Aspects of Smartphone Market

Introduction

The smartphone sector has gradually welcomed new competitors like Apple, Samsung, Huawei, OnePlus, and Xiaomi. These new entrants outmatch incumbents such as Nokia due to more robust product planning and design techniques. This process results in developing new smartphone variants and wide variances in technological characteristics across different companies, demonstrating that product differentiation remains a cornerstone of this inventive and competitive industry. Accordingly, this essay argues that smartphone makers are strongly motivated to produce cutting-edge technology devices to respond to consumers’ persistent efficiency requirements and growing threats from incumbents and new entrants.

Competitive Evolution

The smartphone enterprise has developed tremendously and seen major transformations in the past decade. These changes began after 2008 when Apple’s iPhone and handsets built on Google’s Android were debuted (Marques, 2016). To start with, worldwide sales of handheld phones have been steadily expanding. In 2015, Smartphone Shipments broke records by reaching 1.4 billion devices sold (Shabrin et al., 2017). Furthermore, entrants like Apple, Google, and Microsoft took advantage of their vast resources and expertise to design mobile ecosystems that set them apart from predecessors, but the latter fell off (Giachetti & Marchi, 2017). The once popular market leader, Nokia, has had its share of the market undercut significantly by Apple and Android-based devices like Samsung, Xiaomi, Oppo, and OnePlus.

The smartphone business has become highly diversified over the years. This is indicated by the fact that the market proportion of the leading five manufacturers decreased to 47% in 2015 from 80% in 2008 (Marques, 2016). Finally, the market share by mobile Operating systems possibly implies a major shift away from the once dominant Nokia’s Symbian and Blackberry OS in favor of iOS and Android since 2008 (see Figure 1). Specifically, Android now has roughly 80% market share and, when combined with iOS (16%), controls the market, leaving other OS such as Harmony OS with less than 1% (IDC Corporate, 2021).

Strengths and Weaknesses of the Smartphone Market

Smartphones enable users to access the internet via a cellular network, a Wi-Fi hotspot, or wireless home internet. Connectivity is immediate and becoming progressively rapid as carriers constantly improve the efficiency of their networks. Users can complete almost any operation, from banking to e-mailing to booking dinner appointments online, with just a single click. Most handsets now offer instant connection to online networking sites such as Facebook, Instagram, Twitter, and feature-rich messaging apps like WhatsApp and iMessage. Moreover, a wide range of smartphones is accessible to many people. Consumers do not need to spend thousands of dollars on a smartphone anymore. Some carriers and companies allow users to buy smartphones through monthly contracts. Users can also select from different brands with almost similar features. Manufacturers such as Xiaomi and OnePlus offer smartphones with advanced features only found in premium smartphones at relatively low costs (Miller et al., 2021). Overall, the industry is rapidly becoming a need for the general public, and the prospects of this shifting are little to none.

Conversely, there is a risk that smartphone makers’ earnings would decline as the cost of new technologically superior devices decreases. It has become increasingly difficult to justify the need to charge high fees for the so-called premium smartphones when budget smartphones offer nearly the same specs at affordable costs. A classic example is the release of Xiaomi Poco F1 in 2018, which packed advanced features, including the newly released system on chip (SOC) Snapdragon 845 (Liao, 2018). This chipset was only found in premium and expensive smartphones such as Samsung Galaxy S9. Poco F1 cost approximately $30, whereas Samsung S9 cost more than $60, which is twice the former’s price (Liao, 2018). Xiaomi’s strategy shook the industry, and manufacturers have been forced to follow its step by releasing affordable smartphones with sophisticated specs and capabilities. Thus, another weakness is that manufacturers invest much in marketing, owing to the industry’s strong competitiveness. Finally, Android and IOS ecosystems are not compatible despite being the dominant operating systems on the market. For example, Android apps cannot run on iPhones and vice versa. This incompatibility makes switching from one ecosystem to another difficult.

Opportunities and Threats of the Smartphone Market

Vendors of smartphones are progressively designing phones to reflect the current technological developments. In the 2010s, as 4G technology gained more popularity, the demand was for devices that supported it (Marques, 2016). Likewise, the primary and secondary cameras continue to grow in appeal, showing that multiple camera systems have developed so prevalently that smartphone suppliers must offer value by upgrading the camera resolution and image processing capability. There is also the adoption of Near-Field Communication (NFC) and infrared sensor technologies, allowing for wireless data transmission (Marques, 2016). Through the former, users can make contactless payments, and the latter control various smart home devices. These features open doors for mobile manufacturers to expand in other markets such as banking and cloud computing.

