Strategic Management: The market of applications for Smartphones

Résumé du document

The Smartphone applications market is skyrocketing: While operators recorded 3% global profit in 2009, the application market is on track to reach 17 billion Euros in 2012, versus 4 billion in 2009 (with already some 7 billion application downloads). This means a growth of about 50% during the first quarter of 2010, according to Gartner.

Definitions:
Smartphone: "A Smartphone is a mobile phone that offers more advanced computing ability and connectivity than a contemporary basic 'feature phone'. Smartphones and feature phones may be thought of as handheld computers integrated within a mobile telephone". "Smart phones run complete operating system software providing a platform for application developers."

Applications: "Application software, also known as an application, is computer software designed to help the user to perform singular or multiple related specific tasks."

We can also highlight that a Key Success Factor of Apple is its ability to go beyond the needs of consumers and to make its innovation accessible to them. Moreover, its strategy is very strong. Indeed, in 2007, Apple launched the iPhone. It belongs to the Smartphone category, that means a mobile phone offering advanced computing abilities. It's like a small computer combined with a phone. Recently, the number of application integrated on it has increased. Indeed, we can count more than 225,000 applications available today and this number doesn't seem to stop growing.

However, the Smartphone was not invented by Apple as we will explain in part B. Apple introduced the iPhone on the market quite late compared to the other mobile suppliers: so, how did the iPhone succeed that well ?
The iPhone has two main strengths:
- The simplicity to use (thanks to the touchscreen) and to access things (applications makes everything clear and reachable)
- The mobility. You can access the internet wherever, whenever, you can utilize GPS, etc.

The difference between the iPhone and other Smartphones are the AppStore and the numerous applications. In fact, when Apple began to attack this new market, it created a tool to overpass other suppliers: the AppStore. In July 2008, it became possible to buy applications for the iPhone from the Apple Store. It was a spectacular success. Indeed, in one month, 60 million applications were sold which represent $1 million per day on average! In 2009, 5 billion applications had been downloaded and the company forecasts around 12 billion in 2012.

Extraits

[...] Android is already the first OS sold on smart phones in the US. The strength of Google is to have a rich Android Marketplace ( 68.000 applications available), being easy to use for developers and free. Indeed, Google wants to be everywhere, and to be a direct competitor for Apple; it has even launched at the beginning of the year a smartphone under its own brand (produced by HTC), to be sold only on the internet. 3/Wholesale Applications Community During the Mobile World Congress (February 2010), reacting against AppStore leadership and profit operators (América Móvil, AT&T, Bharti Airtel, China Mobile, China Unicom, Deutsche Telekom, KT, mobilkom austria group, MTN Group, NTT DoCoMo, Orange, Orascom Telecom, Softbank Mobile, Telecom Italia, Telefónica, Telenor Group, TeliaSonera, SingTel, SK Telecom, Sprint, Verizon Wireless, VimpelCom, Vodafone) and 3 manufacturers (Samsung, LG Electronics and Sony Ericsson, totalizing over 3 billion customers) founded the Wholesale Applications Community, to develop an open application platform for Symbian, Android, Windows Phone Their aim is to enable developers to create universal applications for the new mobile generation, and to build a strong competitor against Apple, which is still leader in applications downloading. [...]

[...] The first has been the computer OS monopolistic firm since ever. And the second one is an internet start-up, which tries to have a foot on each sphere of the communication market. Both do not want to miss the opportunity of this booming market. Microsoft has been developing smart phones OS for long (2002), with Windows Mobile. Last year, it decided to give a renew its strategy, changing at the same time the name of its brand, becoming Windows Phone. [...]

[...] But Nokia seems to have some difficulty to move to a services business model, based on the application market. The company has recently changed its chief executive officer for a former Windows manager. And it has to use its advantage of global reach to gain market share all around the world instead of losing clients and facing losses, as it has been this year. Samsung proposes 1100 apps for mobile and TV use, and boast 10 millions downloads in 34 European countries. [...]

[...] We should never forget that we have only done a third of what has to be realized in high technologies and Mobile use. (external reasons) The great deal now stands in reducing the size of batteries and improving sustainability of the phone energy. Smart phones turn out to be computers, so they consume a lot but still have to be mobile. For the moment, no solution has been found to improve this dependency to electricity. [...]

[...] The success of these applications is booming, and so is what has since been called m-commerce (for mobile-commerce): 10% of real-estate small-ads are now consulted through smart phones apps, eBay expects 40% of its sales being made with a mobile by 2014 Such sectors as real-estate and online shopping have a lot to gain to be accessible with mobile phones. Even every day, commons tasks (going to the cinema, consulting the weather-reports, checking bus schedules, listening to music on deezer ) are made easier thanks to applications, and thus meet a huge success. Original services as well as mobility are two main features of application that help companies obtain more profit. [...]