Smartphones and the Smartphone Industry - Case Study Example

Smartphones and the Smartphone industry Name Institution Date Smartphones and the Smartphone industry Introduction A Smartphone is a demonstration of the convergence of computing and communication for mobile consumer devices which is on the evolutionary course to avail interoperability and again leverage the services as well as functions from each and every industry (Sarwar & Soomo, 2013). This class of mobile phones provide integrated services from communication, mobile, and computing sectors that include voice communication, personal information management (PIM), messaging and wireless communication capability. Although previously intended for business use, the Smartphone has continued to become common in the general public much faster than it is increasing in Corporations. Smartphones are now everywhere. Coming in the form of iPhones, Blackberrys, Androids and many others, and whether you call them Smartphone, feature phones, handhelds, or pocket PCs, these devices are cellular telephones that have been integrated with computers. As Sans (2011) points out, they differ from the traditional phones since they perform the functions of microcomputers with an elaborate operating system. They can run a huge variety of software applications and can access the web. Users can therefore send e-mails from their phones, which come with embedded memory, and include a completely functional keyboard. Recent models have come with ability to provide one or more types of wireless network connectivity, be it Wi-Fi, 4G, 3G and/or Bluetooth. These devices are becoming the centre of human interaction, access to information and business activities and their importance continues to be limitless. These phones now find use in educational institutes, shopping malls, public places, hospitals and so many other sectors of users’ personal and business experiences. They certainly remain very critical devices in the current generation and attract great interest, with researchers forecasting an even greater dependence on the device in the future. Since the inception of the Simon from IBM in the early 90s, the Smartphone industry has continued to revolutionize human interaction. As the Blackberry was introduced, a new era was opened in the history of the devices since this came with more dominant features compared to its predecessor, including Fax, email, internet, camera and web browsing. The advent of iPhone in 2007 marked yet another breakthrough in the Smartphone market when it was introduced to the general consumer markets (Sarwar & Soomo, 2013). From this time, massive improvements have been witnessed in the phone’s operating system as competitors in the operating system (Android, iOS, Blackberry OS, Windows phone) industry and Smartphone manufacturers (Samsung, Sony, Nokia, HTC, Apple, LG, Motorola and several other) concentrated on introducing even more features both on the device and its operating system as they fought for market dominance and survival. Smartphones have shown fastest growth in the mobile industry in recent times with shipments increasing by about 74 % to 295 million units in 2010 (Berg insight, 2011). Vendors have adopted Smartphone operating systems so as to reduce development time as well as costs. Operators, on the other hand, promote smart phones that encourage adoption of postpaid subscriptions with data plans. With more consumers continuing to prefer smart phones instead of the original feature phones, players in the field are aiming at establishing themselves as the controllers of the market. As researchers have pointed out, forecasts indicate that at a growth rate of 32 % per annum, shipments of Smartphones will rise to 1.2 billion in 2015. The industry has, in the recent years, witnessed an increase in the number of device manufacturers as well as software developers. In addition to the early smart phone operating systems like Symbian, Blackberry OS and Windows Mobile, new proprietary operating systems, like Bada OS and iOS from Samsung and Apple respectively, have joined the industry. In addition, several vendors now put to use multiple operating systems across their devices, although this has added developmental costs for the vendors and fragmentation for the application developers (Berg insight, 2011). By the fourth quarter of 2011, Android was the leading Smartphone OS, shipping about 32 million handsets, two million more than Symbian. The below expectation performance of the Symbian forced Nokia to adapt Windows Phone as its main operating system. Apple’s performance has been exemplary. Its continued success with the iPhone devices ensured that its iOS platform outsold Blackberry handsets in the second half of 2010 and iOS became the third largest OS in terms of volume sales. More recently, both Symbian and Microsoft’s Windows Mobile have lost market in a consistent manner mainly due to the competition from iPhone and the Android OS. In the fourth quarter of 