1. “Customer
Service
is
the
Most
Valuable
Source
for
Innova7on
–
a
Success
Story
of
Silicon
Valley”
A
presenta*on
at
2012
Hong
Kong
Interna7onal
CRE
&
Innova7on
Expo
Prepared
by:
Al
Kwok
Principal
IP
Advisor,
STARS
Founda*on
(www.STARSF.org)
Founder,
China
Interna*onal
Intellectual
Property
Services
Ltd.
Governor
&
Co-­‐founder,
Savantas
Policy
Ins*tute
Former
VP
&
CIPO,
NetLogic
Microsystems
(“NETL”)
1/F., CMA Building, 64-66 Connaught Road Central, Hong Kong
Tel: +(852) 2810 1777 Email: info@starsf.org

2. Outline
“Customer
Rela7onship
Excellence
=>
Innova7on
Leadership”
Customer
Rela7onship
Excellence
<=>
Product/Service
Focus
Innova7on
Leadership
<=>
Value
Crea7ons
for
Customers
⇒ End-­‐to-­‐end
Product/Service
Lifecycle
Analyses
⇒ Complete
Value-­‐Chain
Analyses
(focusing
on
Mission-­‐and-­‐*me
Cri*cal
Links
in
the
Chain)
⇒ (Produc*on)
Supply-­‐Chain
Management
(SCM)
+
Applica*on-­‐Service
Demand-­‐Chain
Management
⇒ CRE

Design-­‐win
Professional
Services

Innova*on
Leadership
⇒ New
Applica7on/Service
PlaMorms
+
(China)
Market
Sustainability
&
Scalability
1/F., CMA Building, 64-66 Connaught Road Central, Hong Kong
Tel: +(852) 2810 1777 Email: info@starsf.org

3. The
Value
Hierarchy
(Business
Models)
Presented
at
Intellectual
Property
Symposium
2002
in
Guangzhou
on
December
10,
2002
Brand Innovation
Intellectual Property (IP)
Values/Profit Margins
50%
Applications (Mkt. & Standards)
System Integration (Archit., …)
Outsourcing
40%
Trend
Engineering (Design, ODM,..)
30%
Manufacturing (Process, OEM)
Consumer recognition Core competency
1/F., CMA Building, 64-66 Connaught Road Central, Hong Kong
Tel: +(852) 2810 1777 Email: info@starsf.org

4. The
Value
Chain
(=>
DemandSupply
in
Alignment)
Great
end-­‐to-­‐end
push-­‐pull
effect
for
market
scaling
thru
lifecycles
For
Consumer
Electronics
Market
(Ecosystem)
Consumer
Markets
(End
Users)
Service Providers Various
Applica7ons/Services
System
Manuf.
Differen7ated
Applica7on
Designs
System
Integrators
System
Applica7on
PlaMorm(s)
Generic
Reference
Design
(w/ other chips)
IC
S/W
PlaMorm
(API,
drivers,
etc.)
IC
Design
houses
IC
H/W
PlaMorm
1/F., CMA Building, 64-66 Connaught Road Central, Hong Kong
Tel: +(852) 2810 1777 Email: info@starsf.org

5. Raising
Values
of
a
Product
(IP
is
the
Core)
• 价格
=
给客户的价值
=>
Price
=
Values
to
Customers
价格
=
成本+服务+IP授权+品牌
(价格 = 给客户的价值) • Pre-­‐sale
services
mean
design-­‐win
efforts
providing
solu*ons
to
address
customers’
problems
Brand
Recogni*on
• This
is
the
best
sources
of
innova7on
(品牌认知) and
ideas
for
the
next-­‐genera*on
Increasing Values (提高增值)
products
(Product
&
Tech
Roadmaps)
• Post-­‐sale
services
mean
reducing
Embedded
IP
Licensing
customers’
costs
of
ownership,
(隐含IP授权) extending
the
useful
life*me
of
the
product,
genera*ng
recurring
sales
&
product
improvement
ideas
Pre-­‐
&
Post-­‐Sale
Services
• Embedded
IP
licensing
means
the
(售前及售后的服务) customers
can
use
the
product
IP
for
their
own
product
upli[ing
&
differen*a*ons
-­‐
e.g.,
“Intel
Inside”
Manufacturing
Cost
• Brand
recogni7on
means
the
(生产成本) customers
recognize
the
product
and
its
maker
for
superb
quality,
performance,
reliability
&
services
1/F., CMA Building, 64-66 Connaught Road Central, Hong Kong
Tel: +(852) 2810 1777 Email: info@starsf.org

