Yossawee Laowattanawong ID: 6220212010

How sustainable is Apple’s competitive position in smartphones?

Smartphones are one of the needs that people need to utilize in everyday uses. It can’t be denied that
everyone needs to have at least one phone in his or her pocket. There are tons of multi-media functions for
you to use to make your life easier in a tip of your hand such as camera, navigator, media player, on-demand
delivery service, and much more than you can ever think of.

Before the smartphone was invented, phones were made only just to receive calls and call out calls. No one
in the 80s would ever expect phones to do more than one function. In those times, every electronics have
only one function to do at a time. A decade later, smartphones were invented and changed our daily life.
Nokia was the first pioneer to provide phone with various attractive hardware designs and user-friendly
interfaces.

In the early of millennium era, Nokia, Motorola, and Samsung dominated roughly 60% of the smartphone’s
market share. The competitive with these companies were outrageous. Every products at that periods short
product life cycles which has an average of 6 to 9 months. The smartphones market started as a blue ocean in
this era and it attracted electronics company to enter. The competition at those times was the variety of the
design and how superior technology that each company provide. Cost also affect how people would choose
the product too. The smartphone market at that time had a low barriers to entry. Many electronics company
can enter the market easily due to low invest on capital. However, the market still dominated by Nokia,
Motorola, and Samsung which make it hard to gain the market share.

Apple Inc. had foreseen an opportunity in this market. Steve Jobs, previous CEO of Apple company, decided
to introduce an innovative product that changes the world in January 2007 at Macword. He made a
revolutionary product which was a breakthrough of the industry that was the iPhone. iPhone introduced all
brand new uniqueness phone that other competitors could not do. A user-friendly interface, touch screen, and
virtual keyboard on a phone was something new at those times. Nokia didn’t plan to invent one due to high
risk of cost, but not Samsung. Other companies who can’t adapt to the change of the market met decline in
sales.

In Porter’s Generic Strategies, Jobs invented his phone as a broad differentiation. iPhone was made to have
an elegant design, user-friendliness, eco-friendly recyclable material, and combine with its high-end
branding which made it differentiate from other companies. Apple made its product not just for one group of
market, but designed for everyone. It targets individual and business organization which mean anyone can
use an iPhone.

To maintain the differentiation generic strategy, Apple continues on innovating its products. It must keep
developing and researching to maintain its competitive advantage. Apple must keep on innovating to be
ahead of the industry even other competitor are catching up, but still Apple has made the system sustainable
Yossawee Laowattanawong ID: 6220212010

than other company. Apple didn’t only make an innovation product, but invent an eco-system that user could
freely transfer files between owned or apple devices via Airdrop. This is one of the main key feature in
differentiation strategy that other companies hasn’t be able to compare with Apple. Another one is the
extension of App Stores which attract people to use it. Respectively, developers also come in the market to
create more applications.

After Apple joined the market, barrier of entry is low for awhile. In the last 5 years, Chinese company with
brilliant innovation such as Xiaomi and Huawei can go against Apple after the existence of iPhone for more
than decade. Threat of new entrants are higher right now when Chinese company was able to gain the market
share from Apple. Chinese products are getting more superior than Apple and the pricing was cheaper which
make it more attractive. That makes the barrier of entry to be moderate.

Demanding of iPhone was very high in the last decade, Apple has based it products to be manufactured in
China. There are many company that help Apple outsourcing which make the power of supplier low. There
are many industry that could help Apple manufacture the product. Apple views its product that is for
everyone which make the bargaining power of customer low. Customers have to deal the higher pricing of
each newly developed hi-end phone in the later year, but much more choices in the line to choose if you need
a budget phone on iPhone. Threat of substitutes is getting higher as the Chinese company enter the game.
More products are be able to substitute what iPhone can. There are many variety, cheaper, and more superior
phones that is offering in the market.

