Industry Analysis
The Smartphone industry in the UK has now reached a point where comparatively it is more reasonably priced. The industries are merging as the industry giants like Samsung, RIM and Apple have become direct competitors in the battle of reaching out to the Smartphone consumers. The industry participants are going to face tough competition in the next years for sustainable growth. Samsung, Apple, and RIM Blackberry have completely captured around three-quarters of the UK Smartphone market, which leaves little for the other competitors. The UK Smartphone market is however still growing with more people shifting to smartphones. Companies like Hoagie has significantly increased their stake in this market in the recent years with their dual approach of attacking the low end and the top end of the market via their low budget P Smart Model as well as the well-reviewed model of the P20 Pro (Sunnebo, 2018). However, the rising prices of the Smartphone in the past have caused the global Smartphone market to face a recession, which is going to translate in the UK market as well. The market leader, Samsung has been worst hit by the global slowdown (Orlowski, 2018). People are spending more on their Smartphone; however they are keeping their Smartphone longer as well, which is slowing down the sales of Smartphone. As per the analysts, the Smartphone industry has not yet come to terms with the longer replacement rates, reduced carrier subsidies, lack of exciting hardware design innovations, and high buildup of their inventories (Field, 2018).
SWOT Analysis of Smartphone Industry of UK:
| Strengths | Weaknesses |
| -The Smartphone adoption in the United Kingdom has increased over the years -In 2011, 29% of the UK population had adopted the smart phones while in 2018 it has reached to 78%. -The use of optimized software, browsers, larger screens fast 3G connects and liberty to use several applications via internet has made it possible -Samsung is one of the most used phones by the consumers with 8% of the total Smartphone users having Samsung Galaxy J3 and 4% having Samsung Galaxy S7 Edge -Even though the market share is mostly taken up by industry giants there is still little room for companies like Nokia, Huawei and LG as well. -Nokia has recently become the unlikely third runner up in the market with its new dose of nostalgia and start-up agility. | -Intense competition among direct competitors has left little room for other players in the industry -It is considered that the industry is officially in recession as the global shipments have declined as well -The phone market is saturated to some extent which is exhibited with its slowed growth of demand -The weak demand has caused manufacturers to price higher further lowering the demand -Customers are now delaying their phone purchase unless it is very much needed. |
| Opportunities | Threats |
| -The use of artificial intelligence is expected to bolster the growth opportunities and encourage demand for smart phones -The providing of Cloud technology service would also enable further opportunities in the industry -The use of Internet of things would might also provide better and new services to the manufacturers for increasing its sales | -The intense competition might remove smaller companies from the industry as it gets more aggressive -Any new disruptive technology may entirely remove the industry if it does not accordingly -The recession in UK Smartphone industry would prolong with lower demand of the market |
(Statista, 2018) (Statista, 2017) (Field, 2018) (Orlowski, 2018) (Williams, 2018)
Industry Leader |Samsung:
Samsung is the leading mobile device vendor in the UK Smartphone market with 28.86% of the market share. The company has a very high R&D expenditure and has the strongest patent portfolios among all tech companies. The company is known for its highest product innovation and design capabilities. The high brand value and the solid financial condition of the company make it a strong market leader.
External Analysis:
The company is operating in a market where most of the share is already taken by the industry giants. However, the increment in the Research & Development expenditure would enable the company to expand its market in the current environment further. The more focus on mobile advertisements and strategic collaboration with related business can further help in expanding the business in the UK market. The company can follow the trend of investing in its cloud business segment or using artificial intelligence on the products. Being a Korean company, it is exposed to the exchange rate fluctuation which is one other factor it has to look for. The intense competition in the UK market and the potential disruption caused by the launching of the new products can slow down its growth (Sharma, 2017).
Customer Base & Market Positioning:
The customer base of Samsung Inc in the UK market is very wide with a customer who uses devices on a routine basis to the ones who have business needs. The target age group of the customers is 20 to 50. The product range is varying for the lower middle class to high class.
Financial Performance:
The company has recently reported its third quarter results. The company has reported KRW 65.46 trillion in its consolidated revenues, which is the growth of 5.5% this year. The operating profit of the company has grown by 20.9%. The memory business has been most strong for its sales. The exchange rate effect has also been positive for the company (Samsung, 2018).
Emerging Company | RIM Blackberry:
The company Blackberry Limited is the multinational company which is originally known as Research in Motion or RIM. The company has lost its market share to the market leader Samsung in the last five years as its market share has declined from 40% in 2011 to 0.57% in 2018 (Statista, 2018). The company has, however, the potential to overcome this challenge and redeem its lost position in the UK Smartphone market.
External Environment:
RIM introduced blackberry in 2006 when it became a commercially successful product. However, from then onwards, the tough competition in the market has taken back its share, and the company has since been trying to survive the challenges (Cecere et al., 2015). The intense competition in the UK Smartphone market has been a challenge for the company, however it has to potential to overcome if it would spend more on innovative and creative design. Furthermore, investment in the Internet of Things would also help it elevate its position in the market.
