Inside the smartphone industry
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Inside the Smartphone Industry. Ashley Campion Wes Kincaid Stephanie Lanter Michael Riggen John Hutchens Nathan Frost Claudia Martinez. What is a Smartphone?. A Smartphone is a mobile device offering highly developed features beyond a classic mobile phone Computer-like functionality

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Inside the smartphone industry

Inside the Smartphone Industry

Ashley Campion

Wes Kincaid

Stephanie Lanter

Michael Riggen

John Hutchens

Nathan Frost

Claudia Martinez

What is a smartphone
What is a Smartphone?

  • A Smartphone is a mobile device offering highly developed features beyond a classic mobile phone

    • Computer-like functionality

    • Applications for entertainment

    • Access to the Web

    • Personal data processing

The first smartphone
The first Smartphone

  • In 1992, IBM created the first Smartphone which they named “Simon”

    • Shown as a concept product at COMDEX, a computer industry trade show in Las Vegas

    • It was released to the public in 1993 and sold by BellSouth

More about simon
More about Simon…

  • Other than being a mobile phone it contained such features as a calendar, address book, world clock, calculator, note pad, e-mail, sending and receiving faxes, and games

  • Customers used a touch-screen to select phone numbers

    • Text was entered with a unique “predictive” keyboard

    • Although it sounds similar to our Smartphone's today, the Simon would be considered fairly low-end

The industry today
The Industry today

  • The Smartphone Industry has earned revenues into the billions of dollars and has become extremely competitive

  • Apple is the leader in the industry today, with a few competitors behind them

    • Microsoft

    • Sony

    • Dell

    • Google

Market size
Market size

  • Over 168 million customers

    • Market expanding to teens and even pre teens

    • Older generations are also acquiring Smartphones for work purposes

  • Over 1200 companies

  • 4 major Smartphone providers

    • Verizon

    • T-Mobile

    • AT &T

    • Sprint

Scope of rivalry
Scope of rivalry

  • Three contributing factors

    • 1: Cost of plan

    • 2: Speed of network

    • 3: Phones

Life cycle
Life cycle

  • In the mature stage

  • Only way to gain an advantage over other companies is by making the three factors better than others.


  • Cost of plans

    • Cancelation fees

    • Long term contracts

  • Speed of networks

5 forces model

Rivalry within the industry

Main Competitors

- RIM, HTC, Palm, Motorola, Samsung, Nokia

U.S. Market Share of Smartphones

5 Forces Model

5 forces model1
5 Forces Model

  • Threat of Potential New Entrants

    - The threat of new entrants is low since start up costs for a cell phone service provider are extremely high. A great sum of money must be invested to attain the economies of scale, and it is difficult to enter the market with existing firms already operating on cost and differentiation strategies.

  • First Mover Advantage

    - Releasing a product early will enable one to capture the largest market share, establish partnerships, erase barriers to entry, and dim the chances of competition.

Bargaining power
Bargaining Power

  • Buyers

    • Customers Buying Power

      - Phones are changing dramatically and what consumers want is cheap and efficient. Buyers have high bargaining power and will usually pay for what the consumer’s value the most.

    • Buyers Willingness to Switch

      - Will switch for innovative products and good ratings

  • Suppliers

    • Suppliers end up being in a low bargaining position because cell phone operators provide such high volume orders that they have to be cautious not to temper with the relationship.

Inside the smartphone industry

  • Threat of Substitute Products

    • Cost and Innovation

      - Companies within the industry compete on innovation and new applications.

    • High switching costs with servers/phones

      - Consumers would more than likely not switch between a new product due to contract fees and the cost of purchasing a new product.

  • Intensity of Rivalry Among Competitors

    • Innovative (Blue Ocean)

    • Applications (GPS, Google, Email, Video/Camera, Bluetooth, Games etc.)

    • New target market

      - Price reduction attract more customers

Inside the smartphone industry

Establish Mobile Software Giants:

Manufacturers: Google, MSFT

LG, Samsung

Threat of

New Entrants

1. Consumer Market

2. Corporate Market

Bargaining Power

Of Buyers

Bargaining Power

Of Suppliers

Existing Rivalry in the Industry

  • Carriers – AT&T

  • OS providers – Linux, WM

  • Hardware makers - Intel

Threat of



  • Skype 2. PDA phone palm

  • 3. Features phones – Nokia, LG

What to learn
What to learn

  • Companies need to learn from this what buyer’s value in the industry. How to add value to the customers. Know what they like and strive to achieve this.

  • Who are my loyal buyers and suppliers and try to build a strong relationship.

  • Know what your company is best at and learn how to go from there in making it even better.

