About a year and a half ago, I wrote about a $12 “Gongkai” cell phone (pictured above) that I stumbled across in the markets of Shenzhen, China. My most striking impression was that Chinese entrepreneurs had relatively unfettered access to cutting-edge technology, enabling start-ups to innovate while bootstrapping. Meanwhile, Western entrepreneurs often find themselves trapped in a spiderweb of IP frameworks, spending more money on lawyers than on tooling.

It makes an Arduino look like a 555. A 364 Mhz, 32 bit processor. 8 MB RAM. GSM. Bluetooth. LCD controller. PWM. USB and dozens more. Smaller than a Zippo and thinner than corrugated cardboard. And here is the kicker: $3. So why isn’t everyone using it? They can’t.

Adoption would mandate tier after tier of hacks just to figure out what exact hardware is there. Try to buy one and find that suppliers close their doors to foreigners. Try to use one, and only hints of incomplete documentation will be found. Is the problem patents? No, not really.

[Bunnie] has dubbed the phenomenon “Gongkai”, a type of institutionalized, collaborative, infringementesque knowledge-exchange that occupies an IP equivalent of bartering. Not quite open source, not quite proprietary. Legally, this sharing is only grey-market on paper, but widespread and quasi-accepted in practice – even among the rights holders.

He contrasts this with the West where only the big players like Apple and Google can step up to the plate. Everyone else is forced to use the embarrassingly obsolete hardware we are all familiar with

When the smart phone using a variety of techniques, they will have to pay royalties for technology developers. About 350 eruon pluralistic device for royalty payments can account for the order of hundred euros, or nearly a third.

For example, the baseband circuitry is paid royalties on all 3G and LTE technology development. Depending on the size of the royalties from the modem can grow up to more than $ 50, or more than 40 euros. Wi-Fi chipset royalties account for nearly as high as that cell network modem.

The phone’s operating system is paid royalties for an average of 5-8 US dollars, ie 4-6 EUR per phone. It is evident that Microsoft nets with Android phone royalties more money than the Windows Phone smart phones.

In addition, the smartphone will raise the price of the mandatory video codecs, without listening to music or watching videos would not be possible. They royalty payments, however, vary greatly.

AAC codec is paid royalties only about twenty cents. MP3 royalty is less than a dollar class, but H.264 codec royalty payments are already over 10 dollars, or about 8 euros.

Source: http://www.elektroniikkalehti.fi/index.php?option=com_content&view=article&id=2021:rojaltit-iso-osa-alypuhelimen-hintaa&catid=13&Itemid=101