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Transcript of Smartphone Industry
What is five forces analysis
A model introduced in 1979 by Michael Porter and used by companies for industry analysis and corporate strategy development. The five forces include competition, supplier strength, customer power, the potential for new companies joining the industry, and the threat of substitute products.
- Tariff and Tax in Saudi Arabia
- How Smartphone enter Saudi Arabia
- Registration Requirement
- Technological factors
- Environmental factors
- Legal factors
Threat of potential entrants-
- Economies of scale: At hardware level (difficult) but at software level (easy due to open platforms).
- Capital: Huge investment at R&D and operations level required.
- High brand loyalty.
- Learning curve effect.
I. Smartphone market growth
largest global consumer electronics market.
II. Future Smartphone sales forecast
1.5 billion units by 2016
IV. Smart Phone Operating Systems
Bargaining power of buyer-
- Verity of available smart phones.
- Switching cost is relatively high.
- Consumers: price insensitive and quality oriented.
-Level of dependence on one buyer is Low.
- Number of buyer relatively to sellers is Large.
Bargaining power of suppliers-
- Bad selling proposition, hand makers can switch.
- High competition among suppliers .
Discount on volume .
- Suppliers for all competitors are quite limited.
Threat of substitutes-
- PCs are available in multiple configurations, performance and price ranges.
- PCs represent about 90% of the market .
- Huge network externalizes for PCs .
- No Mac clone available No competing product in the Mac market.
Rivalry among competitors-
- Few firms (concentrated market).
- Differentiation: limitation but huge scope on software level.
- Brand name a big factor for intense competition.
It has a unique operation system.
They have (QWERY keyboards) which is easy to write on it using
only the thumbs.
Long-Term Evolution based handholds.
Lack of the unique Blackberry products.
HTC the third-largest Smartphone – maker in the world behind Apple and Samsung.
HTC is part of the global market that breeds flexibility, new technologies and innovations
High products quality such as an amazing camera
HTC one of the most important players in the Android world, delivering some of the best smart phones on the market today.
Limited of advertising.
Weak financial result.
Supply Chain Become Another Weakness of HTC After Improving Design.
- The company has been the leading player in the global mobile devices market since 1998.
- Nokia has the unique production technology, strong technical strength, perfect quality control system.
- NOKIA is having difficult catching up with the changing customer trends.
- It has declared its profits had dropped by 40% in 2010.
- The smart phone device shows excellent performance.
- It has negligible (small) load times.
- The company has come on strong with motion gestures.
- Many Samsung products are not user friendly.
- Many of its applications are more for show, rather than for being useful.
Threats & Opportunities for Smartphone
The overall usage of mobile phones is still increasing.
Products and services have continued to change the way
Increase market share which is difficult and expensive.
Consumer can change their tastes very quick.
Market share IN KSA
Top three problems the mobile industry needs to solve
The tremendous growth which was recorded in mobile phones in Saudi Arabia in 2012 and 2013 was a result of the high penetration of mobile phone subscriptions in Saudi Arabia. According to the Communication and Information Technology Commission of Saudi, the number of mobile phone subscriptions in Saudi Arabia reached 53 million by the end of 2013, a very high penetration rate of 181.6%. The high penetration rate reflects the fact that almost every person in Saudi Arabia has two mobile phone subscriptions active at any given time. Growth in mobile phones in Saudi Arabia in 2012 was thus sustained by the proliferation of smartphones, a consumer electronics device which is rapidly coming to be seen as indispensable among Saudi consumers.
To conclude, in regards to the future outlook :
• The global Smartphone market has been experiencing explosive growth for the last several years. The mobile device market is the largest global consumer electronics market. It represents an opportunity for huge volumes but comes with great and growing challenges .
• By 2016 , smart phone sales will exceed 1.5 billion units per year , and the
Smartphone unit sales will grow at nearly a 30% compound annual growth rate over the next five years . Smart phones will represent about two-thirds of all mobile phone purchases.
• In the first quarter of 2012, Samsung became the world's largest mobile phone maker overtaking Nokia, which had been the market leader since 1998. Samsung's success is based on Google's Android operating system, which now dominates the smart phone market with a record share of almost 80 per cent.
• Overall, Samsung has been the strongest part of the smart phone market in Saudi Arabia At the same time, policies in the Samsung sector should continue to promote investment, innovation and healthy competition.
• A report by the United Nations Conference on Trade and Development (UNCTAD) shows that Saudi Arabia has the largest number of
mobile phone users worldwide. The report revealed that there are
180 mobile phones for every 100 residents in Saudi, and the usage
of mobile phones is on the rise among teenagers and children as young as nine years in age.
To sum up , the smart phones world is undergoing rapid change. The market has large competition .The industry is considered to be dynamic in nature as it witnesses rapid growth symmetric with technology changes. As we have mentioned, Bargaining power of suppliers-Moderately high and Bargaining power of buyer-Low.
All the four Competitors until now have been profitable, except Nokia which faces difficult catching up with the changing customer trends and It has declared its profits had dropped by 40% in 2010 .
Overall the industry in Saudi Arabia has a positive outlook.
SMARTPHONE Opportunities and Scope for Growth
V. Over view Smartphone market in KSA
Smartphones account for 58% of the mobile handset in KSِِA at end-2012.
almost 2 active SIM cards for every person in the populationز
Apple is a leading innovator
Strong marketing and advertising teams
Decreasing market share