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Plausible Competitive Scenarios Smartphones Market

Plausible Competitive Scenarios Smartphones Market. AGENDA. Current Industry Structure Industry Drivers Future Scenarios Implications for LG. Current Industry Structure: AS IS.

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Plausible Competitive Scenarios Smartphones Market

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  1. Plausible Competitive Scenarios Smartphones Market

  2. AGENDA Current Industry Structure Industry Drivers Future Scenarios Implications for LG

  3. Current Industry Structure: AS IS • The urban market is already seeing saturation in mobile penetration with more than 88% penetration, however rural market still has low mobile penetration • The mobile handset market in India is the second largest market after China. The market is expected to grow at a CAGR of 11.8% from FY 2009 to FY 2016. • Nokia continues to be the leading market participant but there has been a decrease in market share over the last year. • Indian manufacturer Micromax had the highest shipments in FY 2010 after Nokia and Samsung. • Market is fragmented with both Global, Domestic, Low Cost players, with total number of players ballooned to 68 in 2010Nokia, Samsung, Sony Ericsson, LG, Philips, Sharp, Panasonic, Toshiba, Haier, Sanyo, Vizio, Micromaxx, Lava, Karbon, Maxx, INQ , Videocon, BPL, ONIDA, TCL, • Market Share(%) of major players Q3 2010 Others Nokia G’Five Samsung Micromax, Spice, Karbon, Lava

  4. AGENDA Current Industry Structure Industry Drivers Future Scenarios Implications for LG

  5. Multiple forces are shaping the future of handsets & pocket devices* • Mobile broadband technologies(HSDPA, LTE) are emerging as critical necessities • Telcos are aggressively deploying BB pan INDIA • 3G adoption would trigger sales of smart devices Broadband Technologies • Media & entertainment Industry becoming big with DTH, IPTV, Broadband technologies penetrating Digitization • Use of video and other data services will grow as internet data traffic multiples and mobile broadband consumptions increases • iPhone triggers consumption of Apps and others follow Data Traffic • Communications and content will become seamless with open access enabling interaction with any device, service providers • Access of same content with TV, Phone, Tablet • Consequently increasing number of players offer combination of products Convergence • One in five phones and laptops sold will be a Smartphone and a Tablet resp; devices with mobile internet access • Smartphone sales expected to reach more than half a billion by 2014 • Strong growth rates are estimated ~26% CAGR from 2009-2014 • Low Cost Tablets have started to slowly penetrate the market Mobile Pocket Devices Pocket devices : Mobile handsets: smart phones ; PDA’s, Tablets

  6. Both supply & demand side drivers are pushing adoption of mobile devices , however market restraints giving challenges… Pocket devices : Mobile handsets: smart phones ; PDA’s, Tablets

  7. AGENDA Current Industry Structure Industry Drivers Future Scenarios Implications for LG

  8. Along with industry drivers, number of uncertain critical variables will shape future industry scenario To provide dimension that defines possible scenarios Uncertainties surround critical variables… … along drivers around Dominant Themes Mobile Bazaar Fast BB Availability Addressable Market Economic& Regulatory Rise of a CE Patron Device to Device Communication Market Growth Demand for Data Services Clash of Leaders Newer Verticals in Digitization Unified Communication 2 1 3

  9. In face of favorable industry drivers many kinds players would push for their share in huge mobile opportunity High • Global Players : 2 kind of players: • Mobile Manufacturers only Apple, RIM, NOKIA Players who have attained leadership position and are focused on only mobile business • CE Patrons: Players who have a diverse portfolio in Consumer electronic space • Low Cost Players : 2 Kind of players • Chinese players : Chinese handset manufacturers entered India • Home Grown Players : Indian players leveraging china sourcing selling mobile handsets in INDIA • Allied Players: Players from other industries like Telecom Players, DTH players have either entered in handset business or plan to Global players like Google, IBM, Microsoft who are mainly platform players (Internet, Software) are creating ecosystem to be present across all CE devices Global Low Cost Capabilities to Move with Fast Changing Market Chinese Allied Domestic/Home Grown Low Low High Ease to Change/Influence Market structure Size of the Bubble indicates Growth Aspirations, Readiness to Change

