Market Analysis on Smartphone Industry
“The future belongs to those who believe in the beauty of their dreams.
” Says Eleanor Roosevelt and we cannot agree more. We have always been fascinated by topics related to product design and market analysis since a very small age as they are essentially omnipresent. Business related questions like “Why is this product priced like that? ” and “How does this company make a profit? ” have since then filled our mind and we have been eager to search for the ideal answer.
The more we learn, the more we realize that we would like to know more about it and meet people from all over the world. Therefore, we would like to seize this precious opportunity to satisfy our curiosity about the world.
In fact, three of us are using Apple iPhone (i. e. iphone3G, iphone3GS and iphone4) and we are definitely the smartphone users who have clear understanding of the functions and specifications of the current existing products in the smartphone industry.
Since all of us have great interest in participating in this project, in which we can deeply analyze this current situation of this industry and apply knowledge and theories in making comparison between product competitiveness, we hope that we can make good use of this golden opportunity to learn outside of classroom and conduct competitive analysis on smartphones through identifying customers’ needs and surveying the latest products of the targeted category that are available on the market.
To show our great enthusiasm towards this project, we have prepared an article analyzing the smartphone industry and making evaluation on the competitive advantages of some existing products. Introduction – More than what we expected in the past Who wants everything inside mobile phone? People at first are skeptical about the potential of the so-called modernized Operating System stored in mobile phone. It turns out that the idea became a multi-billion dollar industry. Everybody is trying to get a piece of the smartphone pie including Microsoft, Google, Apple, Nokia, and Research In Motion (RIM).
Gone are the days when mobile phone users solely made and received telephone calls across a wide geographic area. Nowadays, what consumers care about is how much I can get access using a mobile device rather than just making and receiving a phone call. The increasing importance of mobile devices has triggered intense competition amongst software giants such as Google, Microsoft, and Apple, as well as mobile industry leaders Nokia, Research In Motion (RIM), and Palm, in a bid to capture the largest market share pre-emptively.
Nowadays, a smartphone run complete operating system software providing a platform for application developers. It offers more advanced computing ability and connectivity than a contemporary feature phone and allows the user to install and run more advanced applications. Growth in demand for advanced mobile devices boasting powerful processors, abundant memory, larger screens, and open operating systems has outpaced the rest of the mobile phone market for several years.
Smartphone users like us are eager to have functions like the capability in getting internet connection via Wi-Fi and 3G network, social networking, location services, HD video recording, retina display, installing amazing applications which provide all sorts of things that we could imagine via app store for Apple iPhone or market for Google Android. Target customers and their needs According to Gartner, Inc. , worldwide mobile device sales to end users totaled 1.
6 billion units in 2010, a 31. 8 percent increase from 2009, Smartphone sales to end users were up 72. percent from 2009 and accounted for 19 percent of total mobile communications device sales in 2010. A huge increase in smartphone sales is expected in the coming years. Today’s consumers can access a wider range of mobile services than ever before through smartphones, so in choosing mobile device consumers care more and more about which content and applications they will be able to access.
Companies must consider the new dynamic in their go-to-market strategies and leverage the equity generated by these new mobile brands to drive sales.
In fact, most services provided by smartphones are offering person-to-person transfers, using Short Message Service (SMS). However, in our opinion, mobile financial services such as money transfer will be one of the functions to be included inside a smartphone next year. Apart from money transfer, as e-banking and e-payment become more and more popular, paying for goods and services over the mobile Web could also be introduced in the near future, so that smartphones act as a media for users to organize daily-based issues involving the dollar sign.
External environment – Smartphone industry Smartphones are not only revolutionizing the mobile phone industry.
They are also about to change the way we use computers. In this rapidly emerging industry, more and more companies are trying to get a piece of the smartphone pie by capturing a larger market share from rivalries. As mentioned in the above, more and more consumers around the world are willing to purchase smartphone. For the buyers’ power, the power of buyers is relatively weak even though there are various types of smartphones to choose from.
