MONOPOLISTIC COMPETITION \IN MOBILE O/S MARKET SMARTPHONE OPERATING SYSTEMS

TABLE SHOWING MOST OF THE CURRENT MOBILE OPERATING SYSTEMS FOR SMARTPHONES, PDAS AND NETBOOKS IN 2010

SHARE OF WORLDWIDE 2010 Q4 SMARTPHONE SALES TO END USERS BY OPERATING SYSTEM, ACCORDING TO CANALYS.[6] OPERATING SYSTEMS THAT CAN BE FOUND ON SMARTPHONES INCLUDE NOKIA'S SYMBIAN, GOOGLE'S ANDROID, APPLE'S IOS, RIM'S BLACKBERRY OS, MICROSOFT'S WINDOWS PHONE, LINUX, PALM/HP'S WEBOS, SAMSUNG'S BADA, NOKIA'S MAEMO AND MEEGO AMONG MANY OTHERS. ANDROID, BADA, WEBOS AND MAEMO ARE BUILT ON TOP OF LINUX, AND IOS IS

DERIVED FROM THE BSD AND NEXTSTEP OPERATING SYSTEMS, WHICH ARE ALL RELATED TO UNIX. FEATURES OF THE MARKET : DIFFERENTIATED OFFERING - MC FIRMS SELL PRODUCTS THAT HAVE REAL OR PERCEIVED NON-PRICE DIFFERENCES. SAME IS THE CASE WITH THIS MARKET. THE SYSTEMS PERFORM THE SAME BASIC FUNCTIONS BUT HAVE DIFFERENCES IN QUALITIES SUCH AS TYPE, STYLE, QUALITY, REPUTATION, APPEARANCE. FOR EXAMPLE APPLE HAS AN EDGE IN TERMS OF REPUTATION IN THE MARKET FOE COMING OUT WITH INNOVATIVE PRODUCTS, BLLACKBERRY O/S IS OPTIMISED FOR EFFECTIVE COMMUNICATION AND ANDROID HAS AN ADVANTAGE OVER BOTH INNOVATION AND PRICE. WHILE COMPANIES SUCH AS APPLE AND

RIM PROMOTE THEIR O/SS THEMSELVES AS THEY COME BUNDLED UP WITH THEIR OWN HANDSETS , O/SS LIKE ANDROID AND SYMBIAN ARE PROMOTED BY HANDSET MANUFACTUERES. CONSIDERABLE NUMBER OF FIRMS - A PRODUCT GROUP IS A "COLLECTION OF SIMILAR PRODUCTS. THERE ARE MANY FIRMS IN EACH MC PRODUCT GROUP AND MANY FIRMS ON THE SIDE LINES PREPARED TO ENTER THE MARKET. THE FACT THAT THERE ARE "MANY FIRMS" GIVES EACH COMPANY THE FREEDOM TO SET PRICES WITHOUT ENGAGING IN STRATEGIC DECISION MAKING REGARDING THE PRICES OF OTHER FIRMS AND EACH FIRM'S ACTIONS HAVE A NEGLIGIBLE IMPACT ON THE MARKET. FOR EXAMPLE, A FIRM COULD CUT PRICES AND INCREASE SALES WITHOUT FEAR THAT ITS ACTIONS WILL PROMPT RETALIATORY RESPONSES FROM COMPETITORS. THIS IS AN

CONTRADICTION IN OUR CASE AS FIRMS ARE NOT MANY IN NUMBER BUT STILL THEY CAN CUT THEIR PRICES AND INCREASE THEIR SALES. BUT THIS MAY OR MAY NOT INCREASE THEIR MARKET SHARE. THIS IS BECAUSE THOUGH THE PRINCIPAL COMPANIES (O/S) PRODUCING THEM MAY BE FEW IN NUMBER BUT THERE ARE A LARGE NO OF HANDSET MANUFACTURERS WHO HAVE VARIOUS OFFERINGS AT DIFFERENT PRICES. THIS POINT SPECIFICALLY REFERS TO THE CASE OF SYBMIAN , ANDROID AND WINDOWS PHONE O/S . HANDSET MANUFACTUERERS SUCH AS NOKIA AND SAMSUNG TEND TO OFFER THE SAME O/S ON TWO OR MORE DIFFERENT MODELS WHICH DIFFERENT HARDWARE FEATURES. THEREFORE THESE FIRMS INCREASE THEIR SALES BY OFFERING MASS MARKET PRODUCTS. ON THE OTHER HAND COMPANIES SUCH AS RIM AND

APPLE OFFER PRODUCTS TO NICHE MARKETS WHICH INCLUDE INDIVIDUALS WITH HIGHER DISPOSABLE INCOMES AND THE FIRMS THEREBY CHARGE HIGHER PRICES . THIS IMPLY THAT THOUGH ABSOLUTE SALES OF FIRMS LIKE ANDROID AND SYMBIAN MAYBE HIGH NET SALES OF APPLE AND RIM WILL BE HIGHER. FREEDOM OF FREE ENTRY AND EXIT - THIS FEATURE LEADS TO STIFF COMPETITION IN MARKET. FREE ENTRY INTO THE MARKET ENABLES NEW FIRMS TO COME WITH CLOSE SUBSTITUTES. IN THE MARKET IN QUESTION (MOBILE O/S) FREE ENTRY IS POSSIBLE BUT FREE EXIT IS NOT . SUCH AN EXIT WILL NOT ONLY BE ACCOMPANIED BY LOSS OF REVENUE BUT ALSO BY LOSS OF REPUTATION AND CONSUMER GOOODWILL. THIS IS BECAUSE MOST OF THE FIRMS INVOLVED HAVE DIVERSIFIED FROM SIMILAR TRADES AND AN