6. IT
Business
Food-­‐chain
 Hierarchy of IT Business (from “service to consumers” as the top
of the food-chain with highest Gross Margin then down):
Service requirements drive H/W platform improvements
Service (to consumers) <=> Domestic market (localization)
(China market is huge enough)
Application (for service) <=> Domestic market (localization)
(China centric standards & IPs)
Network platform <=> Domestic stds. for local services/appl.
International stds. (for global interface)
System Integration <=> Domestic market (localization) vs. Int’l. mkt.
(for applications) (China centric standards & IPs vs. Int’l. ones)
S/W & F/W platform <=> Int’l and domestic stds. (global & local)
H/W platform <=> International stds. (global IC supplies)
Existing OEM/ODM business model breaks the IT Business Food Chain
without positive feedback from Service to drive next product dev. cycle
1/F., CMA Building, 64-66 Connaught Road Central, Hong Kong
Tel: +(852) 2810 1777 Email: info@starsf.org

7. High-­‐end
vs.
Low-­‐end
Example
 China
e-­‐book
as
a
low-­‐end
example
 “Shanzhai”
business
model
(山寨型商业模式)
 Copy
others’
design
concepts
 Add
more
common
(proven)
applica*ons
 Aim
for
low-­‐cost
and
low-­‐price
(~US$250)
 Lidle
post-­‐sale
on-­‐going
services
 Lidle
connec*on
to
on-­‐going
e-­‐commerce
service
 Lidle
customer
feedback,
no
learning
and
no
product
innova*on
 Apple’s
iPad
as
a
high-­‐end
example
 Designed
as
an
e-­‐commerce
CRM
tool
(*ed
to
iTunes
e-­‐commerce
plaeorm)
-­‐
one-­‐stop
e-­‐commerce
business
ecosystem
 More
recurring
business
from
post-­‐sale
of
iPad
(hardware)
 Aim
for
high-­‐value
and
affordable
price
(~US$600)
 Complete
the
“H/W
plaMorm
to
Service”
end-­‐to-­‐end
cycle
for
next-­‐genera7on
product
innova7on
1/F., CMA Building, 64-66 Connaught Road Central, Hong Kong
Tel: +(852) 2810 1777 Email: info@starsf.org

8. Market
Posi7oning
-­‐
Product
Focus
ecosystem:
Industrial
market
by
Under-­‐developed
Too
Far-­‐out:
nature
with
higher
(50-­‐>70%)
Building
infrastructure
&
Not
ready,
hype,
bubble
Ecosystem
profit
margins
Future
Growth:
Future
Growth:
Long-­‐term
Longest-­‐term
Future
Growth:
Well-­‐developed
Short-­‐term
Cut-­‐throat
Well-­‐developed
infrastructure:
Compe77on
consumer
market
by
nature
with
(me
too!)
lower
(30-­‐>50%)
profit
margins
Mature
(must
have)
Futuris*c
(nice
to
have)
Applica7on
1/F., CMA Building, 64-66 Connaught Road Central, Hong Kong
Tel: +(852) 2810 1777 Email: info@starsf.org

9. Types
&
Ranking
of
Innova7on
In
the
order
of
las*ng
value
impact
to
society
(from
most
to
least):
 New
business
model
(global
produc*vity
jump)
-­‐
great
las*ng
value
impact
 E.g.:
e-­‐Commerce
(internet),
pure-­‐play
foundry
business
model,
carbon
trading…
 New
business
process
(global
produc*vity
jump)
-­‐
great
las*ng
value
impact
 E.g.:
Window/Office
(new
work
environment),
outsourcing,
TQM,
ERP…
 New
applica*on/market
(for
exist.
prod.
or
tech.)
-­‐
great
value
impact
 E.g.:
GPS,
RFID,
radar
guiding…
-­‐
from
military
to
commercial
applica*ons
 New
technology
(for
exis*ng
product)
-­‐
great
value
impact
some*mes
 E.g.:
High-­‐speed
CMOS
(over
NMOS)
for
power
reduc*on
and
device
scaling
 New
product/service
(for
exis*ng
market)
-­‐
medium
value
impact
 E.g.:
On-­‐line
shopping/trading,
SMS
(China),
digital
broadcast…
 New
combina*on
of
package
of
technologies,
products
and
services
 E.g.:
Apple’s
iPhone
and
iPod,
Blackberry,
solar,
clean
tech…
 New
design
(implementa*on
or
appearance)
-­‐
limited
value
impact
 New
system
architectures:
e.g.,
the
Sandisk
“338”
patent
for
flash-­‐memory
card
 New
subsystem/circuitry
1/F., CMA Building, 64-66 Connaught Road Central, Hong Kong
Tel: +(852) 2810 1777 Email: info@starsf.org

