Changing The Competitive Landscape Of The Smartphone Industry Marketing Essay

Changing The Competitive Landscape Of The Smartphone exertion Marketing EssayAbstractInnovation flush toilet be delimit as a process of converting opportunities into unexampled ideas and of the simple application of these ideas in practice (Tidd, Bessant, Pavitt, 2005). The past decade saw constant innovations in ICT aimed at increasing self-efficacy of the end users of communication devices. Elements such as miniaturization and omnipresent computing ( justify handset chemical bond, 2007a) have literally brought the personal computer to the treat of the consumer, in the form of a novelphone. The smartphone is rich with features such as mesh browsing, touch screens, fluid-camera, improved connectivity and entertainment with the capability to adopt new applications (Burgelman, Silverman, Wittig, Hoyt, 2009). novel years witnessed an explosive fruit in wandering(a) subscribers, where in 2008 unaccompanied global shipments rose 28%, as the smartphone gained momentum in the mobile phone diligence (Canalys, 2008). The next a a few(prenominal)(prenominal) years ar predicted to found a compound annual growth rate of 13.5% in handset shipments leading to 1.9 billion handsets at the end of 2012 compared to 1 billion in 2007 (DataMonitor, 2008). Today, receivable to its portability and versatility the smartphone is a appoint player that facilitates the integration of technology with raw consumerism as the end user is given the capability to engage some(prenominal) computational devices and systems simultaneously (Tsai, Wang, Hwang, 2008). Mark Weiser (1991) refers to this as present computer science.The get hold of for smartphone has been the attain driver for innovations (such as the touch screen, internet browsing, Wi-Fi) in the mobile assiduity in the past decade and the blossom forth handset Alliance and the humanoid programme are recent products of such pursuits. This study analyses how the OHA and mechanical man has and get out alter the terms of competition in the mobile intentness, with relation to Porters tail fin industrial forces.The Smartphone Indus attackindustriousness ParticipantsAnalysing the industry evaluate chain of the smartphone the let out components can be identified as chipset manufactures (Intel) , infrastructure developers and platform manufactures (Microsoft, Palm, iPhone) who deliver the goods the hardware and parcel components for handset manufactures. Application developers produce the applications that run on the operating platform whereas content providers such as Google provide the instruction for these applications. Mobile operators such as ATT and T-Mobile distribute handsets and provide the subscribers with ne twainrk connectivity.In 2006 the global handset mart was an oligopoly dominated by 5 companies which accounted for 85% of the food market where Nokia and Motorola together accounted for 58%. Traditionally manufacturers competed with design. The entry of iPhone 3G to the market in 2008 created a new streamer by combining design, performance, usefulness and functionality (Burgelman, Silverman, Wittig, Hoyt, 2009). It is considered by some industry analysts to be a blockbuster where Apples market share increased from 3.6% in 2007 to 17.3% in 2008, making it the now second base hugest player.Googles Entry into the Smartphone IndustryEstablished in 1996 as the brainchild of two Stanford University computer science graduates, Google is now considered to be a blockbuster design that has expanded beyond its core business as a attempt engine to a portfolio of products and services (Bhattacharya, Gopal, Samad, 2009). Today, a vast majority of Googles revenue is generated through the companys advertisement products, Adword and Adsense (99% in 2007 and 97% in 2007) (Burgelman, Silverman, Wittig, Hoyt, 2009) that provide targeted advertising on its search pages, by placing advertisements relevant to a search on the results page.Googles entry to the smartphone industry was facilitated by its acquisition of the start-up open source software system firm, android in 2005 ( personal credit line Week, 2005). This event was a result of Google identifying the future growth potential of the smartphone and its capacity for mobile advertising. Eric Schmidt, the Chairman and CEO of Google stated You canalize your phone e reallywhere. It knows all about you. We can do a very targeted ad. Over conviction we will make more notes from mobile advertising. (Schmidt, 2010). slack handset Alliance and androidIn November 2007 Google unveiled the adequate to(p) Handset Alliance, a consortium of 34 companies in the mobile industry representing the industry value chain (Fig 1), consisting of multinational companies such as T-Mobile, HTC, Intel, Qualcomm and Motorola. The clinical of the alliance was to create an Open Software, Open Device and an Open Ecosystem (Open Handset Alliance, 2009b) boost open innovation for increase of mobile technology base on the open source platform. Today the OHA has expanded its membership to 65 companies.Fig. 1 The Wireless Value Chain (Hendrix, 2009)In November 2007 OHA released mechanical man, an integrated software pack consisting of the in operation(p) System, middleware, user-friendly interface and applications and the mechanical man SDK free to the development community.Open Innovation and Open reference workOpen innovation is innovating through the collective creative input and knowledge of internal and external resources (Chesbrough, 2003). Open source technology is one method of open innovation (von Hippel von Krogh, 2006). It grants the developer the self-command of the source code without a cost of license fee or royalties giving them the freedom to advertise develop and distribute the product free or at a fee (Open Source Initiative, 2010). The openness of the platform creates more advance and cheaper innovations with shorter succession-to-value, improving RD p roductivity and creating better value for money for the end user (Open Handset Alliance, 2009b). The OHA was a value network fostering open innovation by pussying of knowledge and Intellectual Property of the members. android, was its for the first time product built on the Linux open source kernel (Open Handset Alliance, 2007a).The Competitive Industry ForcesMichael Porter (1979 2008) defines five forces that define the competitive kinetics of an industry by shaping the interactions within that industry. These forces can be define as negotiate designer of suppliers and customers the threat