UNWANTED EXIT CAN LEAD TO ADVERSE EFFECTS ON THE FIRMS OTHER PRODUCT LINES. NON-PRICE COMPETITION / SEELLING COSTS - IT IS A UNIQUE FEATURE OF MONOPOLISTIC COMPETITION. IN SUCH TYPE OF MARKET, DUE TO PRODUCT DIFFERENTIATION, EVERY FIRM HAS TO INCUR SOME ADDITIONAL EXPENDITURE IN THE FORM OF SELLING COST. THIS COST INCLUDES SALES PROMOTION EXPENSES, ADVERTISEMENT EXPENSES, SALARIES OF MARKETING STAFF, ETC. IN THE MOBILE O/S MARKET COMPANIES SUCH AS RIM AND APPLE SPEND A LARGE AMOUNT OF MONEY ON ADVERTISING WHILE INCASE OF OTHER FIRMS SUCH AS SYMBIAN AND ANDROID PUBLICITY IS MOSTLY DONE BY THE HANDSET MANUFACTURERS. THE FOCUS OF THE ADVERTISEMENTS IS MOSTLY ON THE

DIFFERENTIATING FEATURES SUCH AS THE LOOK AND FEEL OF THE PRODUCT, TECHNOLOGICAL INNOVATIONS , SUPPORT FOR THIRD PARTY APPLICATIONS THROUGH THEIR ONLINE APPS STORES ETC. PARTIAL INTERDEPENDENCE AMONG FIRMS LARGE NUMBERS OF FIRMS ARE DIFFERENT IN THEIR SIZE. EACH FIRM HAS ITS OWN PRODUCTION AND MARKETING POLICY. BUT IT IS NOT THE CASE ALWAYS. FOR EXAMPLE IF APPLE COMES OUT WITH A NEW PRODUCT WITH VASTLY SUPERIOR FEATUES, THE SAME MAY GAIN MORE MARKET SHARE DESPITE ITS HIGHER PRICES. THIS WILL CAUSE THE OTHER FIRMS TO INCREASE THEIR EXPENDITURE ON RESEARCH AND DEVELOPMENT TO COME OUT WITH A PRODUCT COMPETITIVE TO THAT OF THE APPLES.

PRICE COMPETITION THE COMPANIES COMPETE WITH EACH OTHER ON THE BASIS OF PRICE. THIS IS ALSO THE REASON WHY THE DEMAND CURVE FACING A FIRM IS DOWNWARD SLOPING. IF THE PREMIUM CHARGED ON A PRODUCTS BY THE PRODUCER FIRM IS EXORBITANT, CONSUMERS TEND TO MOVE AWAY FROM THE SAME TOWARDS ITS SUBSTITUTES OR DIRECT COMPETITORS. IS THE REASON WHY SYMBIAN HAS LOST ITS MARKET LEADERSHIP POSITION TO ANDROID. AS MENTIONED EARLIER FIRMS BASE THEIR PRICING STRATEGY UPON THE NATURE OF MARKETS THEY INTEND TO SERVE. APPLE AND RIM TEND TO SERVE A SMALL MARKET OF GADGET FREAKS AND BUSINESS PROFESSIONALS RESPECTIVELY AND HENCE CHARGE A HIGHER PRICE. PRICES OF ANDROID AND SYMBIAN POWERED DEVICES ON THE

OTHER HAND DEPEND ON THE HANDSET MODEL THEY ARE BEING OFFERED UPON. FUTURE INDICATIONS BY THE END OF THE FISCAL 2010-2011 ANDROID HAS TAKEN OVER SYMBIAN AS THE MARKET LEADER. THIS IS BECAUSE OF ITS BETTER USER INTERFACE AND STRATEGIC PRICING BY ITS PROMOTERS THE OPEN HANDSET ALLIANCE. APPLE AND RIM ON THE OTHERHAND WILL CONCENTRATE ON NICHE MARKETS. NEW ENTRY TO THE INDUSTRY WILL BE DIFFICULT BECAUSE : 1. GROWING USER BASE OF EXISTING FIRMS 2. ALLIANCES BETWEEN OPERATING SYSTEM DEVELOPERS AND LEADING HANDSET MANUFACATURERS (OPEN HANDSET ALLIANCE AND NOKIA-MICROSOFT PARTNERSHIP) THEREBY CREATING A SEMIMONOPOLY TYPE OF SITUATION

3. REQUIREMENT OF LARGE AMOUNT OF FUNDS FOR R&D FOR THE DEVLOPMENT OF NEW SYSTEMS WHICH WILL ACT AS BARRIER TO ENTRY