1. 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