This chapter discuss about factors that influences the business environment used by PEST model. Then also discuss industry concept of competition, competitor analysis, such as strengths, weakness, opportunities and threats.
3.2 Introduction of Smartphone
In 1973, Motorola introduced a first cellular telephone, and then no one had imagined that this would ignite a whole new technological change: "The Mobile Revolution." Typical "cell phones" were used only for voice calling and later for text messaging, but with growth in mobile phone adoption, "cell phones" are now available with a number of different features like e-mail, video and audio facilities, internet access, etc. Thus, a whole new change in this mobile sector happened and the smartphone race began. This race also created competition between operators and handset manufacturers in getting more returns from mobile phone equipment and services. The rise in the smartphone segment accompanies the mobile internet revolution. However, the main reasons are better margins for Original Equipment Manufactures (OEMs) and higher Average revenue per user (ARPU) for operators. The smartphone is basically a combination of operating system, application, and handset manufacturers. In addition, due to the increase in the application market of the smartphone and the growing popularity of OS used for mobile systems, it can be said that the near future will witness the most powerfull application running on phones with high powered operating systems.
Considering current growth in the smartphone sector, it is estimated to grow by at least 18-20% by 2011 according to iSuppli. Following table shows sales of smartphones during year 2008 and 2009.
Worldwide Smartphone Sales to End Users in 2009 (Thousands of Units)
Market Share (%)
Market Share (%)
Table 1: World Smartphone Sales
3.2.1 Overview of Different Smartphone Operating Systems
Before moving to Android and iPhone, it is necessary to understand
3.3 PEST Analysis
PEST analysis is stands for Political, Economic, Social, and Technological analysis and describes a framework of macro-environmental factors used in the environmental scanning component of strategic management
Whether the diffusion of Smartphone will contribute to information control and national unity, or strengthen information flow and centrifugal forces are question. However, it may enhance individual rights of political involvement by spreading political information and critiques easier and faster than before. As a result, traditional government control of information traffic maybe weakened.
Calgary (1994) mentioned that, by using the increasing economic interests of the foreign business in China and Hong Kong, the Chinese government could take advantage of the lobby power of the foreign telecommunications multinationals involved in the diffusion of mobile communications in China as a political card to force foreign governments to make favorable policies toward China. The permission of allowing AT & T to sell its used mobile communications system in part of China and China's good relation with Motorola are two examples of an indirect political impact from the diffusion.
The diffusion of Smartphone communications can help China and Hong Kong economic development. Wireless communications devices can provide convenience to commercial mobility and prompt access to business information in the current social wave of doing business first in China and Hong Kong. Business becomes more mobile than ever in an information age, but china's still poor wired telecommunications network cannot meet the demand for mobile communications which keep the information sharing and exchange fast to avoid the long time economic bottleneck - China's limited wired networks and transportation capabilities. There the Chinese people, believing time is money, turn their eyes to pagers and cellular phones as a very useful business tool to make money. As a result, the diffusion of mobile communications adds a new push to China's increasing economic activities.
China is a unique, large market where a low per capita income combines with consumer's desire for advanced communications products. Smartphone in China have created a profitable business in China in the past few years. Benefited by the present demand exceeding supply, sales and operations of pagers and cellular phones can get capital back very fast.
Also according to the Western telecommunication professionals, the economics of wireless technology as an alternative to wired services looks even more appealing. Due to difficult terrain, long local loops and the constant need for repairs, the cost of adding a new wired subscriber in China averages around $2k and is often more. But wireless technology cuts this by half.
The demand for Smartphone has made the multinationals such as Microsoft, Apple and Android increase their sales and investment in China and Hong Kong. Thus China and Hong Kong can improve its inadequate communication system which has been one of the bottlenecks of its economic development by having the aid of these foreign resources. Also with more foreign players competing in China's market for mobile communications, China will be in a favorable position to make better business deals by the way of using one against another. However, the increasing market demand for imported finished products also drains more scarce foreign exchanges out of China's reserves. In turn the foreign drain may hurt China's economic expansion in other areas such as energy and transportation.
