Economy and Risk Management

Continuous Assessment

Smartphone Market Analysis, Development and Impacts of the Environmental Reasons

Alper Batik
MSIPS
2931670
Contents
I-Introduction: ............................................................................................................................................... 3
II-Smart Phone Market Analysis.................................................................................................................... 3
III-Smart Phone Market Share ...................................................................................................................... 4
A-The U.S Smartphone Market Share ....................................................................................................... 5
B-Company Information: .......................................................................................................................... 6
IV-Growing Important of Smartphone Market and the impacts on Demand and Supply ............................ 9
A-The features of Smartphone For Customers ......................................................................................... 9
B-Risk and Barrier to Smartphone Market.............................................................................................. 10
C-How Import Policies Favor and Disfavors of Smartphone Market ...................................................... 11
D-Impact of Smartphone Environment................................................................................................... 11
IV-Conclusion .......................................................................................................................................... 12
References: ................................................................................................................................................. 13
I-Introduction:
A smart phone is a mobile phone that includes high level functionality with making
phone calls and sending text messages. It integrates with a personal digital assistance (PDA)
which, is a mobile device, let users to store check e-mail, manage contacts and calendar
knowledge, the internet, take a picture and record video. The first smartphones were developed
by the IBM and Nokia in 1990s. These were IBM Simon and Nokia 9000. However, the first real
smart phone was developed by Ericsson that was called the Ericsson R380. After that,
Blackberry, Microsoft, HTC, Sonny and Nokia started to manufacture smart phones (Fling,
2009). In 2007, Apple started to manufacture IOS operating system of smart phones and the
following year Google presented its open source Android operating system for mobile phones.
Also, other smart phone companies developed their operating system. Thus, smart phone market
competition started directly. Smart phone market provides to continues of mobile phone market
and smart phone market is much more higher than mobile phone market (ALSTYNE, PARKER
and CHOUDARY, 2016).

II-Smart Phone Market Analysis

A smart phone which, is a new generation of mobile internet devices, can transform
lifestyles. The smart phone market has been dynamic and growth significantly for 5 years. It is
smaller than a laptop (Singh, Mittal and Pandey, 2016). Smart phone market includes different
business model strategies. Take for example, large company such as Nokia and Palm/HP remain
from the phone and personal digital assistant while new firms such as Apple and Google have
got head offices in Silicon Valley. It is clear that Nokia definitely loses the market share when
Apple and Google have had good strategy model (Arthur, 2013). A mobile operating which,
system has got the most important role of the smart phone market, is the software development
to run on mobile devices. The operating system manages and look after the mobile device such
as keyboards, WAP, email, text messages, etc. The main competition firms' smart phone
operating systems are Google (Android), Apple (IOS), Blackberry (In Motion/RIM), Nokia
(Symbian), Palm (WebOS), Microsoft (Windows). Currently, a huge amount of smart phone
devices are run by Google Android and Apple IOS (Adesina, 2014). There is one question about
why smart phones will be gone out very soon such as other revolutionary Silicon Valley
technology. It is current some companies are dominate the smart phone market while the market
is saturated. The reason is a few of countries can buy smartphones while a large number of
African countries, Asia and even some couple countries in Europe cannot buy smartphone
(‘Mobile Phones Industry Profile: Canada’, 2017).

III-Smart Phone Market Share

Smartphone market sharing definitely depends on its operating system while Google
Android's market share has been growing compared with other mobile operating systems.
Android uses open source. Meanwhile, it might be developed by android developers. However,
IOS is more secure than Android (‘iOS vs. Android in the enterprise.’, 2012). Despite Apple
started to sell smart phone one year before Google, Google operating system was much
dominated the market than Apple. A statistic data shows that android phone was sold 56 friction
while IOS phone was sold 33 amount in the USA by 2011 (‘Android U.S. Smartphone Share
Drops, Apple Jumps 10 Percent.’, 2012). Today, Samsung is the most important company in the
market while Apple and Huawei follow it (‘Apple Bests Samsung In Worldwide Phone Sales
Amid Disappointing Q4: But Samsung poised to overtake when Galaxy S9 debuts’, 2018).

