Chapter 504: Smartphone High‑Stakes Gamble

March 18, 2008, Shenzhen.

The day marking the seventh anniversary of Fenghuang Phone's launch.

In front of the floor-to-ceiling windows of Wanxiang Dasha, Li Yaozong stood for a long while. Outside, the traffic on Shen Nan Avenue flowed like an endless river, and the outline of Fenghuang Mountain appeared faintly in the thin mist.

Below, at the entrance of the Fenghuang Phone flagship store, the line of people had been forming since six a. m., and by now it had already wound around three corners.

Behind him, three reports lay on the desk.

First: Fenghuang Phone's global sales, which surpassed fifty million units last year, a year‑over‑year increase of 47%.

Second: Fenghuang Chat's user count, exceeding 300 million, with daily active users of 120 million.

Third: Wanxiang Group's revenue last year, 230 billion, with profit of 45 billion.

Any one of those reports would be enough to make any entrepreneur laugh out loud.

But Li Yaozong did not smile.

His gaze fell on the far corner of the desk—where a phone sat, not a Fenghuang, but an Apple.

In January 2007, Apple released the iPhone.

The first generation rotated 360 degrees, was full‑touch, had no keyboard, only a Home button.

At the time everyone said it was a product made by a lunatic. A phone without a keyboard—could it work?

Now, a year has passed.

The iPhone sold over one million units.

Not a lot.

But Li Yaozong knew this was only the beginning.

Eight people were seated in the conference room.

Chen Feng, Zhao Ming, He Xiao,

and a few new faces—Liu Yang from the hardware department, Wang Bo from the systems department, Zhang Lei from the screen team, and Li Xiang from the battery team.

Li Yaozong sat in the head seat, with that iPhone placed before him.

"Everyone," he began, "I called you here today to show you something."

He pushed the iPhone to the center of the table.

"Apple's."

The conference room fell silent for a few seconds.

Chen Feng picked up the phone and flipped it over and over a few times.

"Full‑touch," he said, "no keyboard."

Zhao Ming leaned in to look.

"What about the system?"

"They say Apple made it themselves," Chen Feng tapped the screen a few times; the interface was smooth, "smoother than our Pangu system."

He Xiao asked quietly from beside him.

"Can this thing be sold?"

"It sold over a million units last year," Li Yaozong said.

He Xiao was stunned for a moment.

"Over a million? We sold more than fifty million last year,"

"Right," Li Yaozong said, looking at him, "but our fifty million were feature phones. Its one million‑plus are smartphones."

He paused.

"In three years, how many feature phones can still be sold?"

No one answered.

Li Yaozong stood up and walked to the whiteboard.

He picked up a marker and drew an upward‑sloping curve.

"This is our feature‑phone sales," he said.

He then drew a steeper curve above it.

"This is the global growth of smartphones."

He looked at the people seated.

"Everyone, we are now standing on a mountaintop. Looking down, it's all scenery. Looking ahead..."

At the intersection of the two curves, he drew a circle.

"Here is a cliff."

The conference room was so quiet that the hiss of the air conditioner could be heard.

Chen Feng spoke first.

"President Li, you mean..."

"What I mean," Li Yaozong turned around, "is that within three years smartphones must replace feature phones. Within five years, any manufacturer that doesn't make smartphones will die."

He looked at Chen Feng.

"I have a word for you all. Running a company is only one step away from bankruptcy."

He paused.

"Now, the step that separates us from bankruptcy is this one."

Chen Feng stood up and walked to the whiteboard.

He picked up a marker and, on the edge of the cliff, drew a building.

"Smartphone," he said, "its core is the SoC."

He drew a foundation under that building.

"What is SoC? It's a system-on-chip. Integrate CPU, GPU, memory controller, communications baseband, image processor, … all onto a single chip."

He turned and looked at Li Yaozong.

"President Li, what we're making now is a feature phone chip. The CPU only handles telephone calls and texts, occasionally runs small apps. A smartphone's CPU needs to be ten times stronger than now, even a hundred times."

Li Yaozong nodded.

"How long will it take?"

Chen Feng thought for a moment.

"Three years."

"Too long." Li Yaozong said, "Two years."

Chen Feng fell silent for a few seconds.

"Two years is fine, but we need more people and more money."

"How much more?"

"The R&D team, from the current 500 people, expand to 1,500. The budget, from the current 1 billion per year, increase to 3 billion."

Li Yaozong did not hesitate.

"Approved."

Zhao Ming stood up.

"On the system side," he said, "the smartphone's operating system is completely different from that of a feature phone."

He walked to the whiteboard, next to Chen Feng's building, and drew another building.

"The feature phone's system is closed. The functions users can use are all hard-coded by us. The smartphone's system is open. Users can install whatever apps they want."

He looked at Li Yaozong.

"The Pangu system can run now, but to run on a smartphone, we have to start over."

Li Yaozong looked at him.

"How long?"

Zhao Ming thought for a moment.

"Two years. At least."

"One and a half years." Li Yaozong said, "After one and a half years, I want to see a usable version."

Zhao Ming opened his mouth, wanting to say something, but swallowed it back.

"Okay."

Liu Yang stood up.

He is the head of the hardware department, thirty-six years old, wearing a pair of black-rimmed glasses, and speaks slowly and deliberately.

"Display," he said, "feature phones all use LCD. Smartphones need something better."

He drew a square on the whiteboard.

"Apple uses a Retina display, with a resolution of 326 ppi. What we're using now is 160 ppi."

He paused.

"Also touch. The feature phone's touch is resistive, you have to press with a fingernail. The smartphone's touch is capacitive, just a finger touch works."

