Market Analysis : The Smartphone Market

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The Smartphone Market The device commonly regarded as the first to realise widespread success in the smartphone market was the Blackberry. However the handset, referred to as the ‘crackberry’ (Middleton, 2007) after the feeling of addiction many users felt towards it, was quickly joined in the market by companies such as Apple and Samsung. The intriguing market seems to be constantly evolving and is still an emerging market subject to multiple market forces. Many economic theories can be applied to this market including Monopolistic Competition, Platform Competition along with Network Effects and Tipping Points. The market has seen the evolution of smartphones from a keyboard based device with closed operating systems into thin, touch…show more content…
As they joined it gave consumers extra choice. Figure 2 shows the market share of the existing companies reduced as they lost custom to the new competitors, causing the demand line (D) to shift left until it is tangent to the average cost curve. This means that in the long run in a monopolistically competitive market no economic profit will be made. The demand lines steepness will also reduce as the market becomes more price elastic (consumer spending is more reactive to changes in price). As the market evolved the differentiation came in the form of software rather than hardware. Technology firms looked towards the systems which operated the phone (McCarty, 2011), or Operating Systems. Operating systems, such as iOS, developed to become more and more customizable, a strategy which successfully rose brand loyalty. At first, applications were online developed ‘in-house’ by Apple to maximise the abilities of the smartphones and provide users with new and exciting abilities on one device, such as iTunes, which persuaded many not to use any other ‘inferior’ products. The competition between As the market evolved, the eco-system of the smartphone market changed focused on platform competition; the operating systems became more important. With platform competition came the theories of network effects and multisided platforms. Network Effect is based around the main idea that when a system, such as the iPhone and its
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