The strategy of the players within the high-end smart phone war of the last decade or so seems clear: Absolute hegemony over the digital ecosystem, infrastructure, and data upon which the devices rely with total control of the hardware intellectual property. Whether it is an Iphone paired to the Apple store, or an Android device connected to the Google Play store, the user is locked in.
The closed application ecosystem combined with the contracts commonly required to access the most functional mobile networks with the largest carriers, Verizon and AT&T, greatly simplifies common strategic concerns. New entrants are essentially a non-issue for a variety of interconnected reasons, not the least of which is the sheer size of the players. Apple and Google both are sitting on massive cash reserves and have all the benefits normally afforded to incumbents. So, at least for the near future, the industry seems to be dominated by two major players, with Windows phones perhaps creeping in at the margins.
With the smaller players structurally kept at bay, the major players are left to try and outmaneuver the other. The most recent iteration comes in the with the seconds major round of patent squabbles between Apple and the most popular Android handset provider, Samsung. Apple and Samsung have the first and second highest handset customer retention rates, respectively. So, largely being unable to whittle away at each other’s customer base through their products, the two parties have employed legal measures to the tune of some $1.5 and $2bn in separate patent suits.
With the US market reaching what some consider a near saturation point, developing countries offer a significant opportunity for growth outside of the competitive clinch occurring in US markets. BRIIIC nations are expected to contribute to “70 to 80 percent” of near term smart phone sales growth, growing at 19% annually through 2016. So, the question becomes, will the major players in the US market be able to retain their dominance in the face of surging international demand, or will other large players develop sufficiently to challenge them?