Strong growth in the number of mobile internet connections, along with the continual release of newer, more innovative smartphone models, has facilitated price growth
Los Angeles, CA (PRWEB) March 24, 2015
The smartphone market has a buyer power score of 2.6 out of 5, indicating a relatively even split of negotiation power between buyers and suppliers. According to IBISWorld analyst Kevin Young, smartphone prices have risen at an estimated average annual rate of 4.8% in the past three years, largely supported by a rise in smartphone usage among adults aged 20 to 64. Moreover, suppliers have been investing more in research and development (R&D) to produce more technologically advanced smartphones during the period, driving up their costs, which have been passed down to buyers. Buyers have, however, benefited from rising import penetration.
Consumer demand for smartphones has increased considerably in the past three years, as evidenced by the strong growth in the number of mobile connections during the period. Due to the popularity of earlier generations of smartphones, producers have invested heavily in R&D to develop new and improved smartphones, which are often released on an annual basis. The release of new smartphones with more powerful features prompts many consumers to terminate their contracts and upgrade their phones, which is why wireless carriers vie for exclusivity agreements for vendors' new releases.
The high level of brand equity among many vendors, such as Apple and Samsung, further undermines buyer power by forcing buyers to accept premium, value-based pricing, continues Young. However, the United States is a net importer of smartphones, so the market is also flooded with cheaper imports. Foreign-based manufacturers are actively producing lower-priced smartphone models to siphon a share of the lucrative US smartphone market. Buyers benefit from the wider range of prices made available by import penetration.
Buyers have also benefited from low price volatility during the period. Although smartphones are costly, low volatility in prices indicates that buyers do not face sudden and significant price shifts. Even though vendors release newer and often more expensive versions of smartphones annually, increasing market saturation will stifle extreme price growth in the coming years as consumers become less enthralled with cosmetic updates. For more information, visit IBISWorld’s Smartphones procurement category market research report page.
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IBISWorld Procurement Report Key Topics
This report is intended to assist buyers of smartphones, which are mobile phones that have larger screens, built-in applications and internet access. Smartphones are equipped with operating systems and increased processing power, allowing them to perform functions similar to those of a computer. This report excludes other mobile phones, tablets and laptops.
Recent Price Trend
Product Life Cycle
Total Cost of Ownership
Supply Chain & Vendors
Supply Chain Dynamics
Supply Chain Risk
Market Share Concentration
Buying Lead Time
Key RFP Elements
Buyer Power Factors
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IBISWorld is one of the world's leading publishers of business intelligence, specializing in Industry research and Procurement research. Since 1971, IBISWorld has provided thoroughly researched, accurate and current business information. With an extensive online portfolio, valued for its depth and scope, IBISWorld’s procurement research reports equip clients with the insight necessary to make better purchasing decisions, faster. Headquartered in Los Angeles, IBISWorld Procurement serves a range of business, professional service and government organizations through more than 10 locations worldwide. For more information, visit http://www.ibisworld.com or call 1-800-330-3772.