The Smart Phone Industry By: Max Correa & Mimi Kagabo What is a Smartphone? Value to our Consumers Bargaining power of Suppliers-medium A mobile phone with an advanced mobile operating system that combines features of a personal computer’s operating system with other features useful for mobile or handheld use Prestigious brand name– strong company identity The amount of features that each phone contains The quality of the product compared to other smartphones Complementary goods (Apple watch, Mac, & tablets) Two main suppliers in this industry (manufactures and software developers) High competition among suppliers which helps reduce the price to produces Critical production inputs are similar Threat of Substitutes products - Low Intensity of existing rivalry- High Low buyer inclination to substitutes Consumers that cannot afford Apple or Samsung are forced to substitute it with another smartphone brand (LG, Microsoft) Consumers that want a simple phone will not purchase a smartphone Fast industry growth rate Low product differentiation High margins Brand identity High diversity of rivals Exit barriers are low Model of Competition Duopoly: a situation in which two suppliers dominate the market for a commodity service Apple & Samsung dominate the smart phone industry Samsung has recently had the edge over Apple for their recent phone Galaxy S7 Samsung’s Galaxy S7 accounted for 16% of all USA smartphones Apple’s IPhone 6 accounted for 14.6% of all USA smartphones Threats of entry - Medium Global Smartphones sales/Revenue Strong network distribution required High capital requirements Strong brand names are very important Advanced technologies are require Patents limits new competition Customer loyalty to one brand Bargaining power of Customers - High Power that customers have is rising because of the increasing number of smartphones and very little differentiation Demand is highly sensitive Low dependency on distributors