The market leader in Asian smart phone business, Hong Kong, has developed and launched an improved design of smart phones. The new design of smart phones has incorporated software from Google Inc. This feature will allow the smart-phone users to download all formats of documents into the phone. The move was due to Apple Inc’s launch of Android that resulted in Hong Kong losing most of its market share.
The external environment in the smart phone industry is highly competitive worldwide. This requires each player to continue reinventing the product to survive and maintain their market share. The threat of new entrants is mitigated by the high-investment outlay required to successfully operate in the industry. The smart phone business is led by a few large companies. The major players in the industry include Nokia, Apple Inc, Taiwan HTC Corp, Samsung, Motorola Inc and LG Electronics. The bargaining power of consumers is increased by the presence of a variety of different suppliers in the market. The consumer negotiates for lower prices for a smart phone with more features.
Rivalry among companies in the smart-phone market is through price wars and product differentiation strategy. The companies use these strategies to gain more market share in the industry. Apple Inc’s launch of the Android powered smart phones saw other rivals in the market lose their market share and its profitability sky rocketing. To counter the move, the Hong Kong the market leader in smart phone production launched a Smartphone with Google software. This made Nokia lose its market share in the smart-phone market. Nokia smart-phone model uses the Symbian software which is an outdated technology compared to smart-phones with android technology.
Samsung tried using the companies own software in the version of smart phone. The Samsung’s smart phone did not make an impact in the market and consumers were not so keen to adapt it. Samsung later followed the market trend and incorporated the android technology in their smart phones. This enabled the company to reach its target by selling over twenty million handsets in the year 2010. With every player in the industry adopting the android technology, one of the companies will need to develop improved smart phones to regain the market leadership from Apple Inc.
New product development helps a company to gain new market share. Previous products only contribute to a small portion of a companies’ overall profitably because consumers’ needs are dynamic. Companies need to develop new products to suit the changing consumer demand in a bid to remain competitive in the market. Apple Inc’s launch of its iphone with android technology gained a third of the global market share selling close to thirty million pieces of smart phones in the year 2010.
The article, using the five forces frame, works to review rivalry in the smart-phone market and how the main players use product differentiation as a strategy. Technology becomes obsolete very fast and competitors in the cell phone industry need to constantly reinvent their products. Otherwise, they risk being pushed out of the market by their rivals. Hong Kong, the largest supplier of cell phone in the Asian market, had to reinvent its products to remain competitive. For companies to survive and gain competitive edge, they have to keep up with the market trends. Hong Kong regained its market leadership position only after incorporating Google software in its smart phone design