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The Current Smartphone Oligopoly

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Desmond Roarty

on 15 November 2013

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Transcript of The Current Smartphone Oligopoly

The Current Smartphone Manufacturers Oligopoly
By Desmond Roarty


Scott Goldie

Creativity and Technology in Business Module

Mobile phones are big business.
They are nowadays crucial to us in everyday life.
It's difficult to think of a world without them.

"By 2014 the world will have more cell phone accounts than people" (SiliconIndia, 2013).

Also, Markets and Markets (2011) estimated that the total global mobile phone and smartphone market is expected to be worth $341.4 billion by 2015.

But one should remember, only a few decades ago mobile phones didn't even exist.

History of Mobile Phones

Although there were some mobile phones used from the 1940's to the 1980's, these were 1st generation mobiles, and were rather clunky, impractical and unreliable.

Mobile phones really took off in the 1990's, when 2nd generation phones were made available. These phones were smaller, faster, cheaper, and much more fashionable to have than their predecessors.

The People History
, 2013)

History of Mobile Phones

3rd generation mobiles were developed soon after the excitement of 2ndGen mobiles, and these are capable of not only making a phone call, but for using emails, internet, games, and much more.

4th generation mobiles are the latest installment of mobiles to be made available, originally in 2009. These are even faster than older models, and have a greater number of WIFI access points to connect to - meaning a stronger internet connection, to name just a few improvements.

The People History
, 2013)

Mobile phones have come a long way in a short space of time Advancements in mobile technology is expanding at an exponential rate!

Global Connections, from 2000 - 2017

(GSMA Intelligence, 2013)
Vying for a slice of the "smartphone pie" are 3 main groups:

Manufacturer. Eg. Apple,
Samsung, HTC
Operating System. Eg. iOS,
Android, Windows
Network Service Provider. Eg. Vodafone,
EE, Three
Apple Iphone Example
Each of these 3 sectors are controlled by an
of firms.

This means "a situation in which a particular market is controlled by a small group of firms." (
Investopedia, 2013

Network Service Providers (UK) Operating Systems

Apple and Samsung have created a huge gap in sales between them and their rivals.

Neil Mawston (2013) noted the global smartphone shipments for the 3rd quarter of 2013 :

Top 3 Companies

Samsung 88.4million
Apple 33.8million
Huawei 12.7million

Therefore Apple and Samsung both sell more than double the number of smartphones than their nearest competitor.

Mawston (2013)
Samsung and Apple combined take up nearly half the market!

Caught in the Crossfire

In order to cement their status as market leaders, Apple and Samsung have been involved in many expensive patent disputes.

Samsung and Apple are currently slugging it out in the courts of more than 10 countries across Europe. (BBC,2013)

Rundle (2012) explained how Samsung had to remove the "all-device service function from it's Galaxy S3 smartphone because Apple claims to have already patented it.

Also, "the EU accused Samsung of stifling competition by bringing a series of SEP lawsuits against Apple and other rivals." (BBC,2013)

In this case, Samsung were trying to prevent rivals from using functions that were on Samsung phones. Because Samsung are the biggest sellers by far, their phones' features had become the industry standard, and therefore phones without these features would find it very difficult to be attractive in the smartphone market.

These cases highlights how difficult it is for smaller companies to compete in the smartphone market because of the reputations and fan-base already acquired by Samsung and Apple, and also these expensive court room disputes are just not economically viable for some companies.
Future Trends

"Its difficult to get the top, but it's even harder to stay there."

However, as we look towards the future all hope is not lost for other smartphone manufacturers to emerge.

The smartphone business is always developing and new technology benchmarks are constantly being set.
Tablets, phablets and smart-watches are just a few of the new technology markets that are currently up for grabs.

New and emerging markets like Africa, China and India mean that there are fresh opportunities for smartphone companies to gain a foothold.

