Google in the Mobile Handset Market - Case Study Example

GOOGLE IN THE MOBILE HANDSET MARKET A market analysis of Google’s new brand Mobile handset ‘Nexus One Your Group :……………………………………….. Date : ……………………………………….. Introduction Once Google has just recently announced its direct access to the mobile handset market, the current consumer market started watching a fierce skirmish between leading computer companies Apple and Google. As reported by Bilton (2010), Apple and Google were on business harmony. But, the ‘competition rivalry’ between the fourth and fifth most valuable US companies is sharpening since the friendship turned sour last year after a conflict regarding a conflict over Google’s voice application which was refused by Apple (The New York Times). It is now a serious matter of market debate that Google’s decision to access mobile handset market with its ‘Nexus One’ can be a ‘next one’ revolution in the consumer technology. This piece of research work presents a market analysis of Google’s Nexus One mobile handset with different tools like SWOT, PESTEL and five force analyses. This work focuses on the growth and expansion of Google’s new mobile brand, the competitive environment and its effect on the business and how can Google deal with opportunities and threats. Market Overview of Nexus One Google is very strong brand with $125 billion worth and an annual revenue of $10 billion. Google’s access to mobile handset market with its Nexus one’ Android phone shows that it is right time to come to dominate the market. David (2010) finds that there is plenty room for every Smartphone marketer to grow. There can be various diversities that consumers are highly demanding for it. By 2012, American smart-phone sales will reach 525 million making up of all cell-phones sold. There are amble opportunities for brands to thrive. In the next three month, around 20 % of Americans are planning to buy an iPhone, and a surging 17% are aiming at purchasing an Android product. Google’s new Nexus One can enhance those numbers since it runs on Android system (Christian Science Monitor, MasterFILE Premier). According to latest data from comScore, Apple’s and Google’s market share of the smart-phone in inching up while other leading brands like RIM are slowly loosing (Cheng, 2010, arstechnica.com). Cheng (2010) figured out that from September 2009 to December 2009, the overall market trend was very positive to Google. RIM and Microsoft have lost around 1 % in its sales and Palm has reduced sale by around 2.2 %, Apple’s Smart-phone was up by 1.2 % and Google’s smart-phone reported a 2.7 % increases in its market share (Cheng, 2010,arstechnica.com). SWOT analysis SWOT analysis is conducted to present an analysis of the current position of the business and it involves looking in to the internal strengths and weaknesses and a firm’s external opportunities and threats (Hall, Jones and Raffo, 2001, p. 123). Strengths Weaknesses Google’s high reputation Ability to create identical market Ability to maintain continuous growth Quality of the services Product differentiation Customer services Opportunities Threats Increased market demand Android technology Advertisement Strategic alliance Fierce competition Price war Economic and political situations Google has gained excellence in the internet and search engine services which in turn helped it gain a very reputation around the world. Google’s Nexus One and its software will be welcomed by a large number of customers. Google’s technology and software excellence can help it create a unique market of its own and to maintain continuous growth and also to provide quality services. As it is highly competitive market, consumers are looking for advanced configuration with mobile handsets and hence it will be a challenge on Google to launch new and various brands with diversified features and also to provide consumer services. The growing trends towards Smart-phone and increased market share of Google from 2009 September to December shows that Google has greater opportunities of dominating the market. The Android technology which is built in Nexus One will be an additional quality and factor that helps gain more control over the market. Google is the worldwide number one internet advertisement provider with adsense system and this can be further enhanced for the betterment of Nexus one. As usual with technology markets, strategic alliance can be used as another strategy to beat the competitor. The competition that exists in the smart-phone market is really a ‘market war’ and this will be a challenge to survive in the market. Apart from ‘price war’ in which all the competitors cut the prices in to maximum and thus attempt to penetrate the market, the economic downturn and political instability will be other threats Google face in its move in to new domain of ‘handset market’. Dealing with Opportunities and Threats Google will have to look at the demand for various software based phones and it must tread carefully in order to avoid upsetting firms like Motorola that is using Android system in their smart-phones. It also has to keep mobile-phone network operators happy so that distribution of its new gadgets can be maximized (economist.com, 2010). Apart from this, Google must make use of its advertising opportunities so that it can help people become aware of the Nexus One and its features like updating software on air, Google map etc. Porter’s Five Force Analysis The Five Force Analysis on Michael Porter (1979) helps a marketer contrast the competitive environment of a business. This analysis has been widely used for determining the severity of the competition in the market and a market overview with regard to different stakeholders. Based on the above Five Force