The Apple iPhone idis 619 Capstone Assignment By


Exhibit II (C) 7: Demographic Trends



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Exhibit II (C) 7: Demographic Trends


a) Usage and significance of cell phones (Source: Mintel/Greenfield Online)

b)Reasons for choosing a mobile phone (Source: Mintel/Greenfield Online)



c) Ownership of mobile handset brands (Source: Mintel/Simmons NCS)



d) Reasons to change mobile phone service (Source: Mintel/Greenfield Online)



e) Usage of mobile features by gender (Source: Mintel/Greenfield -Mobile Phones and Phone Service – US-Aug2006)




f) Usage of mobile features by gender – Would like to use (Source: Mintel/Greenfield -Mobile Phones and Phone Service – US-Aug2006)




Exhibit 2 D: Market Shares


a) Worldwide Handset Manufacturer Market Shares (Yr. 2006 – By number of phones sold)


Sources: http://www.newsfactor.com/story.xhtml?story_id=123003YHSYYX

http://www.edn.com/article/CA6409988.html?partner=enews

http://www.mobiletechnews.com/info/2007/01/25/132924.html
Exhibit V: Decision Tree

Exhibit II (D) 4 – Part A: VRIO Analysis for handset manufacturers


a) VRIO Analysis for Nokia

Legend: V: Valuable; R: Rare; I: Hard to Imitate; O: Organized to leverage

Resource / Capability

V

R

I

O

Competitive Implications

Reasoning behind “Hard to Imitate”?

Brand



Yes

Yes

Yes

Yes

Sustained

Nokia has spent years in building brand (“Connecting People”) and majority of its marketing dollars are spent on building brand awareness. The Nokia brand is known for quality, design, durable and efficient phones.

Product features

Yes

Yes

No

Yes

Temporary

Nokia is very good at coming out with new features on phones and being first to market. In the event it misses any innovation, it is very quick to bring out the phones with similar innovation (as the market leader) and coming up with better designs.

Tailored network solutions and devices

Yes

Yes

Yes

Yes

Sustained

Nokia gives tailored network solutions and has the flexibility to provide network solutions according to the various price points at which potential customers are willing to pay. Similarly it also has phones that can are priced for emerging markets as well as phones for luxury segment. Anyone trying to imitate this strategy will need to implement techniques to not compromise quality across the various product lines and yet not lose focus on luxury and high end customers.

Geographical presence

Yes

Yes

No

Yes

Temporary

Nokia is known worldwide. Although Nokia comes up with wide variety of phones and network solutions, it can contain its costs due to worldwide geographic presence and it can leverage economies of scale due to volume advantage. Other companies can expand their geographic presence. Mass production of handsets leads to network externalities and lowered handset costs.

Broad range of products across multiple mobile handset segments

Yes

Yes

Yes

Yes

Sustained

Nokia phones are available at low-end (free phones) and on high end (with 700 diamonds in Vertu model). Nokia has segmented its mobile business unit to 5 segments – each with emphasis on a particular customer segment, so that they can stay focused to customer needs. Other companies will have to develop a similar organization and develop such a culture.

Style

Yes

No

-

-

Parity

Nokia has reputation to make fashionable phones. However, sometimes competitors such as Motorola can come up with better and more stylish products like RAZR.

High quality products

Yes

No

-

-

Parity

Most of the handset companies provide high quality products especially on the high end.

Headquarters Location

Yes

Yes

No

Yes

Temporary

Nokia’s headquarters is located in Finland and is constantly driven by innovative technology from other players. Nokia is automatically in the game of producing competitive products.

b) VRIO Analysis for Motorola

Resource / Capability

V

R

I

O

Competitive Implications

Reasoning behind “Hard to Imitate”?