Drivers of change
Drivers of Change

  • Long term growth rate

    • People are taking more of an interest in the Smartphone

    • Every quarter more people buy or plan to buy a Smartphone

  • Who buys the product

    • College students

    • Business professionals

Drivers of change1
Drivers of Change

  • Product innovation/technological change

    • Started as any phone that could text or play games

    • Now it is any phone with a built in operating system

      • Internet

      • GPS

      • Downloads

Drivers of change2
Drivers of Change

  • Diffusion of technological know-how

    • New generation

    • Need to upgrade

    • Need for new technology

  • Globalization

    • Strong sales worldwide

    • Companies on different continents

    • Constant lines of communication

Drivers of change3
Drivers of Change

  • Emerging buyer preferences

    • Not just for phone calls anymore

    • High demand for multiple features

      • Send/receive e-mail

      • Access to Internet

      • Purchase I-Tunes, ringtones, and games

  • Social concerns, attitudes, and lifestyles

    • Driven by technology

    • People don’t NEED Smartphones but they WANT them

    • Keeping up with the Jones’s

Competitive forces
Competitive Forces

  • Global economy

  • Price

  • Product Features

  • Product quality

  • Design innovation

Strategic positions
Strategic Positions

  • Sony can’t compete

    • Sales are down

    • Lack of innovation to compete with Apple

  • Dell

    • Cutting operating costs

    • Just trying to survive economy, not thrive

Strategic positions1
Strategic Positions

  • Google

    • Becoming key player in software development

    • Numerous “Apps” for iPhone

    • On top of innovation

  • Microsoft

    • Expects double digit revenue increase

    • Came off of 18% growth in revenue in 2007

    • Very strong position

Competitive moves
Competitive Moves

  • Microsoft

    • Look for Microsoft to continue with same results

    • With double digit growth expected, no reason to let up

  • Google

    • Watch for Google to become a key player in software development

    • Possible product line in the future

Key success factors
Key Success Factors

  • Technology:

    - Internet prediction in 2004

    - As consumers increase the demand for more features offer in the service, also, the network capacity

    Replacing Communication Tools:

    • Fixed line phones being replaced

    • Emergence of Smartphone as a viable tool for many businesses

    • No real substitute product, therefore, people become dependent on them

Key success factors1
Key Success Factors

  • Next Generation Experience:

    - Companies raising their research to meet consumers needs

    -Example: battery running-off and still having 4hrs of talk time, lighter in weight and thinner

  • Marketing:

    - Quantitative research on mobile phone users reveals that there is currently no such thing as a Smartphone market

    - The assumption that the mobile market will develop in the same way as the personal computing market did

Key success factors2
Key Success Factors

  • Pricing:

    - About half of the sales of Smartphone are through employers (as opposed to retail channels)

  • Skill & Capability:

    - Manufacturers adding multimedia and other entertainment features to compete

    - but segmentation suggest to add communication services like, advanced voice and video e-mail, white-boarding etc.

Key success factors3
Key Success Factors

  • Design & Innovation Expertise:

    - Example: Super-smart Smartphone mated into a desktop cradle that hooks up to peripherals like a common all-garden PC. An intelligent dock that would have networking built-in, a USB hub, some sort of communications hook-up, and its own processor, memory, and operating system. It could be connected to an external monitor and keyboard, and would react when a Smartphone was placed into it.The “Smart Interface System for Mobile Communications Devices”, would work as much as a desktop PC does now.

Industry s attractiveness and prospects for long term profitability
Industry’s Attractiveness and Prospects for Long-Term Profitability

Growth Potential

Impact of Competitive Forces

Unattractive Forces in the Smartphone Industry

Is This an Attractive Industry in Which to Participate?

Growth potential
Growth Potential Profitability

Since 1998, 30% increase in the number of people in United States who own cell phones

Innovation played big part

Progression: (brick phone flip phone Smartphone)

Average life of a cell phone is only about 18 months

Probably not skyrocketing levels of growth, but still growth potential

Impact of competitive forces
Impact of Competitive Forces Profitability


The iPhone’s release put Apple ahead in Smartphone industry (327% growth) the year it came out

Research-in-Motion (BlackBerry)

Frontrunner in Smartphone industry until Apple released the iPhone


Hopes to pick up speed with new Google phone Android


Known for brick phone

Has Smartphone, but hasn’t seen successful growth in Smartphone industry

Impact of competitive forces1
Impact of Competitive Forces Profitability

Worldwide: Preliminary Smartphone Sales to End Users by Vendor


Unattractive forces in the smartphone industry
Unattractive Forces in the Smartphone Industry Profitability

“BlackBerry Thumb”

Florida teen sent over 35,000 text message in a month- twice

Texting While Driving

Health hazards

Electronic Magnetic Fields Can Cause Tumors (preliminary research)

Is this an attractive industry in which to participate
Is This an Attractive Industry in Which to Participate? Profitability

Red Ocean

Competing on innovation

Big players like Apple and RIM BlackBerry have huge lead

Blue Ocean

Smartphone companies could differentiate by Dell style customization of cell phones

Or reduce the amount of EMF’s emitted from phone

*Apple’s success in one year could happen with any company