Since consumers often download applications and customize their smartphones in their favor, the cost of customers to switch from one to another is high. Besides, buyers can update their phones’ OS version in an attempt to remove bugs and obtain better performance.
With the difficulty in switching from one OS to another, as the purchased applications are not transferrable between different operating systems, therefore, it is easy to maintain loyal customers.
For the entry barriers, it is definitely not easy for other companies to enter into smartphone industry as the production of smartphones requires lots of factors including the brand image, financial support, and research and development strategies, etc. However, for the threat of substitutes, such software giants and mobile industry leaders as, Apple, Google, Microsoft, Nokia and RIM provide similar products to the market, which will definitely affect the current proportion of market volume and thus reduce sales volume for existing players. The intense competition between them has shown the threat of substitutes to be very high.
Internal environment Apple iPhone Apple logo It is almost four years since the iPhone was launched, more than a lifetime in mobile phone development. Even now rivals are reluctant to use the “i-word”, although they all acknowledge that the iPhone changed what the phone market is all about.
The iPhone allows users to switch from one application to another effortlessly. All its functions can be accessed with just the touch of a finger, making the iPhone the most advanced portable device ever. Users can make a call by simply tapping a name or number in the address book, a favorites list, or a call log. It also automatically syncs all of the users’ contacts from a PC, Mac, or Internet service.
Apart from the ease of use of iPhone, Apple is one of the most established and healthy IT brands in the World, and has a very loyal set of enthusiastic customers that advocate the brand.
Such a powerful loyalty means that Apple not only recruits new customers, it retains them. The success of Apple’s app store caught out most rival phone makers. The app store is the ultimate source for mobile apps. It is the world’s largest od mobile apps, which contains more than 350,000 apps and over two billion downloads and is now making serious money, not just for Apple but for thousands of developers as well. However the current mobile market is very competitive, so iPhone is facing he competition from imitators who can sell a similar or comparable device at a lower price.
Most of these threats are coming from established players in the smartphone industry such as Samsung, LG and HTC. Moreover, software companies such as Google and Microsoft are now posing a credible threat at entering the smartphone market. Google Android Android logo Google is one of the most well-known and respected technology companies. The fact that they are behind the Android platform gives it credibility and viability in the eyes of potential partners, vendors, and developers.
The key factors for Google to success are mainly divided into three categories: device selection, competitive pricing and Google application. Unlike the Apple iPhone where you don’t have any options of hardware suppliers other than Apple itself, the Android OS is open-source and any hardware manufacturer who chooses to do so can use it on their handset. This gives consumers a great deal of selection from which to choose from. The Android OS is very cost effective to develop for since it is open source and the licensing arrangements are very vendor friendly.
Thus, handsets utilizing the Android OS tend to be prices very aggressively. The fact that the Android platform integrates so many of the Google services and applications into its base only strengthen its core capabilities and usefulness.
Google items such as GMAIL, Calendar, Reader, Listen, and of course GPS and Maps to name a few integrate seamlessly with the Android OS and make it very simple for users to synchronize their data across platforms from the desktop to the cloud and mobile platforms.
However, unlike the Apple iPhone, Android does not have a central or cohesive source of multimedia material nor a centralized player. Although there have been some improvements in applications on the Android platform in this area, at this time there is no place to go that comes slightly close to what Apple can offer on this front. Furthermore, Apple controls the when and how iPhone users will get not only new hardware, but also upgrades to the OS and core functionality.
With Android, even when Google releases a new version of its OS, it has to wait for the manufacturers to thoroughly test and modify code to make sure it works properly on their specific hardware configuration. We have done this short analysis only because we all are interested in this topic.
In fact, we are happy to see this big battle between Apple and Google (i. e. iOS vs. Android). We keep in faith that through doing this project next year, we are able to learn the some marketing strategies and concepts of product designs in order to satisfy customers’ needs, so that we can apply the knowledge and theories in the future.