Looking at the competitive position of how sustainable is Apple with other competitors, Apple’s sales is
increasing every years by looking at the Apple’s Unit sales. It has tripled during its first 4 years and gradually
increasing every years. Apple’s iPhone has been in the market for almost 13 years and still selling well with
its current model, the iPhone 11. Apple has been sustainable for so long and I believe it will still be in the
future. By looking at the current report of top 10 model sales market share, Apple iPhone XR which release
in 2018 has the 1st ranking since 2018 until now. It dominates 3% share of all the smartphones available in
the market. More than 26.9 million units of iPhone XR are shipped in the first half of 2019. With the release
of iPhone 11, it makes iPhone XR cheaper and makes it accessible to everyone. Everyone now can carry a
premium brand on their pocket.

By accessing to every group of people, iPhone 11 has provided many variety for customers to choose which
depend on their needs and budget. If you want a budget phone, then iPhone 11 or older model is meant to be
for you which cost about 25,000 baht. If you are a modern person and want a high-specification phone, then
iPhone 11 Pro will be yours which cost at 36,000 baht. If you want a premium spec phone with larger screen,
you can go for iPhone Pro Max which cost at 39,000 baht. There are many ranges that customers can choose
so it stand out for everyone not just only for luxury group of people.

There are many critics review about the current iPhone 11 has less innovation than the previous model and
look quite outdated with other competitions. By looking in-depth and having a hand-on of the iPhone 11,
everything is well polished and developed stable consistence of each function. For example, the cameras may
Yossawee Laowattanawong ID: 6220212010

not have the highest technology on the market, but it could provide a stable color and contrast of each photo
similarly in the same environment. It might be late for iPhone to just have three enormous lens on the back,
but it brings photography to a professional level in the palm of your hand. It makes impressive changes that
retain current customers with Apple products. Current customers also like the ecosystem that they have
brought with other Apple products. It has the ease to use where other competition still can’t keep up with
Apple on this system.

Looking at the competitive advantage of Apple company, it has a value where it can access to all groups of
people. It has eliminated the gap between group of people and neutralises some rivalry brand along the way.
It foresees the profit of making a premium branding on each product especially the iPhone. For rarity, Apple
hired top notch employees to build the best digital device for customers. The resources for making the device
have many outsourcing company to help take care manufacturing. However, the rarest abstract object is the
software or the operating system, iOS, that can only run on iPhone. Make it more rare and valuable to the
company than only just a physical device. The software and operating is inimitable. It provides best security
in the phone on the market and an eco system that can be used between each Apple devices. Androids OS is
not stable as the iOS so it is inimitable or to be better than iOS at this moment. The organization has been
well developed and manage fantastically by the current CEO, Tim Cook. The components of the organization
researched and developed very well to advertise the product, control the cost ,gain more profit, and create
more innovations in the near future. By looking all the components of VRIO, it is said that Apple company
and iPhone have a sustainable competitive advantage and assume to have distinctive competence from other
companies.

Apple has been planning very well on the smartphone war. They have been planned for the future not just
year by year. To access all group of people, it uses iPhone XR in 2018 to open the first chain of pricing
strategy book and it gets cheaper by 2019 to make it easier to own a phone on lower price. In 2019, it
launched iPhone 11 at lower price to gain more audiences from other competitions and retain current
customer. In this year, analysts are saying that Apple is well-positioned to sustain this fantastic momentum.
Apple is reportedly planning to release 5G smartphone this year. According to Wedbush Securities, a
financial services and investment firm, over a third of the 900 million iPhones currently in use will be
upgraded to 5G smartphones. It expects 200 million of those upgrades to take place in 2020. This means
Apple has the potential to increase its iPhone shipment growth this year. Apple can dominate the 5G
smartphone in this near future market. By combining of aggressive pricing and 5G, Apple can attract both
new and existing customers. iPhone will continue to be the dominant smartphone in this year.

At the bottom line, Apple has been gaining competitive advantage since the beginning of releasing the
iPhone. It has been making very well almost every years. By having Tim Cook as a CEO, it keeps the
company on a superior level than other competitors. iPhone will still continue to dominate the market and
could gain more customers once it has the 5G model in the near future.