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Industry Analysis of Smart Phone Market

Tanya Maghanoy
Violeta Nunez
David Redden
Shraddah Reyna

University of Redlands School of Business
BUSB 381: Strategic Management
Professor Richard Doyle
November 17, 2010

Industry Analysis of Smart Phone Market
When analyzing an industry, an overview of growth in the industry and major players in the industry is essential in determining a course of action for the future. This report primarily focuses on smart phones; however, in order to fully understand the evolution of smart phones, other cell phones will also be discussed. This report will begin with growth of the industry, major players in the industry and the evolution of technology in the industry. Considering the goal here is to analyze the industry from the perspective of Microsoft as it launches its Window 7 Phone, other factors will be considered from the perspective of Microsoft. The other factors to be addressed are Porter’s Five Forces, opportunities, and concluding with Corporate Social Responsibility. Industry Overview

According to the IDC or the International Data Corporation vendors shipped 54.7 million units of smart phones in the Q1 of 2010 which is up 56.7% over the same quarter last year and compares strongly against the 21.7% overall growth mobile phone market (International Data Corporation [IDC], 2010a). A smart phone is a generally broad term but is defined by the IDC as "A subset of mobile phones, converged mobile devices feature a high-level operating system that enables the device to run third-party applications in addition to voice telephony” (IDC, 2009, para. 10). In 2010, converged devices accounted for a total of 18.8% of all the mobile phones shipped (IDC, 2010a). Given the current condition of the economy this is surprising considering the higher cost of these devices both in initially purchase price and monthly contracts for data usage. The top five smart phone manufacturers for Q3 2010 based on sales are Nokia, Apple, Rim, Samsung and HTC (IDC, 2010b). Samsung recently knocked Motorola out of fifth place in market share with the introduction of its Galaxy series, demonstrating how quickly things change in this industry. Major Cell Phone Manufacturers Players

All five of these top producers will be addressed individually in order to better understand the major players in the industry. First, Nokia, is both the top producer of cell phones and the current leader in smart phone production worldwide (IDC, 2010a). The company was founded in 1865 and transitioned into the mobile communications market in 1968 (Nokia, 2010a). By 1992 Nokia turned Mobile phones into its core business. The corporate vision of the company is to “empower everyone to share and make the most of their life by offering irresistible personal experiences” (Nokia, 2010b, para. 1). Nokia’s tag line “Connecting people” has evolved into connecting people to what matters for each person and emphasizes that when connected “the “we” is more important than just the individual” (Nokia, 2010b, para. 3). Nokia is organizationally structured with a group executive board overseeing three separate portions of the business: Mobile solutions, Nokia Siemens Networks and NAVTEQ (Nokia, 2010c). The Mobile Solutions department develops mobile phones and handles the market and sales aspects of Nokia’s devices (Nokia, 2010c). While the leader in Smartphone production, Nokia’s exposure to U.S. markets is extremely limited due to the high cost of its handsets. It has a greater market in the Asian and European markets and overall have enjoyed constant year over year growth (IDC, 2010b). It is losing market share and is at 32% compared to a previous share of 38% in 2009 (IDC, 2010b). This loss in share is due primarily to the introduction of Apple to the smart phone market place as well as the growing popularity of phones that use the Android Operating system (IDC, 2010b). Second, Apple entered...
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