http://www.economist.com/business/displaystory.cfm?story_id=13832338
Summary
Even though the mobile-phone industry is suffering from decreasing sales,(4% decrease) companies are still developing new phones for the current market. On June 6th,Palm, a firm that pioneered hand-held digital devices came out with a phone called Pre and just two days after Apple unveiled a upgrade of their popular iPhone. Palm hopes that this new phone will help boost their sales. Two years ago, Palm sought out new talent including some from their rival company, Apple. Unfortunately Apple is not the only competition out there. There is Nokia's Symbian and Google's Android. Apple has the upper advantage because while Palm has no programs or "apps" on their online store, Apple has over 50,000 apps. Apple has also decrease the price of their iPhone from $199 to $99 in order to entice new customers. Apple hopes that this will encourage even more developers to create new apps for their phone.
Connection
The mobile-phone industry is an example of an oligopoly competition. There are only a handful of firms compete ting over the sale of smart phones. In an oligopoly each firm must consider the reaction of the others when it changes its price. When Apple decided to decrease the price of their iPhone, they took into consideration as to what their competitors might do as well. They most likely decided that by decreasing the price, they could persuade more customers into buying their phone instead of buying Firm's new Pre or any other smart phone on the market. All the firms within this industry use advertising, sales promotion, product quality, product warranties, and services as another way of enticing customers to buy their product.
Reflection
Its quite nice to see that even though the mobile-phone industry is suffering from decreasing sales that companies are still developing new phones and decreasing prices as a way of entice customers to continue buying smart phones. The effect of a new smart phone has already has some immediate reaction from Apple. One, there has been a price decrease and two there has been the unveiling of an upgraded iPhone. This new found competition will hopefully keep companies from not only trying to develop the latest "it" thing but also to keep prices low, which are good for the consumers.
4 comments:
"Even though the mobile-phone industry is suffering from decreasing sales, (4% decrease) companies are still developing new phones for the current market." I have to say, it only makes sense. If you've ever read The Grapes of Wrath, there's a quote in that book that more or less sums up to "Businesses must keep making money to stay alive". The phone companies might be losing money right now, but if they don't begin innovating at this time then they will have nothing to sell once the economy picks up. Mobile phones aren't thought up in one day and developed in the next. As a result of research, I've found that phone companies tend to begin R&D on new products around the same time every year, and they always debut their creations around the same time every year as well. This is good news for shareholders, if they can buy in at the right time (for of course, I did the research for Money Management). Although overall sales suffered this year, Rogers' stocks rose following the release of the iPhone in Canada, and we can't forget that RIM saw its stock rise as a result of the latest Blackberries.
- Krista Wong
Hi Gordon, I agree with your thoughts here. In today's extremely competitive market, if you aren't going beyond, you will fall, and you will fail. It is exciting to see how a lot of the mobile-phone companies out there are walking the extra miles in an effrot to boost their business back up in the recessionary clouds. As you have included, decreasing prices, advertising, sales promotion, product qualities, warrenties and services are all attempting methods for the better.
What they are doing now is very similar to what everyone else is doing, and what they are doing are all ways in attempt to keep businesses going and in hope for a better economy to come with all their efforts.
It is beneficial to see many mobile companies developing new phones in an industry that is currently suffering from decreasing sales. The mobile-phone industry should be commended by continuing to invest in research and development to offer consumers newer phones with more features, especially in the current recession. The phones that just came out like the upgraded iPhone and the Nokia’s Symbian should be able to attract more first-time buyers into the market as current trends show more of the population owns cell phones. The development of these new phones also serves as a catalyst for consumers, especially in the younger generation, to switch their phones earlier as these consumers are always trying to “keep up” with the latest gadgets. In turn, there will be more spending in this industry and hopefully sales will start to increase. The competition between the mobile companies is mainly beneficially to consumers as these companies want to grab a bigger market share by lowering their prices, implementing more attractive features in their phones, and investing in research and development to launch newer products into the market as soon as possible. This will encourage consumers to spend in the mobile-phone industry, an industry that should see no shortage of demand in the future as younger and older people in Canada are starting to own cell phones.
Jason Tong
Blk E
The competition between various phone companies such as Nokia and Apple have resulted lowered smart phone prices as well as increased development of the phones. As consumers, this is very beneficial since we are able to buy phones which have been further developed at a much lower price. For example, the price of the iphone has been decreased from $199 to $99. The new iphone S will be sold for $199. Apple hopes that their new phone features and price will be able to help attract new customers. It is likely that these phone companies such as apple will be able to attract many young consumers. New research, and lowered prices of many phones from different phone companies will act as an incentive for consumers to spend more in this industry, causing an increase in spending in this industry.
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