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Five Forces Model Analysis of the SmartPhone Market
The Five Forces Model (Porter, 2008) provides a useful framework for evaluating the dominant competitive forces that influence the size, direction and intensity of competition in a given industry. The Smartphone industry is analyzed in the Five Forces Analysis completed in this paper, and is shown in Figure 1.
Smartphone Five Forces Analysis
(Apple, Investor Relations, 2012) (Bernoff, Li, 2008) (Lee, Kwak, Kim, Kim, 2009) (Porter, 2008)
What is immediately apparent from evaluating the role of Substitute Products, Bargaining Power of Suppliers, Bargaining Power of Buyers and New Market Entrants is the speed and breadth of innovation occurring in this industry. Social networking's pervasive adoption globally is also completely reordering the supply chain for smart phone components and assemblies, hastening product lifecycles in the process as well (Bernoff, Li, 2008). Apple's continual focus on innovation and the rapid product lifecycles they have actually put the Five Forces Model into an accelerated state as well (Apple, Investor Relations, 2012).
Substitute Products
There are a plethora of...
Substitute products are increasing the acceleration of innovation in this market as well. At the very low-end of the smartphone market, contract manufactures including Flextronics continue to offer entire Android platforms are 30% the production cost of an Apple iPhone for example (Apple, Investor Relations, 2012).
Bargaining Power of Suppliers
Apart from the bargaining power of buyers, suppliers have very significant impact on this industry from a competitive standpoint. The growing adoption of EV-DO chipsets for example, which make it possible to turn a smartphone into a Wi-Fi hotspot, are increasingly commonplace (Lee, Kwak, Kim, Kim, 2009). In conjunction with these technological advancements, there is also the development of entirely new services programs and pricing plans for advanced smartphone features that are pay-as-you-go which Virgin Mobile and others have had for nearly a decade (Apple, Investor Relations, 2012) that…
References
Apple, Investor Relations (2012). Investor Relations. Retrieved January 13, 2012 from Apple Investor Relations and Filings with the SEC Web site: http://www.apple.com/investor/
Josh Bernoff, Charlene Li. (2008). Harnessing the Power of the Oh-So-Social Web. MIT Sloan Management Review, 49(3), 36-42.
Lee, B., Kwak, J., Kim, K., & Kim, S.. (2009). Technical innovation and 3.5 mobile phone generation: Lessons from Korea. Telecommunications Policy, 33(5/6), 296.
Michael E. Porter. (2008, January). THE FIVE COMPETITIVE FORCES THAT SHAPE STRATEGY. Harvard Business Review: Special HBS Centennial Issue, 86(1), 78-93.
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