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LAB University of Applied Sciences Faculty of Business Unit Degree Programme in International Business, Lappeenranta Nikolai Sedov Global Android Smartphone Market: Strategy Recommendations Thesis 2020 Abstract Nikolai Sedov Global Android Smartphone Market: Strategy Recommendations, 55 pages LAB University of Applied Sciences International Business, Lappeenranta Thesis 2020 Instructor: Jaani Väisänen, LAB University of Applied Sciences (Senior Lec- turer) The purpose of the research is to provide recommendations on business strate- gies for participants of the global Android smartphone market. The recommendations were developed through a descriptive and exploratory re- search of various related topics – first, the market was overviewed in general, then, products, pricing and general strategies of the case companies were ana- lysed. The main theoretical concepts used were David Aaker’s market analysis dimensions, Wiley Encyclopaedia of Management’s market competition spec- trum, part of the 4P “Marketing Mix”, Joel Dean’s “Pricing Policies for New Prod- ucts” and Porter’s Generic Strategies. The information was obtained from sec- ondary sources. The conclusion chapter presents an overview of the market, products, pricing, and strategies of the case market leader companies. From there, some general recommendations for other market participants and potential new entrants are provided. Keywords: Smartphone, Android, Market 2 Table of Contents 1 Introduction .................................................................................................. 4 1.1 Background ............................................................................................ 4 1.2 Objectives and Questions ...................................................................... 5 1.3 Scope..................................................................................................... 6 1.4 Theoretical Framework .......................................................................... 7 1.5 Delimitations .......................................................................................... 7 1.6 Methodology .......................................................................................... 8 1.7 Structure ................................................................................................ 9 2 Literature Review ....................................................................................... 10 2.1 Previous thesis publications ................................................................. 10 2.2 Market Analysis Literature ................................................................... 11 2.3 Case Companies Literature ................................................................. 13 2.3.1 Product and Price Review ............................................................. 13 2.3.2 Porter’s Generic Strategies ........................................................... 14 3 Empirical Research .................................................................................... 15 3.1 Market Analysis ................................................................................... 15 3.1.1 Size and Growth ............................................................................ 16 3.1.2 Market Structure and Profitability .................................................. 17 3.1.3 Market Trends ............................................................................... 22 3.2 Case Companies Product and Price Review ....................................... 26 3.2.1 Samsung: Products ....................................................................... 27 3.2.2 Samsung: Price ............................................................................. 30 3.2.3 Huawei: Products .......................................................................... 32 3.2.4 Huawei: Price ................................................................................ 33 3.2.5 Xiaomi: Products ........................................................................... 35 3.2.6 Xiaomi: Price ................................................................................. 37 3.3 Strategies ............................................................................................. 38 3.3.1 Samsung ....................................................................................... 38 3.3.2 Huawei .......................................................................................... 39 3.3.3 Xiaomi ........................................................................................... 41 3.3.4 Strategy Analysis and Recommendations ..................................... 42 4 Conclusions ............................................................................................... 46 4.1.1 Findings ......................................................................................... 46 4.1.2 Self-Reflection ............................................................................... 48 References........................................................................................................ 50 3 1 Introduction The topic of the research is strategy recommendations for the global smartphone market of Android devices. It is carried out as a study of the market and a case study of the year 2019 three market leaders by shipments worldwide (Canalys 2020) – Samsung, Huawei and Xiaomi. The research will examine some aspects of their products, pricing and strategies. From the market overview and case ex- amples, general recommendations will be given to other market participants. The topic has been chosen out of the author’s personal interest. The author fol- lows the smartphone market news, reads internet articles on the subject and watches the competition of different smartphone brands. Having certain knowledge of the market has helped the author observe some research gaps in public knowledge, and the topic of the factors of strategic advantage in the recent years does not appear to be well-studied. It is worth noting that while the smartphone industry (like many other similar markets) has many gaps in public knowledge, it is most likely that the market stakeholders conduct extensive re- search, but the findings are largely kept within the companies’ own intelligence, unreleased to the public. The smartphone market is indeed worth researching – it is a market with large sales volume and significant growth potential. According to statista.com (2020), the global smartphone sales volume in 2018 were estimated at around $522 bil- lion, and a stable growth trend is observed over the recent years. Smartphones are undoubtedly a very relevant item for consumers and the smartphone market is expected to continue growing in the years to come, albeit, as for spring 2020, the coronavirus pandemic is adversely affecting virtually any industry, and the smartphone market is no exception. 1.1 Background As described in Encyclopaedia Britannica, a smartphone is “a mobile telephone with a display screen (typically a liquid crystal display, or LCD), built-in personal information management programs (such as an electronic calendar and address 4 book) typically found in a personal digital assistant (PDA), and an operating sys- tem (OS) that allows other computer software to be installed for Web browsing, e-mail, music, video, and other applications” (Hosch 2009). Nowadays, the term “smartphone” is familiar to virtually anyone. It is, undeniably, a technological and a social phenomenon that influences daily lives of ordinary people, allowing for instant access to information and offering significant compu- ting powers, while fitting into a regular pocket. The global smartphone market is a relatively young yet ever-growing market. In early 2020, the number of smartphone users was recorded at over 3 billion, and it is expected to grow further. Despite showing some signs of stagnation, the mar- ket still has significant potential due to rather low market penetration rate in many countries, including India and China, where it is below 70 per cent. (O’Dea 2020.) The smartphones are commonly seen as successors to the so-called feature phones, whose functionality was not usually extended far beyond the basic phone call and text message features. IBM’s Simon, first sold in 1994, is now regarded as the first smartphone in history, although it was not called a smartphone at the time (BBC News 2014). However, it was not until 2007 that smartphones rose to prominence, when Apple introduced the iPhone. Following Apple’s success, other manufacturers hurried to enter the market. Since then, the market has seen extensive growth and has changed significantly. 1.2 Objectives and Questions The purpose of the research is to provide general business model guidelines for smartphone market participants, with the guidelines based on the strategies of the market leaders. Analysing the cases of market leaders may be useful to other market participants for improving the competitiveness. This is to be done through research in various stages. First, the Android smartphone market overall is to be analysed based on several analysis dimensions. Analysing the market is neces- sary to provide background for analysing the case companies. Next, part of the marketing mix – products and pricing – of the three market leaders (Samsung, Huawei, Xiaomi) are to be reviewed. From the findings, the strategies of the three case companies are to be analysed based on Porter’s Generic Strategies. 5 The concept of Porter’s Generic Strategies is a well-known model

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