Foxman (2013) provided information on the new smartphone territories. "RIM’s BlackBerry is starting to focus on African consumers, Nokia has made a bet on Indian consumers, and a variety of other companies are competing heavily for a piece of the pie. Little-known manufacturers in China and Asia are making extremely low-cost devices"

Apple and Samsung have so far neglected the low-cost smartphone market, probably because the lower profits available here, but this leaves room for other companies to build from and they can possibly challenge the "Big Two" sometime in the future.

What is clear is that the smartphone trajectory is on an upwards trend, and as long as there is money to be made, there will be companies trying to get a piece of the action.

Barriers to Entry


- Rising wealth of Apple and Samsung means they can buy better equipment to work more efficiently, and they can learn more information about consumers.


- Apple and Samsung have already established solid fan-bases and good brand reputations.


- Other companies find it difficult to compete with Apple and Samsung in the court-room, as the expenses needed are just too high.


- Apple and Samsung have formed top-class Research and Development teams who are constantly developing new ideas and gaining patents which maintain their companies' stronghold.

come in the form of the 3rd and 4th Gen mobile technology.

Gartner 2013
) states "A smartphone is a mobile communications device that uses an identifiable open OS. An open OS is supported by third-party applications written by a notable developer community."

Smartphones usually have the following characteristics:

Large Touch Screen
Mp3 player
Wireless Technology

Smartphones are increasingly
prevalent in the mobile phone

3g and 4g technologies will account for half of all global mobile connections in 5 years. (GSMA Intelligence, 2013)

This equates to 4.25 billion of 8.5 billion connections by 2017.


BBC (2013)
Patent wars: Tech giants sue Samsung and Google.
Available at: http://www.bbc.co.uk/news/technology-24771421 (Accessed: 14 November 2013).

BBC (2013)
Samsung offers to end mobile patent wars
. Available at: http://www.bbc.co.uk/news/technology-24567049 (Accessed: 14 November 2013).

Foxman, S. (2013)
Available at: http://qz.com/47711/apple-iphone-samsung-and-the-next-billion-smartphones-sold/ (Accessed: 10 November 2013).

(2013) Available at: http://www.gartner.com/it-glossary/smartphone (Accessed: 7 November 2013).

GSMA Intelligence (2013)
Half of all mobile connections running on 3G/4G networks by 2017
. Available at: https://gsmaintelligence.com/analysis/2012/11/half-of-all-mobile-connections-running-on-3g-4g-networks-by-2017/359/ (Accessed: 4 November 2013).

(2013) Available at: http://www.investopedia.com/terms/o/oligopoly.asp (Accessed: 3 November 2013).

Markets and Markets (2011)
"Mobile Phone & Smartphone Market Global Forecast (2010-2015)"
[Online]. Available at: http://www.marketsandmarkets.com/Market-Reports/smartphone-market-219.html (Accessed: 6 November 2013).

Mawston, N. (2013) "Samsung & Huawei Outperform as Global Smartphone Shipments Reach Quarter-Billion Units in Q3 2013",
Strategy Analytics
, 28 October. Available at: http://blogs.strategyanalytics.com/WSS/post/2013/10/28/Huawei-Takes-3rd-Place-as-Global-Smartphone-Shipments-Reach-Quarter-Billion-Units-in-Q3-2013.aspx (Accessed: 6 November 2013).

Rundle, M. (2012)
Huffington Post
. Available at: http://www.huffingtonpost.co.uk/2012/07/25/samsung-removes-key-features-apple-patent_n_1701794.html (Accessed: 13 November 2013).

Silicon India (2013)
World to have more cell phone accounts than people by 2014
. Available at: http://www.siliconindia.com/magazine_articles/World_to_have_more_cell_phone_accounts_than_people_by_2014-DASD767476836.html (Accessed: 6 November 2013).

The People History
(2013) Available at: http://www.thepeoplehistory.com/mobilephones.html (Accessed: 7 November 2013).
This short clip highlights the current smartphone market as of October 2013:

Full transcript