Gartner Research

Market Trends: Economics of Connections and Addressing Regional Price Sensitivities Increase Smartphone Profits

Published: 29 July 2016

ID: G00300374

Analyst(s): Werner Goertz, Roberta Cozza

Summary

Ongoing margin erosion in smartphones requires a new perspective on profitability and value creation. Strategic marketers should extract value from the economics of connections and position products addressing channel and price sensitivity in regional markets.

Table Of Contents

Introduction

Market Trend

  • Smartphones Continue to Be Users' Primary Portal for Connectivity
  • Market Structure Trend
    • The Economics of Connections Unlock New Revenue and Profit Opportunities
    • Ownership of a Device Ecosystem Allows for Extraction of Profits
    • Android Smartphone Vendors Create Miniecosystems for Strategic Advantage
    • Personal Devices Are Loss Leaders to Drive Users to Core Business Assets
  • Buyer Trend
    • Addressing Global Buyer Behavior With Efficient Channel Mix Optimizes Distribution Costs and Profit Margins
  • Regional Trend
    • Improve Profits by Responding to Changes in Upgrade Behavior
    • Improve Global Profitability by Responding to Regional Price Sensitivity

Vendors to Watch

  • Apple
  • Samsung
  • Xiaomi
  • LeEco
  • Huawei

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