  10. Future Competition Scenario - Framework DRIVERS 1 2 • Drivers • Financial goals • Corporate culture • Organizational structure • Leadership team backgrounds • External constraints • Business philosophy What assumptions are made by the competitor’s management team? Competitors Assumption & Perception Motivation Drivers ACTIONS What is the competition doing and what is the competitor capable of doing? Pick 2-3 examples of key players likely to change the war game What are the strengths and weaknesses of the competition? Competitors Capabilities Past & Likely Future Moves 3 4

  11. Illustrative Example : Global players :

  12. Types of players are vying for their share in the mobile opportunity Source:

  13. Types of players are vying for their share in the mobile opportunity Source:

  14. Bipolar Demand from Mature market & untapped market will lead to new entrants & consolidation Fragmented market players with new entrants from allied industry & consolidation/M&A within low cost handset incumbents Clash of Leaders Rise of CE Patron • Paradise lost for Nokia with continuous efforts to make MeeGo strong • Google ruling the Open/free handset OS will collaborate with device maker to lead • Microsoft already • Players like Samsung or Panasonic with deep pockets & very aggressive in growing segments(Smart phones, Tablets) Strong ReplacementGrowth From High IncomeUrban Consumer Strong Growth From UntappedRural Market Mobile Bazaar • Not in near future, but Global leaders like Apple entering niche segment in Urban India • Other Global leaders Nokia, HTC with differentiating strategies to tap bipolar demand • Top 3 Nokia, Motorola, SS continue together to lead • However low cost players Micromax, Lava reaching scale in low segment • Allied players entering market Dell • Followers like LG facing margin pressures Fragmented market with many players

  15. Scenario 1 Mobile Bazaar:

  16. Scenario 1 Mobile Bazaar: CURRENT: 2010 Others Low Cost : 22% Karbon Lava Videcon Onida Micromax Gfive Spice Max Global Players : 78% Others include Sony Ericsson 1.69% Motorola 0.5% Motorola 0.37% Apple 0.05% FUTURE : 2015

  17. Scenario 2 Rise of CE Patrons

  18. Scenario 2 Rise of CE Patrons CURRENT: 2010 Others Low Cost : 22% Karbon Lava Videcon Onida Micromax Gfive Spice Max Global Players : 78% Others include Sony Ericsson 1.69% Motorola 0.5% Motorola 0.37% Apple 0.05% FUTURE : 2015

  19. Scenario 3 Clash of Leaders Most Likely to happen

  20. Scenario 3 Clash of Leaders CURRENT: 2010 Others Low Cost : 22% Karbon Lava Videcon Onida Micromax Gfive Spice Max Global Players : 78% Others include Sony Ericsson 1.69% Motorola 0.5% Motorola 0.37% Apple 0.05% FUTURE : 2015

  21. Potential scenarios have different impact on various players Mobile Bazaar Rise of CE Incumbent Clash of Leaders • They will mostly play in low cost segment and rural markets in future • Struggle for share in urban market but low cost players will stick to low segment • Likely M&A, consolidation leaving only 1-2 strong players Low Cost Players 2 1 3 • Would play niche or partner with strong CE player • Would play niche or die • They will mostly play in low cost segment and rural markets in future Allied Players • If continue to innovate would sustain in market • Will be able to compete on price & differentiation because of size • Would be paradise lost for players like Nokia • Face huge margin pressures if not change strategy Global Players • Within this group followers would get Brand & Cost pressure from Japanese & Chinese players resp. • Take advantage of vast appliance portfolio to leverage convergence • SS or Panasonic have chances to gain • Face huge margin pressures if not change strategy CE Patrons

  22. THANKYOU

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