if new entrants and substitutes and established industry rivals (Fig.2). These are the figures that drive the profitability of the industry in the short and unyielding terms (Porter, 2008). Analysis of these competitive forces and their drivers will provide insight into the land of the industrys profitability and future growth potential.The entry of mechanical man and Google into the sma rtphone industry has importantly affected its competitive landscape. Through the creation of an open ecosystem and a wide developer community it has created a sustainable competitive advantage against non-Andriods.Fig 2 The Five Forces that practice Industry Competition (Porter, 2008)The Five Forces of the Smartphone Industry run out terms Power of SuppliersThere are a number of players in the smartphone Operating Systems (OS) market, led by Nokias Symbian, followed by Apples iPhone OS X, RIMs (Research in Motion) Blackberry, Microsofts Windows mobile, Linux and Palm (Hashimi Komatineni, 2009). These OS developers charged a license fee from handset manufactures, which was usually a variable cost of $0.50 to $25.00 per handset shipped. Further, in order to build applications on a specific OS, developers required SDK (Software Development Kit) and an API (Application Developer Interface), essential support tools for which they give expensive certification and at times high member ship fees (Burgelman, Silverman, Wittig, Hoyt, 2009). collectable to the high blab terms power of these OS developers the cost to handset manufacturers was significantly high.Porter (2008) identifies standardisation as an avenue of reducing the bargaining power of suppliers, and it is essential for innovation in the mobile telecommunication industry (Tilson Lyytinen, 2006). In the past collaborative RD and sharing of intellectual property were means of standardization in this industry (Bekkers, Verspagen, Smits, 2002). Android was developed to achieve an industry-wide standard in open source code making it freely available to all. By establishing OHA for this purpose creates an environment for open innovation reducing development, distribution and time costs of parallel innovation. The open nature of the Android platform makes it amply adaptable on any handset which triggers a high demand for the Android OS, which in turn reduced the bargaining power of the suppliers of OS. negociate Power of DistributersIn the smartphone industry the distributers mainly consist of the network carriers who dole out the phones to subscribers as a part of a mobile service plan. The bargaining power of the distributers is high since they have a large variety of handset manufactures with different features to select from. Although the failure of the Google Android may be due to a multitude of factors one key reason was their decision to lot the phone in their own web store independent of a carrier, in an attempt to shake up handset retailing . They changed this outline by introducing the Nexus One in Vodafone (UK) in April 2010 (Parker Waters, 2010).Handset manufactures try to gain leverage through disfigurementing, networking and advertising to generate brand loyalty. iPhone for vitrine has a very strong brand community. However the entry of the Android phone has created a new buzz word among subscribers, which gives members of the OHA a high bargaining power over other handset manufactures.Another key aspect that affects carriers is the new avenue of voice communication that is available in the smartphones due to the Wi-Fi capabilities and applications that are provided such as Skype and Google Voice. With time this would reduce talk time over the carriers network impacting their revenue. Recently iPhone blocked Google Voice on its platform (Menn, 2009).Through collaborative innovation OHA has built a standard platform (Cusumano, 2010) and reduced RD costs of parallel innovation and increased time efficiencies. These economies will eventually flow to the end user creating higher value for money giving Android phone makers a better bargaining power over their subscribers compared to their competition.Rivalry between IncumbentsWithin a few years of entering into the market the mobile phone became a trade good due to the competition in the market and the fast innovations that resulted in correspondent phones competing on price. When the smart phone entered the market it required a premium price for the added functionality of the phones. at once the creation of a standardized OS platform through Android has the potential to commoditize the smartphone.Since it was introduced to the market Android has emerged as a strong brand whereby every smartphone running on the Android platform is co-branded as an Android phone. The very 1st Android the T-Mobile G1, Motorola Droid and the latest HTC Magic are few such examples. This creates a convergence in branding between the members of the OHA further consolidating the smartphone industry through the alliance.The value network and open ecosystem that is OHA has a large potential for future developments in the smartphone industry due to the knowledge pool they have created. This is a critical asset for the members of the OHA over the other players in the industry. Further, having Google as a strong leverage in terms of branding, culture and human resources adds to the benefit of the OHA.By introducing a standard platform for smartphones Android has reduced any competition between handsets over the OS, opening a new avenue of competition, which is applications.One of the key issues that arise between incumbents in the industry is the Intellectual Property violations. Apple recently sued HTC for 20 palpable infringements over HTCs Android phones (Gelles , 2010).Barriers to EntryThe main barrier for the smartphone industry for a new entrant was the significant fixed costs of RD and advertising. The introduction of Android has reduced these barriers significantly. First, by freely providing the SDK to the development community any new entrant can use this OS without a cost. Further the applications that are developed for the Android phones are highly adaptable and open. Therefore they can be adapted by any new entrant. Similar Apples Apps Store, in that respect are multiple applications that are available with no cost.Further the Android brand is a powerful plat form upon which new entrants can leverage their marketing.ReferencesAguero, J., Rebollo, M., Carrascosa, C., Julian, V. (2009). Does Android Dream with Intelligent Agents. In J. M. 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