Five Forces Analysis
Overall an oligopoly. (I stated in class) Between few companies relying on each other competing with better products. Android as a commoditized products whereas, Apple a differentiated higher end target. Android is commoditized because it services to the lower class whereas, Apple services to the middle to high end.
1)New Entrant-High to Android, Low to Apple-High Fixed Cost-There exists a loyalty brand with each company, results in die hard Apple or Android customers.-Each company fights for differentiation, the company that offers more and better service gets better profit.-Patents make it difficult to copy; resulting in competitor’s advantage.-Apple and Android compete to be the best, fighting for customers and the market so its concentrated and a new company would make it difficult.
2) Suppliers- High to Android, low to Apple. -All products that make up a phone you can purchase. -Highly Concentrated. -Big companies can price shop, allowing the cheapest price. Whereas, if there were small companies with a few amount of suppliers then the suppliers can pick their price.
3) Substitutes-High threat to Android, Low to apple
-Android and Samsung are relying on each other as substitutes.
-Common substitutes to distribute knowledge or info would be: social media, laptops (Apple-is a leader in), newspapers, magazines, e-mails, and internet. -Apple and Android have a symbiotic relationship, they rely on each other, yet at the same time they create innovative products. They can be substitutes for each other
4) Buyers-High threat to Android, low to Apple-Knowledge, it comes down to the customers.-Customers are price sensitivity the cheaper the phone with the best features the more products will sell.-Demand is inelastic, resulting that customers will wait for the product they want to go on sale. -Overall customers will determine the outcome of how the product will do.
D. Apple is differentiated by only marketing to high end consumers. The closest thing Apple products used to reach out to the low end market was the color back phones. Whereas, Android is commoditized because, they reach out to low end consumers.
E. Samsung is a supplier to Apple resulting to Apple stealing designs from Android. Apple phones have the following:
-NO Home button
-2 Rear cameras
Samsung makes DRAM chips and memory chips.
E. No one can copy the technology. By creating technology and apps like Apple’s it would take years to recreate. There are no substitutes (OS) making the IOS valuable. Also, the company is tied back in so, anything bought in IOS profits would go back in the company.