Continually falling input prices mixed with recovering demand from a growing economy is projected to push down prices at a slower rate during the three years to 2017.
Los Angeles, CA (PRWEB) November 04, 2014
Satellite phones have a buyer power score of 4.1 out of 5, which indicates a stable purchasing environment with declining costs and negotiating room. Buyers benefit from consistently falling prices due to the declining cost of inputs and drops in demand for satellite phones. “Due to the declining price of semiconductors and electronic components, the largest input for manufacturers, suppliers are able to reduce prices,” says IBISWorld procurement analyst Andrew Krabeepetcharat. “Additionally, technological change has made satellite phones less costly to produce, which has allowed suppliers to pass on their cost savings to buyers.”
Changes in demand from downstream markets have also placed some downward pressure on the price of satellite phones. As the government is the largest purchaser of satellite phones, declines in government spending during the past three years have prompted satellite phone suppliers to reduce prices. Also, some declines in demand can be attributed to the growing cellular network infrastructure. As cellular network coverage continues to grow, buyers require less satellite services because they are now within range of a network. “Overall declines in demand have benefited buyers, prompting suppliers to reduce prices,” adds Krabeepetcharat. “However, the recovering economy has prompted many businesses to invest in more activities in remote locations, which has placed upward pressure on demand and mitigating price declines.”
At the same time, new technological substitutes have reduced demand for satellite phones and benefited buyers. The growing popularity of peripherals that allow users to have satellite phone functionality on their smartphones has threatened the market and reduced demand. Because these peripherals are relatively new and are offered by only a few suppliers, buyers do not have a substantial number of options.
Despite steadily declining prices, buyers are harmed by the high level of market share concentration. Due to the high level of barriers to entry, a small number of suppliers (including Inmarsat PLC and Iridium Satellite Phone Communications) control the majority of the market, which reduces the incentive for suppliers to compete on price. Also, because only a handful of companies manufacture satellite phones, buyers are less able to negotiate on price because there are fewer options. For more information, visit IBISWorld’s Satellite Phones procurement category market research report page.
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IBISWorld Procurement Report Key Topics
This report is intended to assist buyers of satellite phones. Satellite phones are mobile phones that connect to satellites instead of local or ground based cell sites. Satellite phones are beneficial in that they are not affected by weather conditions and can be used in almost any location. They are used by government organizations, shipping companies and search and rescue organizations.
Executive Summary
Pricing Environment
Price Fundamentals
Benchmark Price
Pricing Model
Price Drivers
Recent Price Trend
Price Forecast
Product Characteristics
Product Life Cycle
Total Cost of Ownership
Product Specialization
Substitute Goods
Regulation
Quality Control
Supply Chain & Vendors
Supply Chain Dynamics
Supply Chain Risk
Imports
Competitive Environment
Market Share Concentration
Market Profitability
Switching Costs
Purchasing Process
Buying Basics
Buying Lead Time
Selection Process
Key RFP Elements
Negotiation Questions
Buyer Power Factors
Key Statistics
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