Interpret Market Trends & Development

The following report focuses on a market research for the smartphone industry and is aimed at
providing an in-depth analysis concerning the background of this sector, the current trends in the
market, SWOT analysis to identify the business features of the products as well as the forecasts for
future trends related to the mentioned industry. Mostly, the focus is oriented towards iPhone
smartphone and tries to provide an in-depth overview within this industry.

The current business environment is becoming more competitive and globalised. Consequently, to
survive, it is essential for companies to market researches aimed at developing a strong brand image
and generating greater financial benefits for the company. As one of the top leader companies,
Apple aims to advance in the technology field through its high quality and innovative products.
Innovation and dynamical technological advancements are two key factors that control the success
of Apple as well as the constant efforts to give its customers the ease and luxury to use its products.

1. BACKGROUND INFORMATION ON YOUR PRODUCT

First of all, smartphone is an evolution of mobile phone. It is simply a mobile phone that combines
more advanced computer capability, connectivity, and the ability to install third-party software.
Looking back at the mobile phone origins, the launch of the IBM Simon in 1993 certainly
represents a crucial moment for the mobile phone industry although at that time the current
smartphone technologies such as wireless sharing, HD video and mobile internet had only dreamed
about.

Certainly, a part from being new computing devices offering native software applications and
traditional wireless voice service, the greatest smartphone ability is that of connecting and running
Internet based services (i.e email, geo-location, streaming etc.) providing an indisputable user
experience. This brief introduction should be exhaustive to explain why many firms have been
trying to capture a portion of the total increasing value created by the smartphone industry, which is
believed to exponentially grow.
Before making a more in-depth analysis about this industry, it is important to highlight some
relevant events occurred in the past since the mobile phone was launched into the market.

1. 1993 -> The launch of the first smartphone, the IBM Simon
2. 1996 -> Nokia launched Nokia 9000
3. Early 2000 -> Ericsson Mobile Communications released the first device marketed as a
“smartphone”
4. Blackberry starts expanding its power in the market through the release of RIM’s
Blackberry series
5. The impetus for the expansion of the smartphone lead to the release of Apple’s innovative
iPhone in July 2008.

2/3 CURRENT TRENDS IN THE MARKET THAT HAS INFLUENCE ON YOUR

PRODUCT & STATISTICAL INFORMATION ON YOUR PRODUCT

While 2015 recorded the highest smartphone shipments in the world, the growth rate has been
declining now. In 2016 the shipments of smartphone was roughly at the same level as in 2015 but in
2017 this rate is experiencing a further growth and 2018 backed by economic revival. A report by
BI Intelligence shows that about 2,100 million smartphone units will be shipped in 2021, growing
at 6% during 2016-2021.
During the last years the global smartphone market has experienced an exponential growth and
although the number of competitors has been increasing, there are two titans dominating the market
taking almost the 92% of the entire market share: Apple and Google. Looking at data regarding the
smartphone sales, the shipments have increased roughly 30% year-over-year (data from Strategy
Analytics). Android’s market showed a significant growth capturing the 86.3% of the market during
the last quarter of 2016 whereas Apple’s iOS achieved the 17% of the total market during the same
period. Customers’ demand for these intelligent and multifunctional devices is supported, thus, by
the constant success and growth of iPhone, Galaxy, and similar devices.

WINDOWS
PERIOD ANDROID iOS OTHERS
PHONE
2015 Q4 79.6% 18.7% 1.2% 0.5%
2016Q1 83.5% 15.4% 0.8% 0.4%
2016Q2 87.6% 11.7% 0.4% 0.3%
2016Q3 86.8% 12.5% 0.3% 0.4%

Android dominated the smartphone market achieving the 86.8%. Samsung is the main contributor
remained in the top spot although there is a strong growth in unit shipments represented by players
such as Huawei, OPPO, and vivo. Apple and Google launched their iPhone 7 and 7 Plus as well as
Google’s Pixel and Pixel XL conquering a significant part of the market.

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iOS experienced a growth by 12.7% during the third quarter in 2016 with the iPhone 7 as the best-
selling model during this quarter.

On the other hand, Windows Phone experienced a decline of 35.2% during the last quarter. In fact,
with Microsoft’s focus on business users the decline in the consumer market is expected to increase.

