The Smart Phone Industry
By: Max Correa & Mimi Kagabo
WHAT IS A SMARTPHONE?
VALUE TO OUR CONSUMERS
• 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)
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
BARGAINING POWER OF SUPPLIERSMEDIUM
• 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 RIVALRYHIGH
• 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
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THREATS OF ENTRY - MEDIUM
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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
Fast industry growth rate
Low product differentiation
High margins
Brand identity
High diversity of rivals
Exit barriers are low
GLOBAL SMARTPHONES
SALES/REVENUE