When unemployment is high, companies may decide to delay the release of their new updated phone as a means to maximize profit. By withholding the release of the phone, not only does demand build but the ability of more consumers to enter into the market to purchase the phone does occur. At this point, the profit maximization curve peaks earlier and is likely to have a prolonged parabola at the top of the curve which is a short-term profit maximization curve. With a low employment rate, the likelihood of the smart phone market to do very well is limited by the low employment rate and is subject to constraints when considering the smart phone market and the consumer's ability to pay.

Supply & Demand

Law of demand and substitutes how the demand of these phones are very high. Which again ties back to scarcity but how substitutes are so readily available? I mean you don't have to have a smart phone you can have a regular ole cell and then an iPad. You would think that scarcity wouldn't be an issue but it is. Human desire is hard to fulfill we are always wanting the next biggest and best thing. How incredibly elastic the smart phone industry and consumer choice….The book talk about things that caused a shift of the demand curve or a change in demand and one key point was obviously change in the price of a related good. This is really a key driver of competition in the smart phone industry. Even though consumers love their phones and really can't live without them price is always a factor and commercials and the top cell phone companies are constantly having price and technology wars. Who can create the biggest best phone and sell it the cheapest.

Consumer choice and how obviously price affects what a consumer will buy but the smartphone industry is interesting because these phones aren't exactly getting cheaper but consumers are still buying still trading their old phone in for the newest smart phone. Supply and demand are ostensibly curves on a graph that will almost always intersect and create an equilibrium price where the smart...

Supply and demand cycles are critical to the overall number of smart phones produced for a primary and secondary market.
Entry Barriers & Oligopoly

Entry barriers- Entry Barriers: A large number of barriers prevent entrance into the smart phone industry. Among the largest are the following:

fixed costs -- necessary research and development reputation of incumbent firms -- people buy phones from companies they trust differentiation -- limited ability to differentiate from other phones

Fixed costs can also include fees and other barriers to entry that the industry requires to regulate the business. Barriers to entry is important to industry as it somewhat protects the profits of a company by limiting the entry of market competitors. An oligopoly is a market with many buyers and only a few sellers. An airline is an example of an oligopoly. Oligopolies have a high fixed and variable cost a barrier to entry.

The reputation of incumbent firms does provide an inelastic demand curve that may hinder the market competition from entering into the market or into the local market where the primary market demand for the incumbent firm exists. By limiting market entrants due to the brand awareness and consumer sentiment of the smart phone market, the ability of an incumbent firm to capture a larger percentage of the market does increase.

Product differentiation is a part of the marketing mix which identifies the unique capacity of the product which makes it different from others on the market and which makes the product in particular demand within a class of consumer.

References

The Economist. Science and technology. Babbage Mobile phones. Good night phone. May 30th 2011, 19:33 by G.F. | SEATTLE