Five Forces Model Analysis of the Smartphone Essay

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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).

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Substitute Products

There are a plethora of substitute products available, from the black market counterfeits being produced throughout Asia, specifically China, to the rapid advancement of new technologies at Microsoft, Nokia and HTC with the Android operating system (Apple, 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,

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.....

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