2012, Smartphones accounted for about half of all mobile phone shipments recording 45.5%, according to reports from a leading research firm (Etrade Supply 2013). During this time, Samsung and Apple remained the biggest vendors, commanding 29% and 28% market shares respectively. In the top five, this period saw the replacement of LG, Motorola and HTC with Sony, Huawei and ZTE, stressing the very stiff competition in the industry. Both Huawei and ZTE indicated massive growth in their volume sales and have focused their attention from the mass market toward higher-end devices. Vendors with lower cost devices are likely to increase their dominance in the market (Etrade Supply, 2013). More recent surveys indicate tough competition for the third spot with LG, Lenovo and ZTE recording 5.1%, 4.7$ and 4.2% respectively in market share, with Samsung recording profits of £4.5 billion in profits (Woollaston, 2013). General market dynamics and increase in scale of operation has forced the big companies to increase their workforce. According to Slivka (2013), Apple’s head count grew from the 72,800 employees by the end of 2012 fiscal year to 80,300. Slivka (2013) also notes that most of the growth was witnessed outside of the company’s retail division, one that grew only by 400 employees. But the company’s growth could not be emphasised more when considering its stock performance over the years. As MacDonald (2012) points out, there are 5 significant times in Apple’s history when an investor could have invested. When Steve Jobs returned to the company in 1997, the company’s stock price was $4, but this rose to $10 by the year 2001. An investment of $5000 could have gained a profit of $870,000 and $345,000 had it been invested in 1997 or 2001 respectively. When Apple introduced the iPhone in 2007, the stock price rose to $187 and this rose to $270 by 2010. September 12th 2012, the stock price was $669 after Apple announced iPhone 5 and the release date for the iOS 6. Every launch of their product continues to draw huge masses with their products proving to be highly regarded by consumers. Samsung’s stock performance has been far much lower than Apple’s. It has failed to maintain its performance over the years but as Cheng (2013) reports, investors now begin to consider investing in the South Korean Smartphone manufacturer as value stock. In august 2012, the company recorded stock prices at 1.15M Won. This was a record low within the same year and in 2013. In the months that followed, the company witnessed rise and fall in its stock market in equal measure, reaching a high of 1.55M Won and again recording 1.25M Won on 22 august 2013. Although the company has witnessed massive growth in the Smartphone industry, this seems not to influence its stock prices. These prices seem to be affected by changes in the stock market exclusively (Opiyo, 2013). Conclusion As the Smartphone giants continue to compete, it is evident that consumers will still enjoy the latest in terms of Smartphone technology. Samsung has already announced that they will unveil their new Smartphone model within this year and this has already created anxiety as users anticipate the capabilities of the new market entrant. They hope that the new galaxy phone will come with additional capabilities. While Samsung prepares for the new phone, competition continues to intensify with ZTE, Huawei and other vendors struggling to establish themselves in the market. Researchers have already forecast that the future of the Smartphone looks limitless. In future, the Smartphone will take central space in almost everything that consumers will involve in. References Sarwar M & Soomro T. R. (2013). Impact of Smartphone’s on Society. European Journal of Scientific Research. ISSN 1450-216X / 1450-202X Vol. 98 No 2, pp.216-226. MacDonald M. (2012). 5 points in Apple’s history when you should have invested. Retrieved on 3rd February from Sans. (2011). Using your Smartphone Securely. Swansea: The SANS Institute. Woollaston V. (2013). Samsung becomes the world's largest Smartphone maker as Apple's market share hits a three-year low. Retrieved on 3rd February 2014 from < http://www.dailymail.co.uk/sciencetech/article-2378789/Samsung-worlds-largest- smartphone-maker-Apples-market-share-hits-year-low.html> Berg insight. (2011). Will Android, iOS or Windows Phone be the winner on the surging smart­phone market? Gothernburg: Berg Insight AB. Etrade Supply. (2013). Top Three Largest Smartphone Manufacturer–Samsung, Apple and Huawei. Retrieved on 3rd February 2014 from < http://www.etradesupply.com/blog/top- largest-smartphone-manufacturer-samsung-apple-huawei/> Cheng J. (2013). Time to Treat Samsung as a Value Stock? Retrieved on 3rd February 2014 from < http://blogs.wsj.com/digits/2013/12/16/time-to-treat-samsung-as-a-value-stock/> Opiyo D. (2013). Is it safe to invest in Samsung? Retrieved on 3rd February 2014 from < http://beta.fool.com/daltonopiyo/2013/08/22/is-it-safe-to-invest-in-samsung/43855/ > Read More