10. Success
Example:
GPS-­‐based
Services
(MyCard
Ltd.)
GPS/GPRS Logistics Service Platform - System Architecture
Control Call Data Center /
Center Center Access Platform
GPRS
Real-time Coordination, Data analyses / Bus.
Location Security Checks Intel., Map Database &
Tracking & Alerts User Web Portal
Logistics Co. Customer- User Access Control &
specified Call Portal Management
Forwarding
Services
Logistics & Passenger Agents
Map Database Mgmt.
Security
Senders & Monitoring &
Receivers Alerts GUI & Templates
Customs
Emergency Data Storage &
Insurance Alerts Archives
Co./ Bank -
Asset Mgt.
Functions of Control/Call/Data Centers & Service Platform
August 1, 2008 1/F., CMA Building, 64-66 Connaught Road Central, Hong Kong
MyCard Confidential 9
Tel: +(852) 2810 1777 Email: info@starsf.org

11. Maximizing
IP
Value
Crea7on
–
Part
1
 Innova*on
<=
Differen*a*ng
values
to
customers
 Highest
values
=
Mission-­‐and-­‐*me
cri*cal
(“Must-­‐have”)
ones
 Customers
must
use
and
buy
the
product
when
available
 Lidle
values
<=
“me-­‐too”
innova*on
w/o
differen*a*on
 Intellectual
property
(IP)
 Protected,
reproducible
and
scalable
innova*on
 Patent
is
the
best
form
of
protected
IP
 Exclusive
rights
for
20
years
to
use
for
commercial
purposes
 Values
of
the
patent
is
based
on
its
“CLAIMS”
 The
1st
CLAIM
is
most
important
in
a
patent
 Scope
–
the
broader
and
the
more
independent,
the
beder
 The
fewer
enabling
elements
and
less
restric*ons,
the
beder
 Coverage
–
covering
all
means
of
customer
value
crea*ons
 Mapping
value
crea7ons
vs.
enabling
elements
 Values
to
customers:
performance
(func*onality
&
speed),
price
(yield
improvement
&
cost
reduc*ons),
quality
(robustness,
consistency,
tolerance
&
reliability)
&
delivery
(shortened
cycle-­‐*me
and
lead-­‐*me).
1/F., CMA Building, 64-66 Connaught Road Central, Hong Kong
Tel: +(852) 2810 1777 Email: info@starsf.org

12. Maximizing
IP
Value
Crea7on
–
Part
2
 Customer
value
driven
corporate
culture:
 Innova*on
is
pursued
solely
to
create
DIFFERENTIATING
VALUES
to
the
customers
(sharpshoo7ng
&
no
shotgun
approach)
 Contribu*ng
directly
to
their
bodom-­‐line
in
term
of
cri7cal
func7onality,
cost,
performance,
low-­‐power,
quality
and
delivery
 CRE
=>
Strategic
partnership
and
close
working
rela*onship
with
the
lead
customer
is
a
must
 All
valuable
innova*on
ideas
come
from
lead
(strategic)
customers
 Cisco
for
NetLogic
Microsystems
(recently
ranked
as
the
best
supplier
by
Cisco)
 Aligning
all
the
company’s
ac*vi*es
to
be
proac*vely
responsive
to
the
customers’
current
and
future
needs
 Including
applica*on/technology
and
service/product
roadmaps
as
well
as
employee
evalua*on/promo*on
 Con*nuous
innova*ons
by
solving
proac*vely
the
customers'
next
biggest
problems
(the
next
product
development
cycle)
1/F., CMA Building, 64-66 Connaught Road Central, Hong Kong
Tel: +(852) 2810 1777 Email: info@starsf.org

