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The Strategy of the Smartphone Industry. A Comparative Analysis of Apple, Sony and Xiaomi

Term Paper 2015 24 Pages

Business economics - Business Management, Corporate Governance

Excerpt

Table of Contents

List of Abbreviations

List of Figures

List of Tables

Executive Summary

1. Introduction
1.1. Problem Definition
1.2. Objectives
1.3. Methodology

2. Overview Mobile Phone Industry
2.1. Dominant economic features of the mobile phone industry
2.2. Porter´s Five Forces Industry Analysis
2.3. Strategic Group Analysis
2.4. Key Success Factors Mobile Phone Industry

3. Competitive Strategies of Apple, Sony and Xiaomi
3.1. Apple – Broad Differentiation strategy
3.2. Xiaomi – Best-Cost Provider
3.3. Sony - Focused Differentiation strategy

4. Conclusion

5. Bibliography

List of Abbreviations

Abbildung in dieser Leseprobe nicht enthalten

List of Figures

Figure 1: Shares of worldwide sales of mobile phones

Figure 2: Worldwide projected market share for smartphone operating systems

Figure 3: Number of Apps available for mobile phone operating systems

Figure 4: The global Smartphone market from in 2018

Figure 5: The Five Forces That Shape Industry Competition

Figure 6: Strategic Group Map for global smartphone industry

Figure 7: Worldwide sales of Apple iPhone

Figure 8: Xiaomi's mission statement

List of Tables

Table 1: Key Features of iPhone6, Xperia Z3 and Mi 4

Table 2: KSF in the mobile phone industry

Table 3: Smartphone product range of Apple, Sony and Xiaomi

Table 4: EBIT in million $US by phone manufacturer

Executive Summary

Mobile phones have become an everyday necessity in peoples’ lives. The Smartphone market attracts a lot of companies and has become a highly competitive environment for companies. Apple, Sony and Xiaomi apply different strategies to sell their smartphones. This assignment begins with a basic understanding of the mobile phone industry. It gives an overview of the market size, relevant market shares and the future growth projections. The following chapters uses common strategic management tools to analyze the smartphone industry and its driving forces. This work also provides current data about business units with respect to sales, revenue and market shares for the core products of Apple, Sony and Xiaomi. The main part shows the critical analysis with the different strategic approaches of the three companies. The similarities, differences, advantages and disadvantages of each strategy are discussed and evaluated. This work concludes with the conclusion chapter.

1. Introduction

The smartphone became a standard device for modern society in the past years. The World’s mobile phone market is predicted to grow up to 23% in 2018. The global mobile phone market is a highly competitive environment where a high number of firms compete. While established mobile phone markets like the U.S. and Europe are mature markets, there is growth in emerging markets like China. Apple, among others, competes with Sony and a young Chinese phonemaker named Xiaomi. All three of companies are involved in the global mobile phone market which is today a highly competitive industry. Two major operating systems are the industry’s standards today – Apple’s iOS and Googles Android.

1.1. Problem Definition

Apple, Sony and Xiaomi apply different strategies in their smartphone business units. The three competitors achieve different numbers in sales or profitability. Some brands seem to be more attractive for customers than others.

1.2. Objectives

The following text should give an overview of the global mobile industries and its driving forces. The analysis of the industry should give an understanding of the driving factors and the attractiveness of the smartphone market. In addition to that it should answer the question, which strategy is executed by Apple, Sony and Xiaomi in this highly competitive industry and show what advantages or disadvantages these strategies have.

1.3. Methodology

The following text is based on several studies, statistical data and publications. The rapid development in the mobile phone industry required the latest sources that include electronic sources. A lot of information is based on information published in the past 2-3 years. Common tools are used to analyze the industry and strategic approach of the competitors. These tools are used and will not be explained in detail.

2. Overview Mobile Phone Industry

2.1. Dominant economic features of the mobile phone industry

Smartphone market consists of all firms throughout the world that manufacture and sell smartphones. The major participants in the global market today are Samsung, Apple, Lenovo, Huawei, LG and Xiaomi. The figure below shows that the number of traditional phonemakers like Nokia declined in the past 5 years whereas the shares of new Chinese brands steadily increased.

Abbildung in dieser Leseprobe nicht enthalten

Figure 1: Shares of worldwide sales of mobile phones1

In general, the smartphone market Is fast a moving industry and characterized by

- continuous introduction of new products
- quickly evolving technology
- high requirements to design
- short product life cycles
- aggressive pricing
- rapid imitation of product and technological advancements
- highly price sensitive consumers

The Smartphone

A smartphone is a multi-functional mobile electronic device that is run by operating system. Beside the basic functions like calling, messages or email, it allows users to install additional applications to custom the device to their individual needs. The Smartphone is a unit of hardware and software that cannot switch between different Operating systems. Table 1 one gives a summary of Apple’s, Sony’s and Xiaomi’s current flagship products and its key features.

Table 1: Key Features of iPhone6, Xperia Z3 and Mi 42

Abbildung in dieser Leseprobe nicht enthalten

Operating Systems

Currently there are three main operating systems dominating the global smartphone market:

1. Google’s Android
2. Apple’s iOS
3. Microsoft’s Windows Phone

Googles “Android” currently dominates the global smartphone market with 82,3%, followed by Apple’s own proprietary OS “iOS”. iOS and Android are the de facto industry standard. Microsoft’s Windows phone is predicted to remain the third popular OS:

Abbildung in dieser Leseprobe nicht enthalten

Figure 2: Worldwide projected market share for smartphone operating systems 5

The number of software applications, or “apps”, available for each smartphone operating system also reflects balance of power for the dominating operating platforms. Apps give the consumer the freedom, to customize their phone to personal preferences and a strong buying argument.

Abbildung in dieser Leseprobe nicht enthalten

Figure 3: Number of Apps available for mobile phone operating systems 6

[...]


1 Source: Statista GmbH. Das Statistik-Portal. statista.de. Available at: http://de.statista.com/. Accessed June 2015.

2 Sources: Product information published at www.apple.com, http://www.apple.com/iphone-6/specs/, www.sony.com http://www.sonymobile.com/de/products/phones/xperia-z3-compact/, www.mi.com, http://www.mi.com/en/mi4/specs/

3 Modified Android with skin „MIUI6“ by Xiaomi, source: http://en.miui.com/overview.php

4 Selling price on release date

5 Source: Statista GmbH. Das Statistik-Portal. statista.de. Available at: http://de.statista.com/. Accessed June 2015.

6 Source: Statista GmbH. Das Statistik-Portal. statista.de. Available at: http://de.statista.com/. Accessed June 2015.

Details

Pages
24
Year
2015
ISBN (eBook)
9783668090996
ISBN (Book)
9783668091009
File size
873 KB
Language
English
Catalog Number
v310660
Institution / College
University of applied sciences, Munich – Wirtschaft - MBA
Grade
1,7
Tags
MBA FOM München Strategy Management Apple Sonny Xiaomi Strategic Corporate Management Assignment

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Title: The Strategy of the Smartphone Industry. A Comparative Analysis of Apple, Sony and Xiaomi