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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