This table shows some important key players in smart phone markets.

Table 1: Worldwide Smartphone Participant

Apple American foundation

Samsung Korean foundation
Huawei Chinese foundation
Blackberry Canadian foundation
HTC Taiwan foundation
Sonny Ericson Japanese foundation
LG Korean foundation
Nokia Finish foundation

Figure 1: The share of smart phone market worldwide

Source: IDC

Figure 2: Development of Smartphone Market

Source: visual (https://visual.ly)

A-The U.S Smartphone Market Share

 All worldwide firms in the smart phone market of the USA manufacture and sell a smart
phone to customers in the USA. The smartphone market is definitely oligopoly market and it
offers perfect competition. Meanwhile, the entrance of the market is difficult (Fan and Yang,
2014).

Figure 3: operating system market share of US

Source: techcrunch

This figure shows how many percentage of mobile operating system in the USA by 2017. It is
clear that the amount of Android was almost two times higher than the fraction of IOS (Fan and
Yang, 2014).

B-Company Information:
Apple which, is American company, designs, develops, and sells electronics, computer software
and online services to the costumers. It was founded in 1976 by Steve Jobs, Steve Wozniak and
Ronald Wayne. The total revenue was $ 229.234 billion in 2017.123,000 people work in Apple,
while the company has got 449 retail stores in 22 countries (‘Apple Inc SWOT Analysis’, 2018).
Supply chain management (SCM) is the integration of key business processes from end user
through suppliers to provide products, services and information that add value for customers and
other stakeholders. It is a design, organize and execute process. An effective SCM choose trust-
based and long-term business relationships with customers, suppliers and other strategic partners
(Chandraprakaikul, Baines and Lim, 2010).
Apple has got modern supply chain management model and agile supply strategy. Its strategy is
taking responsible and flexible to the consumer needs when the risk of supply shortage or
dispersion is supported by pooling stock and other limit assets. The reason is the combination of
the hedged and responsive supply chain strengthen. Additionally, Apple let the suppliers to be
responsible to the changing, diverse and unpredictable demands of the consumer on the front end
when the company takes the minimize risks of supply disruption (Hettiarachchi, 2017).

Figure 4: Apple Supply Chain Management Map

Source: supplychain247.com

Apple supply chain model is a process of huge cost saving and improving service. It
includes supplying products that are not seasonal and have a life cycle of over a year. It also
reduces the number of warehouses, the number of key suppliers about manufacturing, shipping
and storing.

Figure 5: The number of Apple suppliers and the number warehouses

Source: Econlife

Apple has 200 suppliers. They provides at least 98 % of procurement expenditures for
materials, manufacturing and assembly of our items in the world. Apple also has got 756
manufacturing, contract center and retail sites (Bloomberg.Com, 2018). Although supply chain is
so profitable, responsiveness, reliability and effective, it also includes risks due to some factors
such as globalization of sourcing, production and sales, and occurrence of internal and external
risk events. These are material shortages and natural reasons. Supply chain risk management
(SCRM) is impact on supply chain management. It is a systematic method and depends on
identifying, assessing, mitigating and monitoring potential. SCRM defines with probability of
risk event and impaction of risk event (Aqlan and Lam, 2015). Apple has got some supply chain
challenges. Take for instance; the company has got some major suppliers in China. So, the
company's profit has fallen down. Other smart phone companies work with their suppliers and do
sustainability while Apple cannot do sustainability. So, the company loses its consumers' trust
(Webb, 2017).
IV-Growing Important of Smartphone Market and the impacts on
Demand and Supply

A-The features of Smartphone For Customers

Smart phone customers have had experience fierce competition in a rising competitive
global market since 2013. Smart phone manufacturers have got relationship with their
consumers. Customer satisfaction and brand loyalty are the most important things in this
relationship. Customer satisfaction shows the perspective of relationship marketing lies in the
awareness. The brand loyalty has impacted on motivation of customer choices and developing
technology is impact on customer choices. Apple has offered high and innovative technology
since it manufactured the first Iphone. Also, the firm develops its goods and technology every
time. Furthermore it has got strong customer service (Mostert, Petzer and Weideman, 2016).