Brand

Yes

Yes

Yes

Yes

Sustained

Motorola has come a long way from the perception of a “stodgy engineering company” to one of the hippest, most innovative phone providers. Ranked only behind Nokia in brand value, it has improved its brand position worldwide through hip marketing campaigns and very successful product introductions (e.g. RAZR & SLVR)

Product innovations

Yes

No

No

Yes

Parity

While Motorola is working hard on introducing several new products (e.g. 8 in Q4 FY’06), the race is on with all the top mobile manufacturers who are also introducing new products at an increasingly rapid pace

Complementary services

Yes

No

No

Yes

Parity

Motorola collaborated with Apple to introduce a few phones with iTunes capability. But this position is now threatened with Apple’s iPhone introduction and other mobile manufacturers following suit

The iRadio service is currently unique but can be easily imitated by other mobile manufacturers



Commitment to high quality standards

Yes

No

No

Yes

Parity

Although Motorola was the original pioneer of the Six Sigma quality system, this and other quality processes have become the de-facto standard across other mobile manufacturers as well

Consistent cost reduction through supplier management & outsourcing of design / manufacturing activities

Yes

No

No

Yes

Parity

Motorola has achieved significant cost reduction through various procurement process improvements and use of Electronics Manufacturing Suppliers (EMS) & Original Design Manufacturers (ODM). But this practice is quite prevalent amongst other mobile manufacturers as well

A strong developer network

Yes

Yes

No

Yes

Temporary

Motorola started a new developer network, Motodev, in 2005 to attract more developers to leverage their industry standard Linux platform to develop applications. But at this point, this isn’t a defensible enough position as they haven’t built the required network effects yet

Recent acquisition of Good Technology

Yes

No

No

Yes

Parity

Motorola’s acquisition of Good will provide it incremental opportunity but its relatively small subscriber base (500,000 vs. RIM’s 6.5M) doesn’t appear significant enough to dislodge other integrated mobile service providers such RIM

Acquisition of Symbol Technologies

Yes

Yes

Yes

Yes

Sustained

With this acquisition, Motorola is trying to position itself for the convergence of mobile, WiFi, WiMax, RFID and related technologies. Symbol has over 900 patents, is a leader in its field and will provide a significant leg-up to Motorola. However, it will likely take a few years for the full benefits of this acquisition to be achieved

WMNetServ Managed Services

Yes

Yes

No

Yes

Temporary

This is a joint venture with Wipro Technologies to deliver managed services to both public and private network customers to reduce Opex and increase Time-to-Market by providing Total Outsourcing, Out-tasking, Built-Operate-Run/Transfer & Hosting Services. However, other mobile providers could easily enter into similar relationships with other outsourcing companies

Social partnering

Yes

No

No

Yes

Parity

All large mobile manufacturers are involved in a variety of social causes

Technology patents

Yes

Yes

Yes

Yes

Sustained

Several patents across multiple design and technology areas provide Motorola a unique market position

Complementary businesses

Yes

No

No

Yes

Parity

Motorola provides optimized content distribution services through WiFi hot spots and kiosks but some other mobile manufacturers already provide similar services too

c) VRIO Analysis for Palm

Resource / Capability

V

R

I

O

Competitive Implications

Reasoning behind “Hard to Imitate”?

Technology focus

Yes

Yes

No

Yes

Temporary

Palm has had sharp focus on one or two product lines- first PDAs, now PDAs and Smartphones. This, however, has been successfully imitated by RIM

Innovative products

Yes

Yes

Yes

Yes

Sustained

Palm has been known for product innovation

Multiple sales channels –service providers, distributors, direct (webstore)

Yes

No

-

Yes

Parity

Many of Palm’s competitors use multiple sales channels

Outsourced design and manufacturing

Yes

Yes

No

Yes

Temporary

Helps make R&D and manufacturing costs variable, but existence of multiple R&D and manufacturing services providers makes this imitable

Technology leadership

Yes

Yes

No

Yes

Sustained

RIM has been able to obtain technology leadership as well, with its BlackBerry line of products

Choice of industry standard platforms

Yes

No

-

Yes

Parity

Many of Palm’s competitors provide abilities to use multiple industry platforms. E.g. mobile operating systems like Symbian, Windows ME, Palm OS

Brand reputation

Yes

Yes

Yes

Yes

Sustained

Palm is one of the pioneers of the smartphone industry and its brand reputation is high

Worldwide distribution-100 international distributors

Yes

No

-

Yes

Parity

Most of Palm’s competitors have worldwide distribution capability.

Serving multiple segments - consumer, prosumer, corporate

Yes

No

-

Yes

Parity

Most of the players in the smartphone industry serve multiple end user segments

d) VRIO Analysis for RIM

Resource / Capability

V

R

I

O

Competitive Implications

Reasoning behind “Hard to Imitate”?

