Essay about Monopolistic Competition of Smartphones

747 Words Nov 1st, 2010 3 Pages
Microsoft was once a leader in smartphone operating systems. The introduction of the iPhone and the popularity of smartphones caused a decline in Microsoft’s Windows Mobile. Some of the top cell phone makers who used Windows Mobile, Microsoft’s operating system, are making phones that use Android, Google’s new operating system. Motorola has completely switched to Android, and Dell’s first cell phone, the mini 3, is using Android.

The four major wireless carriers in the United States will offer Android phones. Cole Brodman, the chief development officer of t-mobile said that Android is becoming very important to cell phone manufactures. Android is on 1.8 percent of the world’s smartphones. In 2008, Windows Mobile dropped from 12
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In response to profits of manufacturers of phones like Palm and Microsoft based smartphones, Research In Motion entered the market with the Blackberry, then Apple introduced the iPhone, and the latest innovation is Google’s Android. Nokia’s Symbian may be popular in the world-wide market, but not in the United States.

Some operating systems are limit to a specific phone, such as the iPhone or Blackberry, and are not apart of the market between software developer and phone manufacturer. Windows Mobile and Android can run on many phones. Android is free for the manufacture, so the average total cost will decrease and profits will increase. Android is also open source, so the manufacturer can make changes and make it less similar to another phone. Changing the phone to make other phone not a good substitute will make the demand for that phone less elastic, which will also increase profits. This higher profit margin will only last in the short run because another manufacturer will develop their product to become a good substitute.

The iPhone and Android make up 75 percent of U.S. smartphone web traffic. These two operating systems are leading because they offer more features and versatility than the other smartphones. The iPhone is only available on the AT&T network, which does not currently have an Android phone, but next year AT&T will offer Android phones.

The iPhone demand by AT&T costumers is