Inside the Smartphone Industry - PowerPoint PPT Presentation

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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 ... – PowerPoint PPT presentation

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Title: Inside the Smartphone Industry


1
Inside the Smartphone Industry
  • Ashley Campion
  • Wes Kincaid
  • Stephanie Lanter
  • Michael Riggen
  • John Hutchens
  • Nathan Frost
  • Claudia Martinez

2
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

3
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

4
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

5
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

6
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

7
Scope of rivalry
  • Three contributing factors
  • 1 Cost of plan
  • 2 Speed of network
  • 3 Phones

8
Life cycle
  • In the mature stage
  • Only way to gain an advantage over other
    companies is by making the three factors better
    than others.

9
Problems
  • Cost of plans
  • Cancelation fees
  • Long term contracts
  • Speed of networks

10
5 Forces Model
  • Rivalry within the industry
  • Main Competitors
  • - RIM, HTC, Palm, Motorola, Samsung, Nokia
  • U.S. Market Share of Smartphones

11
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.

12
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 consumers 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.

13
  • 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

14
Establish Mobile Software Giants Manufacture
rs Google, MSFT LG, Samsung
Threat of New Entrants
1. Consumer Market 2. Corporate Market
Bargaining Power Of Buyers
Existing Rivalry in the Industry
Bargaining Power Of Suppliers
  1. Carriers ATT
  2. OS providers Linux, WM
  3. Hardware makers - Intel

Threat of Substitute Products
  • Skype 2. PDA phone palm
  • 3. Features phones Nokia, LG

15
What to learn
  • Companies need to learn from this what buyers
    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.

16
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

17
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

18
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

19
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 dont NEED Smartphones but they WANT them
  • Keeping up with the Joness

20
Competitive Forces
  • Global economy
  • Price
  • Product Features
  • Product quality
  • Design innovation

21
Strategic Positions
  • Sony cant compete
  • Sales are down
  • Lack of innovation to compete with Apple
  • Dell
  • Cutting operating costs
  • Just trying to survive economy, not thrive

22
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

23
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

24
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

25
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

26
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.

27
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.

28
Industrys 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?

29
Growth Potential
  • 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

30
Impact of Competitive Forces
  • Apple
  • The iPhones 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
  • HTC
  • Hopes to pick up speed with new Google phone
    Android
  • Nokia
  • Known for brick phone
  • Has Smartphone, but hasnt seen successful growth
    in Smartphone industry

31
Impact of Competitive Forces
Worldwide Preliminary Smartphone Sales to End
Users by Vendor
Company 3Q08 Sales 3Q08 Market Share () 3Q07 Sales 3Q07 Market Share () 3Q08- 3Q07 Growth ()
Nokia 15,472 42.4 15,964 48.7 -3.1
Research In Motion                     5,800 15.9        3,192 9.7 81.7
Apple 4,720 12.9 1,104 3.4 327.5
HTC 1,656 4.5 1,315 4.0 25.9
Sharp 1,239 3.4 1,535 4.7 -19.3
Others 7,626 20.9 9,643 29.4 -20.9
Total 36,515 100.0 32,753 100.0 11.5
Source http//www.gartner.com/it/page.jsp?id827
912
32
Unattractive Forces in the Smartphone Industry
  • 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)

33
Is This an Attractive Industry in Which to
Participate?
  • 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 EMFs emitted from phone
  • Apples success in one year could happen with
    any company
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