Competitive Rivalry In Canada's Smartphone Market

Competitive Rivalry

The degree of rivalry in the smartphone market is moderate. The Canadian major competitors in 2015 were Samsung Corp., Apple Inc., LG Crop., BlackBerry Ltd., Microsoft Corp., Lenovo Group Ltd., and HTC Corp (Passport, 2016). Most of them continuously come up with the new smartphones with better features to maintain or gain more market shares. Apple holds nearly 31% of the market and Android runs more than 56% of new smartphone sold in Canada (Passport, 2016). Samsung, Apple and LG have captured more than 87% of the market. This high concentration makes the industry less competitive. Moreover, from 2104 to 2015, the population of Canadians owned a smartphone has increased by about 24% (Catalyst, 2016). As shown in Passport, firms simply expand their market rather than take each other’s market share. Innovation and new technology are the essential parts for the differentiation of the company to gain market share and profits in Canada’s smartphone industry.

Threat of Substitutes

There are many substitutes that compete with the smartphone industry, such as tables, laptops and mobile phones in different brands. The threat of substitute product is very low due to the multi-functionality, services, and apps have already added on the smartphone. And smartphone is portable and easy to operate.

Buyer Power

The wide choices of smartphone result in customers having much more power to switch brands if a company comes out with a specific smartphone that they like. Some Canadian customers have tied into a long-term contract so it is difficult for them to switch to another brand and the penalties are expensive. Therefore, they may not want to change until the contract expires. However, many customers may have an incentive to switch if they are not tied into a contract that they may change