Current Demand and Supply for Smartphone Market

This graph is definitely related with smart phone market and shows the demand of its
climbing. If the price of a new smart phone increases, the demand decreases. Furthermore,
customer satisfaction, relatively other technological product are impact of demand in the market.
Take for instance; when apple presented its new Iphone X, Samsung presented its Samsung
Galaxy. So, D1 goes to D2 while the result of rise in price from P1 to P2. Furthermore,
developing technology and manufacturing are definitely impact on the supply of smart phone
market.
B-Risk and Barrier to Smartphone Market
Smartphone market has got a low barriers to enter the market. If a company produces a
smart phone with 3G HSPA or 4G LTE and mobile operating software, the company can enter
the market. However, strong brands, product distribution, aggressive price, patent ownership,
network equipment and manufacturing are influence of being successful (Mallinson, 2015). 5
key players are definitely impact on the market. These are buyer power, supplier power, new
entrants, substitutes and degree of rivalry. Buyer is large and able to negotiate products. Buyer is
low threat of backward integration and low dependency on distributions. Supplier which,
provides technology, equipment and parts for mobile phone manufacturing, is critical production
inputs are similar. Supplier also provides high competition. The supply chain of this market is
more complicate while suppliers are impact on the market. A good example is Samsung has got a
great degree of diversification compared with some of its rivals in the industry. New entrants has
to invest more in research and development in the market. However, research and development
are really costly while the market has got some international manufacturers of cheaper mobile
phones such as Xiaomi. Another issue is intellectual property rights which serve as a strong
barrier to entry. Take for instance; Apple and Samsung had patent problem. So, Apple pressed a
charge to Samsung in 2013. Thus, Samsung was paid to Apple $1.05 billion in relation to
software patents. In this market, threat is minimal as mobile phones offer the benefit from usage
in a much wider geographical space. High switching costs and high price-performance ration
(value) are also other threats in this market. Degree of rivalry depends on the limited number of
competitors and high penetration of additional another competitive dimension. Moreover, fast
industry growth rate, low product differentiation, high margins, brand quality and large market
size are other important issues to identify of degree of rivalry (‘Mobile Phones Industry Profile:
Canada’, 2017).
C-How Import Policies Favor and Disfavors of Smartphone
Market
Smart phone market has got some policies and rules in order to provide competition and
equality. However, this situation sometimes might be depend on the governments and another
factors. China is one of biggest smart phone manufacturer country in the world now. Nine
important smart phone manufacturers are based in China and they produce more than third of the
world's smart phone market. Moreover, the Chinese government has given policy to increase the
global smart phone manufacturing in China. Take for example; tax breaks, relaxed labor force
and environmental policies. Also, smart phone customers should pay 5-10% extra. The reason is
China wants to control of the influence of Chinese smart phones apart from the Indian Market
when the Indian government let Apple or any important brand set up a local factory. Therefore,
smart phone manufacturer in China like Xiaomi, Oppo and Lenovo access their firms in order of
meeting local demand (Sharma, 2016).

D-Impact of Smartphone Environment

Smart phone market has been one of the most important business industry since 2007. Every
smart phone is a big healthy risk. Many people work with their smart phone in daily life. So, it
might cause of anxiety, obesity, sleeping problem and depression (Goldhill, 2015). Another
issue is a smart phone includes high friction of metal which is not recycle products and cause of
environmental pollution (Suckling and Lee, 2015).

Figure 6: The degree of environmental facts of smartphone

Source: ethicalconsumer.org
IV-Conclusion
In conclusion, smart phone industry has been developed day by day. The developing of
technology is definitely impact of the market while manufacturers and consumers provides price
sensitive. Furthermore, the entrance of the market is not really high and suppliers specify the
market and product strategy. In the future, smart phone consumption will be continue while
people will satisfy the products. Therefore, the demand will be decline.
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