4. RELEVANT LEGISLATION THAT APPLIES TO YOUR PRODUCT, MARKET?

1. Australian consumer laws (www.consumerlaw.gov.au)

2. Surveillance Devices Act 2007 (NSW)
3. Apple one-year limited warranty (www.apple.com/legal/warranty)
4. Apple protection plan (www.apple.com/legal/applecare)
5. Apple privacy policy
6. Privacy Act (1988)

5. CURRENT COMPETITORS, POTENTIAL COMPETITORS IN THE AREA

Environmental Analysis/PEST Analysis

Through the PEST Analysis one can identify the factors affecting the organization's ability to
perform efficiently in the global markets. It includes:

Political Forces as these affect the organisation’s ability to operate efficiently in foreign
markets

Many Asian developing countries represent a barrier for the company’s success as political issues
such as an increasing suicide bomb rate, terrorism, changes in legal requirements in terms of sales
tax, import and export duties mines the ability of Apple to successfully perform.

Economical Forces as these affect the organisation’s ability to expand its business and achieve
the growth’s target

The recent financial and economic recessions have slowed down the economic activities and lead to
a significant increase of prices of law materials, which have ultimately increased the costs and
prices of products.

Socio-Cultural Forces particularly in a globalised world and society where different cultures
work together in multinational companies sharing the same objectives

Apple focuses on the cultural values of its employees as well as customers to achieve positive long-
term relationships.

Technological Forces

Apple operates focusing on new technological advancements, innovation, and on providing the best
quality and innovative products to its customers.

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6. SWOT ANALYSIS TO IDENTIFY THE BUSINESS ELEMENTS OF YOUR PRODUCT

Considering the presence of two different technologies in the smartphone markets, the following
SWOT analysis will be divided into two groups. The first refers to Android analysis whereas the
second analyses iPhone.

ANDROID

1. Strengths

Android is a platform fitting different types of phone. It means there are different models available
in many price ranges. According to Ian Hamilton, android technology is fast, with many capabilities
as well as excellent voice recognition. Furthermore, it allows freedom of customisation supported
by continuous new versions coming out with enhanced features.

2. Weaknesses

Although the freedom of customisation is an advantageous point for Android, at the same time, it
could represent a weakness. In fact, people might mess the phone up if they do not have the right
technical knowledge. Additionally, android is always prone to external threats like malwares as it is
developer friendly and source code can be manipulated. Also, with new versions constantly coming
out, people with older versions of the phone miss out on new features. Ads displayed either at the
bottom or at the top of apps is another drawback. It is mainly due to the fact that most of the apps
are free. As a consequence, this reduces the user delight. Unlike Apple, which has a centralized
source named iTunes, the multimedia support for Android is more diversified. Eventually, since
many mobile manufacturers, use Android before releasing upgraded version of its OS, a
compatibility test is required by all these manufacturers.

3. Opportunities

Android market share has dramatically increased by further 35% and it is expected to double this
growth in the following 3 years. Many mobile networks in US support Android and this is one of
the reasons for the significant boost in their sales. Eventually, the growth of developing countries in
Asia and Africa has triggered up sales of smartphones, particularly with an Android system.

4. Threats

Apple’s iOS represents the main big threat faced by Android and any new Apple policy aimed at
making iOS compatible to other devices will result in a decline of Android’s market share. Android
is more prone to security threats such as malwares and viruses which can block the mobile. A recent
threat to Android was from Trojan virus through SMS. Moreover, apps can be downloaded from
untrusted sites and this may lead the entire system to crash or affect few applications in the
smartphone.

iPHONE

1.Strenghts

Brand equity: Apple is one of the best companies for its brand equity since the days of McIntosh
computers. Besides this, the tag of innovation has always been applied to Apple: iPod, iPhone, iPad
have experienced relevant tech revolutions. Consumer loyalty, and the amazing software iOS add

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value to iPhone. The user interface is friendly users combined with flexibility and speed. It is easy
to get addicted to its ease of use. Eventually, Apple’s iPhone has a high market share in the global
market due to its brand perception and image as s high quality innovative brand. Apple plays a
crucial role in the I.T industry by catering to the needs of the dynamic market with its extensive
research and developments that enables it to satisfy its customers with highly innovative products.

2. Weaknesses

High price is probably the most relevant. Considering the high brand equity, Apple wants to target
the A grade segment itself. Restrictions on the phone such as no expandable memory and a non
removable battery represent “unnecessary restrictions” that one expects not to have when one buys
such a high priced phone. Although Apple iPhone’s design is very consistent it does not offer to
customers the variety offered by other high brands such as Samsung.

3. Opportunities

The growth potentials of Apple include both opportunities in its range of products and services
provided. The first example is provided by the music player technology, through the iTunes app. It
can be integrated in both iPhone and iPad enhancing the performances and utilities of both devices.
Moreover, it can focus upon developing Podcasts for radio shows through Internet. The technology
& IT industries are dynamic and constantly developing introducing advanced products to satisfy the
growing demand for innovative and technologically advanced products. Eventually, there are
unlimited opportunities to avail for growth.