13. Methodology
for
“CRE
+
Con7nuing
Innova7on”
Lead
Customers’
Requirements
=>
2nd
G
=>
3rd
G
=>…
Close collaboration between the customer and the vendor
Differen*a*ng
Value
Crea*ons
=>
2nd
G
=>
3rd
G
=>…
Business
Model
=>
2nd
G
=>
3rd
G
=>…
Service/Product
Roadmap
=>
2nd
G
=>
3rd
G
=>…
Applica*on/Technology
Roadmap
=>
2nd
G
=>
3rd
G
=>…
IP
Poreolio
Development
=>
2nd
G
=>
3rd
G
=>…
The
next
innova*on
ideas
come
from
customers
&
“Stress
Tests”
iden*fying
(1) The
weak-­‐links
in
product
design
&
performance
and
scalability
(2) System
(architecture)
integrity
and
scalability
(elas*city)
issues
(3) The
bodlenecks
for
scalability
(technology
and
manufacturability
roadmap)
1/F., CMA Building, 64-66 Connaught Road Central, Hong Kong
Tel: +(852) 2810 1777 Email: info@starsf.org

14. AK
comment:
Based
on
a
poreolio
of
ONLY
~100
patents
(All
mul*-­‐billion
$
companies)
AK
comment:
Considering
the
facts
that
NM
is
much
less
than
1/10
of
the
size
(in
revenue)
of
the
other
9
top-­‐ranking
companies
and
much
younger
(~10
years
old),
it
is
a
crowning
achievement!
Likewise,
“ipIQ”
rated
NM’s
poreolio
the
best
for
a
medium
size
(~$100M)
high-­‐tech
company
worldwide
in
its
“Patent
Scorecard
2006”
report
with
the
2nd
highest
CII
(current
impact
index).
Mkt
Cap:
US$250M
@
2004
IPO
=>
US$3.7B
@
2011
M&A
(14.8X
in
7
years
=
>46%
CAGR)
1/F., CMA Building, 64-66 Connaught Road Central, Hong Kong
CIIPS Presentation 14
July 20, 2010 Tel: +(852) 2810 1777 Email: info@starsf.org

15. Conclusion
 Knowledge
Economy
must
be
Prof.
Service/Applica7on
driven
 Core
competency
in
professional
services
is
the
key
to
global
compe77veness
 IBM’s
transforma*on
is
a
good
example
(from
H/W
to
Professional
Services)
 Must
focus
on
“True
Demand”
–
Mission/Time
Cri7cal
ones
 Supply-­‐side
economics
(Reaganomics)
is
a
dead-­‐end
–
unsustainable
 Real
economic
growth
must
come
from
“True
Demand”
–
not
unsustainable
Cheap-­‐Credit
Inflated
False
Demand
causing
con*nual
global
economic
crises
 OEM/ODM,
SCM…
are
for
the
“Push
Effect”.
From
the
Demand
Side,
Services
and
Applica*ons
based
on
standardized
services
provide
the
“Pull
Effect”
–
the
horse
(engine
providing
the
Pull
Effect)
should
be
in
front
of
the
cart
(economy)!
 CRE
“Professional
Services”
is
the
Intrinsic
Source
of
Innova7on
&
IP
 Valuable
IP
development
is
from
Pre-­‐
and
Post-­‐Sale
Professional
Services
 Core
competency
development
requires
“Technical,
Business
and
IP/Legal
Domain
Exper*se”
–
HK’s
educa*on
&
prof.
development
systems
have
to
adapt
 Hong
Kong
&
the
whole
world
need
China
for
market
scalability
 GD-­‐HK-­‐Macau
CEPA
PlaMorm
must
be
further
strengthened
with
CEPA
Special-­‐
Policy
Pilot
(Landing)
Site
(for
product/service
localiza*on)
–
STARSF’s
goal!
1/F., CMA Building, 64-66 Connaught Road Central, Hong Kong
Tel: +(852) 2810 1777 Email: info@starsf.org

16. Thank
You!
多谢光临指导!
al.kwok@starsf.org
1/F., CMA Building, 64-66 Connaught Road Central, Hong Kong
Tel: +(852) 2810 1777 Email: info@starsf.org