Breadth of technology

Yes

Yes

Yes

Yes

Sustained

Multiple product service offerings- Blackberry devices, business solutions-software and services , Blackberry connect embedded solutions for other handset manufacturers, Smart Card readers

Innovative products

Yes

Yes

Yes

Yes

Sustained

High credibility in innovative products due to Blackberry

Strategic alliances

Yes

Yes

No

Yes

Temporary

The alliances are not permanent and other competitors can imitate these

ISV relationships (500 strong)

Yes

Yes

Yes

Yes

Sustained

S/W packages from ISVs serve as valuable complements and enhance the value of Blackberry devices

In house R&D (1000 strong)

Yes

No

-

Yes

Parity

In house R&D provides finer control over design. However, many players follow this route.

Technology leadership

Yes

Yes

Yes

Yes

Sustained

Technology leadership earned through continuous enhancements to Blackberry devices

Carrier relationships (110)

Yes

No

-

Yes

Parity

These are valuable. However, these are normally not exclusive and carriers maintain these relationships with multiple handset manufacturers

Vertical integration- into S/W, enterprise solutions, services

Yes

Yes

Yes

Yes

Sustained

Gives RIM control over complementary products and services, thereby enhancing the value of its core offering namely the blackberry.

Licensing programs w/ OS providers

Yes

Yes

Yes

Yes

Sustained

Ensures that blackberry technology works with multiple operating systems, thereby increasing the choice and therefore, value, to customers

Brand reputation

Yes

Yes

Yes

Yes

Sustained

One of the pioneers in mobile internet connectivity services

Serving multiple segments - consumer, prosumer, corporate

Yes

No

-

Yes

Parity

Useful, but most other players do likewise.

e) VRIO Analysis for Samsung

Resource / Capability

V

R

I

O

Competitive Implications

Reasoning behind “Hard to Imitate”?

Complementary businesses


Yes

No

No

Yes

Temporary

The semiconductor business is a very well placed complement, but with firms like Sony and Apple, this is temporary

Brand reputation

Yes

Yes

Yes

Yes

Sustained

Samsung is a leading brand in consumer electronics

Technology innovation

Yes

No

Yes

Yes

Parity

Majority of firms in the market space are technology innovation driven

Strategic partnerships

Yes

No

Yes

Yes

Sustained

Partnerships and investments in strategic start-ups and university research projects by Samsung

PhD’s in the workforce

Yes

No

No

Yes

Temporary

Samsung prides itself in employing PhDs in engineering, but it can be quickly imitated by competitors

Social partnering

Yes

No

No

Yes

Parity

All big players currently are involved in social causes, which is regarded as critical by some of their clients

Technology Patents

Yes

Yes

Yes

Yes

Sustained

High number of patents give exclusive access to related technologies

Use of technology in supply chain management

Yes

No

No

Yes

Temporary

Heavy investment in SCM streamlines suppliers, reduces operational costs and helps develop better quality products

Global Product Design Team

Yes

Yes

No

Yes

Temporary

Local design teams help align global designs to meet local market needs in terms of product design

f) VRIO Analysis for LG

Resource / Capabilities

V

R

I

O

Competitive Implications

Reasoning behind “Hard to Imitate”?

Fashionable Designs

Yes

Yes

No




Temporary

Although fashionable designs are rare, but it can be easily imitated by it's competitors.

Brand image

Yes

Yes

Yes

Yes

Sustained

LG has been actively improving its brand image when it change its name from Goldstar to LG. In some Asian and European countries, LG is considered to be a luxurious brand.

Aiming at high end market

Yes

Yes

No

-

Temporary

Marketing to high-end consumers is relatively easy.

3G with Cingular

Yes

Yes

No

-

Temporary

Although 3G technology may be limited today, the trend of the industry is to go to 3G technologies.

Complementary product offerings

Yes

No

-

-

Parity

Even though LG offer complementary products, this is not rare. A host of competitors also offer similar complementary products.

Partnership with Prada

Yes

Yes

Yes

Yes

Sustained

The partnership with Prada to create the Prada phone puts LG in a very unique position of the luxury market. Although competitors can partner with other fashion designers, it is still very difficult to imitate the uniqueness of the Prada phone.