The diffusion will change the way the Chinese communicate and work. With more Smartphone devices used, the social contacts will increase so much that more social activities will be arranged easily and on time. These objects also provide a convenient channel for the personal dialogue among family members and friends who have been able to get together often like before because of busier individual time schedules and scattered living spaces. Also with more Smartphone adopters, social concerns about health safety, privacy, and intrusiveness will become salient gradually, though some of them are ignored by the Chinese at present time because of the Chinese basically positive attitude toward technological innovations and the relatively small portion of Smartphone users among the Chinese.
At the same time, the diffusion, along with other socioeconomic factors, has widened the socioeconomic gap between the early Chinese adopters and the late adopters or have-nots. Smartphone with their unreasonably high cost add a new symbol into the "upstart culture" which is usually regarded as a negative social phenomenon in China's media and a disgusting social habit in most Chinese eyes. A cultural conflict between the haves and the have-nots occurs. The haves want to show their mobile phones in certain public occasions to let others know their social images: they are bus, they are dealing business, they have money, they have more social connections, so they are important. Most users also think the negative social comments on them are form the have-nots' jealous psychology; the have-nots hate to see the impudence because they know most of the self-funded Chinese cellular users are dubious people with less education background and less social taste, some of them even are former criminals. Sun (1992) mentioned that, the have-lots also believe many of the users can afford a Smartphone because their money is made not through productive activities but through trade, speculation, or gambling on the stock market. The show-off manner of wealth has been accepted by many Chinese interviewees as an eye-catching feature in the Chinese culture though it is never seen as a good behavior. They think, however, that when more Chinese can afford the price lowering Smartphone and accessing mobile communications, the social cultural conflict will be resolved automatically because the present symbol of social status will be worth nothing when more people have Smartphone. This judgment is reasonable, but its prerequisite depends on the diffusion rate of Smartphone in China and Hong Kong.
In addition, the diffusion of mobile communications may increase government's social control resource by equipping the police with various wireless devices to locate possible protesters, as one of the government preventive measures showed during the incident anniversaries these years.
The diffusion of Smartphone help more Chinese become aware of the technical advances of the wireless innovations. In general, the peoples think natural science and technology are value-free and the continuing technological improvements and adaptations are positive to national development. They see the winners in today's world as determined by economic strengths and technological advantages, rather than ideology and military. So more people usually take a "welcome" attitude to new technology and like to get more knowledge about the innovations, unless they cannot afford or understand these new technologies.
As for the Chinese communication professionals, the diffusion of mobile communications can make them learn more about equipment design, production, and standards either from imported products or from various technology transfer means such as joint venture and cooperative development. Because of their high-education and tech-management background, they have more ability, as change agents, to persuade the decision makers and common Chinese to adopt or reject certain technologies.
The diffusion has helped its communications systems to catch up with the mobile communications technological trend in the world. The Chinese accepted the fact of their backwardness in most high-tech fields, but the professionals also know the leapfrogging advantage in a later adopter, having more technological choices after comparative evaluations, saving time and capital. The quick adoption to program controlled switches and optical fibers has provided a successful experience to the improvement of wired networks. So the improvement wireless communication technologies also gives more alternatives among the updated and appropriate innovations to leapfrog its mobile communications system.
On the other hand, the diffusion also increases the technology dependence of foreign wireless innovators. Although can take advantage of leapfrogging by importing, it will never obtain the most advanced technology and the key techniques. But the diffusion will stimulate market demands for newer mobile innovations, thus technologically rely on the wireless pioneers from the developed countries for quite a long time, regardless of how strong its national pride is.
In short, the diffusion of mobile communications, on one hand, does raise the Chinese's knowledge level and enhance Chin's communication capability. On the other hand, it also reinforces the technology determinism in the Chinese minds and its technology dependence on the developed countries.