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Increased competition for smartphone makers shrinks the market

Telestial News

August 25, 2015

Increased competition for smartphone makers shrinks the market

There are an awful lot of smartphones out there. As well as numerous handset manufacturers, there are dozens of different operating systems too. But in terms of market share and popularity, there are two names that keep coming up, over and over again: Apple and Android. The key differences between these two brands are to do with exclusivity and usability, and it is this which is responsible for both their huge success, and the problems that they are to face in the near future.

Apple have become the world’s largest brand in recent years, due to the extraordinary success of the iPhone. Despite only controlling 20% of the smartphone market, Apple reaps an extraordinary 92% of the profits. This is partially because Apple control almost everything about their own products. They make their own phones, which run on their own operating system, and they jealously guard their innovations. For Apple, this is very much a closed system that begins and ends with them. Their focus on stylish design and interesting new features are part of the reason why they are able to charge higher prices for their products and still succeed (despite the occasional embarrassing misstep). It is for this reason that there have been only 10 iterations of the iPhone (with another two due to be announced next month).

Android, on the other hand, is happy to share itself with other phone makers. First released by Google in 2008, the Android operating system has surpassed Windows, Blackberry and others to become Apple’s only true competition in the market. It is not, however, restricted to one single handset manufacturer, and therein, as the Bard would tell you, lies the rub. You can buy, at present, well over a thousand different types of Android handset, from manufacturers such as Lenovo, Motorola, Sony and Google itself. Telestial’s own smartphone handsets run on the Android system.

While this proliferation may seem like a good thing for competiton on the surface, it is starting to become apparent that this highly fragmented market will cause problems in the future. Take HTC, for example. Voted ‘Device Manufacturer of the Year’ in 2011, HTC used to occupy third place behind Apple and Samsung in terms of market share. Just four years later, HTC’s stock is basically worthless, because they failed to innovate sufficiently in this incredibly fast-moving market.

This is a problem for consumers, for if you’ve bought a mid-range or specialist Android handset from a small manufacturer who gets into financial difficulty; there may suddenly be no one available to help if you run into a technical problem. There is an additional problem, one that has been illustrated by the recent upheaval on the global stock markets – not only is China currently the world’s biggest smartphone market, it is also where all but a few manufacturers make their phones (though some are moving into India). If the Chinese economy gets into further trouble, as seems likely, not only will the Chinese consumer appetite for smartphones wane, but it could also cause problems for the makers as wages for factory workers may rise and the cheap resources that made China the place to have these things built become more expensive.  If life wasn’t already hard enough for a small smartphone manufacturer, it’s about to get a good deal worse.