He looked at Li Yaozong.

"We don't have either of these."

Li Yaozong looked at him.

"Can we do it?"

Liu Yang thought for a moment.

"We can do it. But we need to cooperate with Japan and South Korea. Their technology is five years ahead of ours."

Li Yaozong nodded.

"Go talk. Price is not an issue."

Wang Bo stood up.

He is the head of the system department, thirty-five years old, usually not talkative, but once he starts speaking he can't stop.

"There's still one problem," he said, "the ecosystem."

He drew countless small dots on the whiteboard.

"A smartphone isn't just about having hardware and system. It needs apps. Chat software, game software, shopping software, map software… Users buy a phone, they need something to use."

He looked at Li Yaozong.

"We have Phoenix Chat. But just having Phoenix Chat isn't enough."

Li Yaozong nodded.

"What do you plan to do?"

Wang Bo thought for a moment.

"Hold a developer conference. Let programmers from all over China come to write apps for Phoenix."

He looked at Li Yaozong.

"President Li, can we take out 100 million to create a developer support fund?"

Li Yaozong did not hesitate.

"Two hundred million."

Zhang Lei stood up.

He is the head of the display group, thirty-two years old, the youngest among them.

"Battery," he said, "smart phones consume more power than feature phones."

He drew a downward curve on the whiteboard.

"Feature phones can standby for a week without issue. Smart phones struggle to last a day on standby."

He looked at Li Yaozong.

"Our current battery technology can't keep up."

Li Yaozong looked at him.

"What should we do?"

Zhang Lei thought for a moment.

"Two approaches. First, make a larger battery. But a larger one makes the phone thicker and heavier. Second, implement fast charging, so that when the user runs out of power, a half‑hour charge lasts a day."

He looked at Li Yaozong.

"I think we should pursue both approaches."

Li Yaozong nodded.

"Do it."

Li Xiang stood up.

He is the head of the battery division, thirty‑four years old, usually not talkative, but when he does, he gets straight to the point.

"There's another issue," he said, "heat dissipation."

He drew a heat map on the whiteboard.

"The chips in smart phones run much hotter than those in feature phones. Poor heat dissipation turns the phone into a hot‑potato."

He looked at Li Yaozong.

"Our current cooling solution uses graphite sheets. They're insufficient for smart phones."

Li Yaozong looked at him.

"Any solutions?"

Li Xiang thought for a moment.

"Heat pipes. Direct the heat to the phone's casing to dissipate."

He paused.

"We don't have this technology. We'll have to learn it from Taiwan."

Li Yaozong nodded.

"Go learn it."

He Xiao had remained silent.

He only spoke after everyone else had finished.

"President Li," his voice was a bit hoarse, "is there a smart solution on the automotive side?"

Li Yaozong looked at him.

"Yes."

He walked to the whiteboard and, outside the cluster of circles, drew a big circle.

"Future cars will also become smart—connected, navigable, and autonomous."

He looked at He Xiao.

"But for now, focus on phones. Once the phone is done, the automotive path will naturally follow."

He Xiao nodded.

"Understood."

The meeting ran from 2 p. m. to 8 p. m.

Six hours, they disassembled and examined every component of the smart phone.

SoC, system, screen, battery, heat dissipation, ecosystem…

Each link is a mountain.

Every mountain must be climbed.

When the meeting adjourned, Li Yaozong did not leave immediately.

He sat alone in the conference room, staring at the whiteboard covered in circles.

It's been six years.

Six years ago, his father handed this burden to him.

In six years, he took the Fenghuang Phone from zero to 50 million units, grew Fenghuang Chat from zero to 300 million users, and expanded Wanxiang Group from 20 billion to 230 billion.

In six years, he has climbed countless mountains.

But this time, the mountain is unusual.

This time, it's not climbing upward.

It's walking along the edge of a cliff.

At 11 p. m., Li Yaozong returned home and entered the study.

On the desk lay the freshly drafted "Fenghuang Smart Phone R&D Plan."

The first page contained a single line:

"Goal: Within two years, produce a smart phone made by Chinese people."

He turned to the second page.

A dense list of budgets, milestones, and responsible persons.

SoC development: 3 billion, Chen Feng.

System development: 2 billion, Zhao Ming.

Display development: 1 billion, Liu Yang.

Battery development: 800 million, Zhang Lei.

Thermal development: 500 million, Li Xiang.

Developer fund: 200 million, Wang Bo.

Total: 7.5 billion.

7.5 billion.

Equivalent to one‑sixth of last year's profit.

He picked up the pen and signed at the bottom.

Li Yaozong.

Then he closed the document, stood up, and walked to the window.

Outside the window, Shenzhen's night was deepening.

In the distance, the lights of the Nanshan R&D Center shone like a field of stars.

Among those stars were Chen Feng's SoC team, Zhao Ming's system team, Liu Yang's display team, Zhang Lei's battery team, Li Xiang's thermal team, and Wang Bo's ecosystem team.

Two thousand people, two years, 7.5 billion.

They were to build a new mountain.

And he, to lead them, walked toward the edge of a cliff.

He recalled the saying his father often said.

"When at peace, think of danger. Bankruptcy is only one step away."

Now, he is one step closer to that step.

At 1 a. m., Li Yaozong received a text message.

It was sent by Chen Feng.

"President Li, the SoC team will start overtime tonight. In two years I'll deliver the results to you."

He stared at the message and remained silent for a long time.

Then he replied with a paragraph:

"Arrange your time reasonably and take care of your rest."

He put away his phone, turned, and walked into the bedroom.

Behind him, the night was thick.

Ahead, dawn was still far.

But the road had already begun.