There are three main categories of mobile phones: simple phones (low-cost devices providing basic function of a phone and address book, feature phones (mid-priced phones with multimedia features such as camera or digital music), and smartphones (high-priced gadgets allowing most functions of a PC in your palm). Structural Trends
Business strategy only involved either the vertical or horizontal models. In the vertical model, the company controlled all aspects including software, hardware, services and built the phone from “bottom up” whereas the horizontal approach involves specialization by different companies at each level of the value chain just like in the PC industry. The phone manufacturer’s job in this case is just to provide the design and assemble into the final product. Environment Trends:
Technological advancements, such as the commercialization of 3G wireless networks, in the early 2000s brought about the rise in use of smartphones. The 3G networks allowed constant connectivity, wireless data and high-speed internet access. Initially, business users drove improvements as better productivity tools such “push” e-mail delivering faster communication via phones were demanded by such users. Smartphones gained popularity amongst consumers when innovative features like digital music, cameras, games and GPS were added on. Despite a recessionary environment in 2009, market research showed that demand for smartphones would grow in a shrinking cell phone market and that smartphones would capture one third of the world’s mobile phone market by 2013. In addition to all this, mobile internet was expected to double to 30% by 2012 compared to 13% in 2007 (see Exhibits 3a and 3b). Barriers to Entry:
The mobile phone industry had significant barriers to entry and was only feasible for large companies that had a wide range of expertise in ‘radio technology, hardware design, software, and manufacturing”. Economies of...