Analysis, it can be observed that Nexus One has to face very fierce competition from Apple. Burrows and Peter (2010) emphasized that when companies start to imitate one another, it may be an extreme case of flattery or a case of war. In the case of Google and Apple, it is both. These two companies have been famously good in terms for around a decade. Apple CEO Jobs and Google ECO Eric Schmidt, both are 54, have spend enough in battle with Microsoft and now they have turned from spiritual allies to a strategic one (BuusinessWeek, MasterFILE Premier). According to Gapper (2010), the Android operating software that Google used in Nexus One and its other brands of Mobile handsets in entirely different from Apple’s operating system or Microsoft’s windows (ft.com) and this can be a challenging differentiation in the mobile handset market. Guardian’s communication editor Wray (2010) reported that several European companies are planning to sell cheaper versions of various phones within weeks after Google has officially announced launching of Nexus One. Even Vodafone, which has agreed to provide network access to Nexus One, is expected to cut the price of its devices (guardian.co.uk) PESTLE analysis PESTLE analysis is designed to examine the external environment and the global factors that affect a business. It can provide a quick and visual representation of external pressures that affect a business (Hall, Jones and Raffo, 2001, p. 123). PESTEL analyses political, economic, social, technological, environmental and legal factors that affect a business. Political environment: The present US political environment seems to have lesser impact on the business of Smart-phones. Economic environment: Stock market growth is a positive factor for Google, but same time, the recent economic downturn and its long term impact on consumer behavior toward technological and other products can affect Nexus One. Socio-cultural environment: Google has showed a trend of ‘no face’ to customers. Technological environment: Google is has giant innovative and technological advances in internet search and other advertisement, software and portable applications. Apart from these overwhelming technological excellences, the recent step forward in to the market of Smart-phone with Nexus One has brought attention of its technological power. Legal environment: The factor like ‘fraud click’ on advertisement has impacted Google’s business. Similarly, network related issued associated with Nexus One and other software copyright or counterfeiting issues can bring further legal challenges on Google’s business. Business Environment and its impacts on Nexus One and its Strategy Economic crisis can negatively impact the business while stock market fluctuations can as well affect the business growth as well its plans for future. Google’s ‘no face’ trend to customers needs to be changed especially when it comes to a market like Mobile handset where customers need various services and assistances at different times. The technological environment shows that Google has greater opportunities with relation to its domination in internet advertising and also in its new Android operating system as well. Business Growth and Expansion Fernandez (2010) quoted that Google has the brand power to make a big impact when it launches Nexus One. Google must be able to compete with Apple and other competitors like Microsoft and Symbian and it must show real value to its customers. This is the real challenge Google faces now (marketing week, p. 5). There are a large number of substitutes available like symbian or Microsoft or other software based phones that customers can easily switch between. Google has great potential to gain the advantages of market through its advertising domains because it is the number one internet advertising company and it needs to focus on maximum business growth and expansion not only to make it profitable, but to prove it to be a market dominator with its Nexus One. Conclusion This research paper presents an in-depth market analysis of Google’s new step of mobile handset ‘Nexus One’. This paper discusses the chaos that is it wise to access a market like Smart-phones in the US where companies indulge in fierce competition? This research is conducted with the help of market analysis tools like SWOT, PESTLE and Five Force Analysis. This work concludes that Google new brand phone ‘Nexus One’ has greater opportunities of its Android operating system, increased market demand and Google’s internet hands, even when there are greater threats of competition in the market. References Bilton N (Jan 2010), The War Between Apple and Google Has Just Begun, The New York Times, Retrieved from http://bits.blogs.nytimes.com/2010/01/20/the-war-between-apple-and-google-has-just-begun/?scp=14&sq=nexus%20one&st=cse Burrows and Peter (January 2010), Apple VS Google, BusinessWeek, 00077135, Issue 4164, MasterFILE Premier, Retrieved from www.ebsco.com Cheng J (February 2010), Google makes biggest gain in smartphone market share, arstechnica.com, Retrieved from http://arstechnica.com/gadgets/news/2010/02/google-makes-biggest-gain-in-smartphone-market-share.ars David G (Jan 2010), Nexus One challenges iPhone, but markets more than big enough for two, Christian Science Monitor, 08827729, MasterFILE Premier, Retrieved from www.ebsco.com Fernandez J (January 2010), Googles Nexus One faces test to win kudos of Apple iPhone, marketing week, Marketingweek.co.uk Retrieved from www.ebsco.com Hall D, Jones R and Raffo C (2001), Business Studies, Second Edition, Causeway Press Ltd Wray R (February 2010), Googles phone faces cut-price challenger, guardian.co.uk, retrieved from http://www.guardian.co.uk/business/2010/feb/07/google-phone-cut-price-challenger Read More