Abstract

Band Extension Expected to Create More Advantages than Product Line Extension in the Long Term

Developing products with different specs or price tags can be seen as an extension of the Smartphone product line. Currently, a large number of different types of mobile devices running on the same OS can be found in the market, so it is observed that some branded vendors begin to aggressively plan for brand extension. In addition to Smartphones, branded vendors also have launched tablet devices, handheld multimedia players, and netbook PCs.

Smartphone products are still enjoying rapid growth, but branded vendors have only limited R&D resources, so it can be seen that now most of the branded vendors focus mainly on the Smartphone business. Nevertheless, since Microsoft's Windows 8 will be able to support processors adopting ARM architecture and Google's next-generation Android version Ice Cream Sandwich is expected to better meet the clients' needs for production tools, it is projected that other mobile devices will see further development in the future. When the penetration rate of these devices reach certain degree, and when users begin to base their purchase of various devices on consideration of information synchronization and compatibility, vendors offering more diverse products are forecasted to become more competitive.

For instance, if a user has both iPhone and iPad and relies heavily on the App Store and iCould services, when he needs to replace the existing Smartphone or tablet device, it is highly likely that he will continue to opt for Apple's products. The major reasons behind this phenomenon are to ensure information synchronization and smooth application experience. If a branded vendor has no tablet devices and develops only Smartphone products, it is likely that when its Smartphone user has to purchase a tablet device, he will choose Apple's iPad. When the user begins to purchase iPad applications and store personal information to iCloud, it is likely that when he has to replace the existing Smartphone, he will opt for Apple's iPhone.

Currently, major branded vendors, such as Samsung, LG, and Apple, are able to better allocate R&D resources to different product design. Telecom operators, owing to their familiarity with the ARM architecture and the telecom ecosystem, are more likely to expand their product portfolio from Smartphones to other mobile devices.

Branded Vendors Aggressively Develop Exclusive Software Applications, Open OS Platform Begins to See Differentiation

Except for Apple and RIM that develop their own iOS and BlackBerry platforms, respectively, other major branded vendors all adopt open platforms, such as Android and Windows Phone 7. Android, in particular, is widely used by most of the branded vendors. Through Google's open source, branded vendors can not only develop similar Android products but also get GMS (Google Mobile Service) certification and begin to offer Gmail, Google Maps, Android Market, and other Google-related services. It can be seen that once a branded vendor has developed Android-based models, it can start to enjoy the benefits brought by the Android application ecosystem.

Nevertheless, most of the vendors are able to obtain the Android source code, so it can be seen that branded vendors need to create hardware differences in order to keep competitive or enhance scale of production in order to lower costs. Since it is observed that Smartphone usage among users is almost the same and there is no significant difference among Smartphones' hardware designs, numerous branded vendors begin to aggressively strengthen their software applications. As a result, the vendors' demand for R&D resources keeps growing because even though Google offers the Android source code, tremendous R&D resources are still required to introduce the platform and develop exclusive applications on the platform.

Owing to its relatively insufficient scale of production, it is observed that HTC began to deploy software applications earlier than other Android supporters. HTC purchased French mobile phone software developer Abaxia in 2010. In 2011, HTC has acquired the UK wireless multimedia transmission platform company Saffron Digital, the US video game service OnLive Game System, and graphics company S3 Graphics and invested in the Taiwanese music platform KKBOX. Moreover, through the operation and expansion of HTCSense.com, HTC began to offer its existing users with cloud application services staring from September 2010.

HTC launched the HTCdev in June 2011, a program that supports third-party software developers through releasing the HTC Sense SDK (Software Development Kit) to create new features and customization capabilities for HTC products. The HTCdev provides modifying tools for the application layer and the framework layer in the upper layer of OS. Following this trend, differentiation of the Android platform is expected to deepen. Moreover, mobile application platform providers, such as Facebook and Twitter, are projected to gain more bargaining power because aiming to create differentiation, branded vendors will further strengthen their cooperation with these platform providers.

Appendix

Research Scope

This research focuses on the competition among mobile OS integrators and branded vendors worldwide, analyzes development of the Smartphone industry in the next three years, as well as the key advantages of major branded vendors in the industry.

Definitions

Product Definitions

Smartphone

Smart Cellular Devices provide personal information management and include Smartphones as well as PDAs with built-in mobile communications functionality. Smartphones mainly provide cellular functionality and are equipped with built-in personal information management. The main operating systems encompass Symbian OS, Linux, iOS, Android, Bada, BlackBerry OS, WebOS, and Microsoft OS, including Windows Mobile and Windows Phone 7.

Glossary of Terms

List of Companies