Customer Base and Market Positioning:
The company positions itself in the market with age between 16 to 34 years while the parents of these adults are another secondary market to which it offers its product. More specifically the phone is more preferred by the business executives and professionals.
Financial Performance:
The company RIM has lost its market share in the year 2018. However, its Earnings per share has increased this year to $0.76 from $-2.30 in 2017. The company has reported a positive net income in 2018 while it reported a loss in the last two years (Blackberry Limited, 2018).
The company at Risk: Nokia
The Nokia which was the market leader in mobile phone devices and then it fell off with the disruption of new smartphone technology has emerged in the UK market as the third most popular phone brand. The company Nokia has become the third place in the phone market in the UK with Samsung Inc leading it. It is because of the affordable Nokia 6 and Nokia 3 models (Williams, 2018).
The company has recently launched its new phones with Nokia 3 model. Even though the company has captured third place in the mobile market in the UK, but it is still way back in line. Its market share is lower than Samsung and RIM in the UK. The company is highly priced comparatively, and it has a higher technical model which makes the device less user-friendly. The high competition and aggressive advertising by the competitors can make the company worried about its survival (Sharma, 2017).
Customer Base & Market Positioning:
The Nokia target market is similar to the Samsung Inc with varying portfolios of the market segment. However, it is not considered as luxurious products like Apple. It is considered a product which has used the environmentally friendly process for its development and offered lower power consumption.
Financial Performance
The financial results of the third quarter of Nokia have been reported which shows that the company has improved its financial performance but very slightly. The profitability has increased compared to its first half of 2018. The delays in project timings and the delivery of products have been faced, but it recovered somehow. The revenue has grown only by 1%, but it considers itself on the right track (Nokia, 2018).
References:
Blackberry Limited, 2018. Annual Report 2018. [Online] Available at: http://www.annualreports.com/HostedData/AnnualReports/PDF/TSX_BB_2018.pdf [Accessed 3 January 2019].
Cecere, G., Corrocher, N. & Battaglia, R.D., 2015. Innovation and competition in the smartphone industry: Is there a dominant design? Telecommunications Policy, 39(3-4), pp.162-75.
Field, M., 2018. Smartphone industry falls into ‘recession’ as sales slump 8pc. [Online] Available at: https://www.telegraph.co.uk/technology/2018/11/02/smartphone-industry-falls-recession-sales-slump-8pc/ [Accessed 2 January 2019].
Nokia, 2018. Nokia Corporation Financial Report for Q3 and January-September 2018. [Online] Available at: https://www.nokia.com/about-us/news/releases/2018/10/25/nokia-corporation-financial-report-for-q3-and-january-september-2018/ [Accessed 1 January 2019].
Orlowski, A., 2018. Smartphone industry is in ‘recession’! Could it be possible we have *gasp* reached ‘peak tech’? [Online] Available at: https://www.theregister.co.uk/2018/11/02/smartphone_recession_now_official/ [Accessed 2 January 2019].
Samsung, 2018. Samsung Electronics Announces Third Quarter 2018 Results. [Online] Available at: https://news.samsung.com/uk/samsung-electronics-announces-third-quarter-2018-results [Accessed 1 January 2019].
Sharma, P., 2017. Apple & Samsung dominate UK smartphone Market in 3Q17. [Online] Available at: https://www.counterpointresearch.com/apple-leads-uk-smartphone-market-in-2017q3/ [Accessed 1 January 2019].
Statista, 2017. Share of smartphone models sold in the United Kingdom (UK) during the month of January 2017, by model. [Online] Available at: https://www.statista.com/statistics/700740/smartphone-market-share-in-the-uk-by-model/ [Accessed 3 January 2019].
Statista, 2018. Market share of leading mobile device vendors in the United Kingdom (UK) from 2010 to 2018. [Online] Available at: https://www.statista.com/statistics/487780/market-share-of-mobile-device-vendors-uk/ [Accessed 1 January 2019].
Statista, 2018. Smartphone adoption in the United Kingdom (UK) from 2011 to 2018. [Online] Available at: https://www.statista.com/statistics/271460/smartphone-adoption-in-the-united-kingdom-uk/ [Accessed 3 January 2019].
Sunnebo, D., 2018. Huawei cracks the British smartphone market. [Online] Available at: https://uk.kantar.com/tech/mobile/2018/huawei-cracks-the-british-smartphone-market/ [Accessed 2 January 2019].
Williams, A., 2018. How the hell is Nokia the UK’s third most popular phone brand? [Online] Available at: https://www.wired.co.uk/article/nokia-third-largest-smartphone-brand-in-the-uk [Accessed 1 January 2019].
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