Since multi-core CPUs often enhance performance while consuming less energy, mobile companies meticulously select the chipset that houses the more powerful and efficient CPU. The advent of octa-core processors is noteworthy, as they will eventually outperform and kill dual-core processors. Additionally, the capacity of the mobile battery has been enhanced from the regular 3000mAh to 5000mAh. This means that manufacturers who equip their smartphones with the finest software, camera, CPU, and battery will always outsell competitors. Likewise, 5G has already been launched, and smartphone manufacturers are racing to launch smartphones that support 5G. This wireless is praised for its high computational speed, reduced latency, bandwidth efficiency, and massive data storage capacity (Dogra et al., 2020). In this way, 5G will finally enable smartphones to overtake the human brain in intellectual prowess.

Future Directions of the Industry

In the next 15 years, the smartphone market will see an increased focus on mobile applications, especially gaming apps and artificial intelligence (AI). To begin, the increased access to mobile applications or apps that consumers can download from respective app stores like Android’s play store or Apple’s App store significantly improves the usefulness of smartphone utilization. In 2016, at least 140 billion mobile applications were downloaded, which rose by more than 50% (220 billion mobile apps) in 2019 (Ceci, 2021). While Google’s play store accounts for most app downloads globally across devices, the App store leads in terms of revenue generated from mobile apps. In 2020, Apple generated over $19 billion from apps stores compared to $10 billion generated from the play store (Ceci, 2021). In 2025, mobile apps are expected to yield over 600 billion US dollars in sales, with mobile games accounting for the largest revenue share of all application types (Ceci, 2021). These findings open up exciting opportunities to learn more about the mobile market’s incredible opportunities by studying the habits of smartphone app users.

Similarly, combining 5G and artificial intelligence (AI) can accelerate the adoption and influence of both innovations. AI has shown advanced computing capabilities beyond the human mind (Makridakis, 2017). 5G eradicates data upload drawbacks, allowing large volumes of data to be transmitted from several devices to cloud servers, supplying enormous amounts of data to AI processes (Dogra et al., 2020). As such, its enhanced possibilities will reduce network issues by enabling phones to communicate flawlessly over the cloud. Many companies have already developed dedicated AI chipsets embedded in smartphones, such as Huawei’s Neural Processing Unit (NU) and Google’s TensorFlow (Vincent, 2017). Thus, the next frontier for mobile innovation is the incorporation of advanced AI capabilities into smartphones. This will open doors for more smartphones that can detect objects by merely viewing them through the camera or even finding instant solutions to complex equations by scanning the question using the camera.

Regarding the threats, the industry is constantly threatened by new entrants. The latest trend is incumbents creating new ‘independent’ mobile brands due to their immense wealth. These new brands manufacture cheap yet quality products that threaten big players like Apple and Samsung. Another threat is that smartphones pave the way for hacking through social engineering. Many users, particularly those who like sharing personal information online, can be victims of social engineering, the easiest form of hacking. Smartphones have also been criticized for reducing physical human interaction since people have become so attached to their phones (Elishar-Malka et al., 2019). In schools, smartphones divert students’ attention, subsequently affecting their performance. Lastly, conspiracy theorists such as anti-5G campaigners threaten the quick adoption of the latest smartphone technologies.

Conclusion

Smartphone technical developments have opened the door for a fast-rising mobile industry. Studying the development of these functionalities is critical for all players in the smartphone business as smartphone manufacturers offer handsets with a vast diversity of technological capabilities for distinct consumer market groups. Smartphones’ appeal underscores the rapid technological growth of mobile phones from communication gadgets with restricted purposes to all-purpose devices with improved computational capacity and network connection. However, the industry is highly competitive, and the adoption of better technologies and AI will define success in the following decades.

References

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Elishar-Malka, V., Ariel, Y. and Avidar, R. (2019), “a story of love and hate: Smartphones in students’ lives.” In J. Schulz et al., (Eds.), Mediated Millennials (Studies in media and communications, Vol. 19), (pp. 33-50). Emerald Publishing Limited.

Giachetti, C., & Marchi, G. (2017). Successive changes in leadership in the worldwide mobile phone industry: The role of windows of opportunity and firms’ competitive action. Research Policy, 46(2), 352-364.

IDC Corporate (2021). Smartphone market share – market share. (2021). IDC: The Premier Global Market Intelligence Company.

Liao, S. (2018). Xiaomi’s new Pocophone F1 undercuts rivals with a low price and high-end processor. The Verge.

Makridakis, S. (2017). The forthcoming Artificial Intelligence (AI) revolution: Its impact on society and firms. Futures, 90, 46-60.

Marques, O. (2016). Innovative technologies in everyday life. Springer.

Miller, D., Rabho, L. A., Awondo, P., de Vries, M., Duque, M., Garvey, P., Haapio-Kirk, L., Hawkins, C., Otaegui, A., Walton, S., & Wang, X. (2021). The global smartphone: Beyond a youth technology. UCL Press.

Shabrin, N., Khandaker, S., Kashem, S. B. A., Hie, C. K., & Susila, T. (2017). Factors affecting smartphone purchase decisions of generation-Y. Journal of Contemporary Issues in Business and Government, 23(1), 47-65.

Vincent, J. (2017). Mobile AI chips: A brief guide. The Verge.