new entrants like it, can focus on what they do best - offering consumers the latest cellular technology at attractive prices.

Through its journey into the smartphone big leagues, Xiaomi has trod a familiar path. Almost all of today's major players have emerged relatively rapidly over the last 20 years and have taken market share from incumbents like Nokia, Sony, Ericsson, and Blackberry. We have also seen the likes of Huawei and ZTE emerge as some of the leading contributors to standards, becoming significant owners of SEPs in areas like 5G.

Without global standards, developed by engineers at companies like InterDigital, these rapid market changes would not have been possible. This is particularly worth noting given that this week we celebrate World Standards Day.

It's not just in the smartphone space where companies like Xiaomi benefit from standards. In consumer electronics, where Xiaomi is a top TV vendor, it also benefits from standards such as Wi-Fi and advanced video compression like the HEVC standard. In automotive, where Xiaomi made a splash earlier this year with its first electric vehicle, it can also benefit from cellular technologies as cars become more and more like "smartphones on wheels."

So, as Xiaomi's experiences demonstrate, standards not only power new market entrants, they also enable incumbents in sectors such as smartphones, to develop new connected devices in other verticals that use the same standardized technologies.

While much attention is focused on cellular and the latest 5G standard, video technologies are only becoming more important as we continue to consume a growing amount of video and we see the proliferation of streaming services. Without advanced video compression such as the HEVC standard, modern networks would not be able to cope with the sheer volume of video data that is transmitted every day.

Thanks to the same kind of open global standards system that has given us 5G, device manufacturers, such as Xiaomi, and streaming companies, can benefit from a suite of video codecs without plowing billions of dollars into their own R&D.

On average it takes around ten years for a standard to move from the initial stages of research to the rollout of early network infrastructure and for the first consumer devices to implement the new standard. Engineers from companies such as InterDigital play a central role in standards development but there is no guarantee that our engineers' innovations will be incorporated into a standard like 5G.

I know that our engineers are some of the best in the world at predicting and anticipating where innovation in cellular or video is headed, but we don't get it right 100% of the time. It's only by filing for patent protection on our technologies, that we can have some assurance that we can recoup a fair and reasonable return on our inventions by licensing our patents to implementers. This enables us to continue to make risky long-term investments in R&D for the next generation of technology.

Each year we invest around half of our recurring revenue into R&D and portfolio development, and we pride ourselves on the quality of our innovation and the depth and strength of our patent portfolio. In recent reports LexisNexis has ranked our 5G and video portfolios among the top-five worldwide when ranked on both quantity and quality. Without our commitment and the commitment of other standards researchers, companies such as Xiaomi may not be able to rapidly gain market share in such a competitive market.

That is why the balance between innovators and implementers is so important to ensure that we continue to invest in standards-based technologies and that consumers benefit from a range of more sophisticated devices. The important role of standards in driving today's connected world is worth remembering, particularly as we celebrate World Standards Day.