Porter’s Five Forces
Threat of New Entrants * Moderate
The ability for brand new competitors to emerge is very low. The smartphone industry is very technologically intensive. This means that a brand-new entrant would require a significant amount of money to build a comparative technological product in order to compete with RIM’s technology. No man or woman in their right mind would attempt to design and manufacture such an expensive product for such a competitive industry.
There are, however, many other technological companies in the world that have the money and resources to attempt to build a competing product. For example, only a year ago, Blackberry’s only threatening product was Apple’s iPhone. Since then, Microsoft and Nokia (who previously had no involvement in the smartphone industry) have merged in order to gain a share of the rapidly growing market. Because of the market’s rapid growth, the threat of other wealthy technological companies emerging is high.
Threat of Substitute products * High
Research in Motion was the first company to launch the revolutionizing smartphone in 1999. Their first real competitor emerged in 2008 when Apple launched the iPhone. They have had little threat of substitute products in the past (other than the significantly inferior standard cell phones, which were targeted towards very different market segments). Since Apple’s launch, the threat of substitute products has skyrocketed, and continues to grow with the recent launch of Android. Android is a reasonably cheaper product, with similar attributes. Apple, however, also has similar attributes, but is often considered a superior product. This sets Blackberry in the middle of the road in terms of price and quality.
Bargaining Power of Buyers * Moderate
Traditionally, the cellular phone industry, particularly the smartphone segment, has had a very little range of price. There may be up to a couple hundred dollar difference between phones,