4. Threats

Competitors and intense rivals are the main threats in the technology industry. Nowadays Apple has
to maintain a competitive and strong position in the global market as well as differentiate and
promote products that cannot be provided by the other competitors. Research and development are a
must. Apple requires an extensive and constant research in order to meet the changing trends and
globalisation. By doing so, the company can mitigate the ups and downs of Apple's iPhone demand
due to saturation and substitutes in the market.

7. METHODS OF MARKETING YOUR PRODUCT

1. Promotion

Apple's iPhone promotional strategy mainly points on a purchase strategy where consumers are
encouraged to discover and try out the product themselves. In turns, this will generate the words of
mouth advertising, which is a secondary strong marketing tool for product awareness. Additionally,
Apple’s marketing strategy relies on television, which is an effective medium of advertisement.
Recently, Apple has given it more importance and this industry is flourishing through these
innovative ads.

2. Price

Apple's iPhone is charged at a premium price to highlight the premium product feature. This
strategy is to show and prove that it is a superior quality and innovative device than any other
available in the market. In this way, the consumers will consider Apple's iPhone as a highly reliable
device that can make their life faster and efficient in terms of both work and entertainment.

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3. Place

Apple’s strategy focuses upon building long-term relationships with its suppliers, wholesalers, and
retailers worldwide because in this way its supply chain management can become highly efficient.

4. Marketing Plan

Considering all the above-mentioned data, one can assume Apple needs to work on two main
marketing strategies, which are differentiation and focus to make iPhone the most successful
product in the global smartphone industry.
Producing a unique and innovative product for its customers is the key-strategy to make
differentiation a successful strategy. Apple has to offer its customers with something that is not
provided by other competitors in the global markets. Investing in research and development with
the aim of providing a prime emphasis upon innovation and design is a must. In turns, marketers
must put in light and enhance these features, upon their advertisements, to play a strong influence in
consumer buying decisions. Eventually, “this will create a buzz in the market and gradually the
image as a premium high tech smartphone will strengthen all over the world, which, in turns, will
contribute towards its brand equity. The spread of this innovation will be influenced mainly by its
attractiveness, quality, price, promotion and durability. Customers make high involvement purchase
decision for innovative products as it involves high risks (Barnet & Cavanagh, 2006).

In term of market segment to focus on, Apple selects the upper and higher middle-income group
who, commonly, want to improve their lifestyle. Through this strategy, Apple will be able to focus
on its resources and plan towards a selected target segment for managing it effectively.

8. FORECASTING – WHICH METHOD WOULD YOU APPLY AND WHY

This forecast shows the number of smartphone users in Australia from 2015 to 2021. For 2017, the
number of smartphone users in Australia is estimated to reach 16.6 million, with the number of
smartphone users worldwide forecast to exceed 2 billion users by that time (The Statistics Portal)

Number of smartphone users in Australia from 2015 to 2021 (in millions)

Number of smartphone users worldwide from 2014 to 2020 (in billions)

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According to Apple Inc. reported quarterly revenue that topped analyst projections, Apple sales rose
3.3% to $78.4 billion, with earnings of $3.36 a share in the three months through Dec. 31. Analysts
forecast profit of $3.22 a share on revenue of $77.3 billion, according to data compiled by
Bloomberg. The shares gained as much as 3.5% extended trading, after the results. Expectations are
mounting for a more significant upgrade to Apple’s flagship product later this year, which is the
10th anniversary of the iPhone’s launch. Apple said it sold 78.3 million iPhones in the final quarter
of 2016, generating $54.4 billion in revenue in the period. The average sales price for each iPhone
was $695, compared with $691 a year earlier. Sales in the three months through March will be
$51.5 billion to $53.5 billion, based on the Cupertino, California-based Statistics Company.
Moreover, Apple expects a gross profit margin of 38% to 39% inthe period, while analysts forecast
38.7%.

Overall, analysing global smartphone sales, one can say sales were largely unchanged in 2016
probably due to years of growth at truly high pace. On one hand, this evidence puts pressure on
Apple because iPhone is Apple’s flagship product being able to generate almost two-third of
Apple’s revenue. Services revenue represented the fastest growing segment with sales jumping to
18% ($7.2 billion) in the holiday quarter.

Data Source: Bloomberg Technology

9. APPLY MEASURES OF CENTRAL TENDENCY TO YOUR RESEARCH FOR YOUR

SELECTED PRODUCT

The central tendency measures used to make the above analysis refer to:

1. Means, to provide the value that is most common in the analysed data set
2. Mode that is the most frequent score in the analysed data set (in this particular case, the mode
was qualitative as it was used to refer to highlight the performance of different categories in the
smartphone industry)