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Poter’s 5 Forces:

Porter’s 5 forces analysis is done to understand the industry attractive of smartphone industry.

Threat of Entry:

* Huge capital requirement(Low):High,so economies of scale há to be achieved to increase profit margins.

* Produc differentiation (Low):Smartphone will become a commodity unless they are differentiated from its competitors.Moreover the bargaining power of the buyer is high,so product differentiation is an ideal way to add value to the buyer.

* Distribution channel(Low):In most of the countries,smartphones are sold through mobile operatiors and hence they exert more bargaining power.Alliance with mobile operators is an essential factor for product success in smartphones segment.

* Absolute cost advantage (Low):Recent data by Financial Times reveals that the operating margin of Nokia and Apple is above 30%,whereas the operating margin of the remaining smartphone manufacturer is below 15%.Such efficiency in operations is achieved through learning curve experienced by both Nokia and Apple after remaining in the industry for a longer duration.

* Governmental and legal barrier(Low): Mobile industry is heavily regulated.

* Reraliation (Low):All leading players are fighting a fierce battle to gain more market share,so there will be a heavy retaliation against any new entry.Existing players have sufficient financial clout to block new players.

* Brand(Low): Strong brand recognition is required to sell smartphones.

Supplier Power:

* Software provider (Moderate): There are so many open sources mobile operating system provider,option are plenty and hence the bargaining power of software providers is low.

* Hardware provider (Moderate): There are so may suppliers for hardware components too (Qualcomm,TI&Intel) and hence the bargaining power of hardware providers is aslo low

Substitutes:

The power of substitites is moderate and it actually depends on the impact of substitute products.

Smart phones do...