Award winning design center

Yes

Yes

No

-

Temporary

Although LG has been focusing on fashionable designs to suite the high-end users, LG fail to create any casual ambiguity or patents that would give them sustainable competitive advantages.

g) VRIO Analysis for Apple

Resource / Capability

V

R

I

O

Competitive Implications

Reasoning behind “Hard to Imitate”?

Breadth of technologies

Yes

Yes

Yes

Yes

Sustained

Apple has presence in computer hardware, software, portable music, complementary service tie-ups. Apple TV and Apple iPhone. They can leverage technologies across various platforms (such as using OS X on iPhone). Other competitors have product line extensions or solutions that revolve around a product line. So the technologies are a sustained competitive advantage for Apple.

Innovative products

Yes

Yes

Yes

Yes

Sustained

Although Apple is not first to market a technology, Apple takes existing products and creatively modifies it to make it user-friendly.

High quality sales and after-sales support service

Yes

Yes

No

Yes

Temporary

Apple has its own employees at certain third party retail stores also to help with customer queries. Other customers can easily imitate this strategy.

Direct contact with targeted customers thru' online & retail stores

Yes

Yes

Yes

Yes

Sustained

Apple has setup its own retail stores and websites to reach out to customers. Other competitors like Nokia, Motorola, RIM, PALM etc will need to enter into retail space and have relationships with customers. While other competitors maintain relationship through wireless service providers, Apple will maintain relationship with customers through both wireless service providers and through direct customer relationship using its retail outlets.

Being 2nd or 3rd to market learning from other companies mistakes

Yes

No

-

-

Parity

Both Apple and Nokia learn from others mistakes and take the 2nd to market approach. In doing so, they may lose some market share but they don’t incur huge potential loses if a product fails.

Broad product lines

Yes

No

-

-

Parity

Most competitors have offerings in low end and high end market segments.

Brand reputation

Yes

Yes

Yes

Yes

Sustained

Apple is known for its brand and people are willing to buy products just because it’s an “Apple” product.

Geographies are limited

No

-

-

-

Disadvantage

Apple has presence only in USA, UK, Japan, Europe. Asia which is leading/emerging in wireless handsets has a great potential for higher sales.

Focused
Complementary services (iTunes, iPod, Macintosh, Mac OS, iPhone and Cingular tie-up)

Yes

Yes

No

Yes

Temporary

Apple is known to offer complementary services such as hardware, software, portable music player and iTunes, Phone with integrated services. Most other competitors provide one technology and rely on partners to complete product portfolio. However some firms are coming up with music offering (such as streaming music that can be downloaded directly onto cell phone) and this new model might provide complementary services to other competitors thereby eroding the competitive advantage that Apple currently has.

Increased focus on digital lifestyle (vs. computers)

Yes

No

-

-

Parity

Most companies are now focused on digital lifestyle.

Steve Jobs

Yes

Yes

Yes

Yes

Sustained

Steve Jobs has the creativity and business aptitude for negotiating and coming up with the right complementary products.

Vertical integration of hardware and software

Yes

Yes

Yes

Yes

Sustained

Apple has a tightly integrated culture so it can leverage its hardware and software capabilities and its creative work force to come up with user experience products.

h) VRIO Analysis for Sony Ericsson

Resource / Capability

V

R

I

O

Competitive Implications

Reasoning behind “Hard to Imitate”?

Technology focus

Yes

No

No

Yes

Temporary

Majority of firms in the market space are technology innovation driven

Brand reputation

Yes

Yes

Yes

Yes

Sustained

Sony has a leading brand reputation in consumer electronics

Strategic alliance

Yes

Yes

Yes

Yes

Sustained

Sony Ericsson is uniquely partnered in terms of Ericsson’s expertise in wireless network infrastructure and Sony’s expertise in consumer electronics

Product innovation

Yes

No

No

Yes

Temporary

Sony’s walkman style handsets with high quality camera lens1 and further innovation based on that, leads to a favorable advantage

Patents

Yes

Yes

Yes

Yes

Sustained

Patents in GSM and WCDMA technologies2 cannot be imitated and are leveraged


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