Link: http://www.economist.com/business/displaystory.cfm?story_id=13832338
Summary
It has been recently announced that the mobile-phone industry will be suffering from a decrease in sales of 4%. Though, mobile phone companies such as Nokia, Palm, and Apple are still launching new phones out. Lately, Apple released their brand new Iphone, the Iphone S, along with many new features and “applications.” The price of the Iphone has been reduced from $199 to $99 in order to clear old inventory and at same time, attract customers who has wanted to purchase the phone at a lower cost. On June 6th, two days after Apple’s Iphone S was released, Palm introduced their latest product called the Pre. The demand for smart phones has been growing rapidly and is not expected to slow down any time soon.
Relationship
Referring to Chapter ten in the text book, this type of competition that’s happening right now in the mobile-industry is called oligopoly. Oligopoly is define as a market form in which a market or industry is dominated by a small number of sellers (oligopolists). In this case, due to a small amount of mobile phone companies, each corporation is aware of the actions from others. This can be a bad/good thing, depending how well the company uses their information. By acknowledging other companies’ actions, you can construct a strategy where it beats the other competitors. However, the bad thing is that companies will sometime be able to predict what strategies and create a better one. For example, Apple knew that the economy was not doing well, and that Iphone was a hit, so they decided to lower their Iphone price from $199 to $99. This price drop entices new buyers, especially those who wanted an Iphone before, but couldn’t afford it. In addition, Apple is the only company that offers “SDK,” a membership program where it allows customers to make their own applications. This innovative, multimedia approach towards smart phones is something that’s new to the phone industry. Thus, because of Apple’s innovative approach to their products, it continues to beat other competitors, such as Palm, Nokia, and Sony Ericsson.
Conclusion
I believe that Apple will continue to attract new and old customers to buy their new Iphone. The things they bring to market are exactly what most people want, not to mention it is usually different from any other competitors. Also, I’m pleased to see companies continue to develop new phones, regardless of the economy. As for other competitors, good luck.
