1. Cole Bardreau John Knisley Laila Judeh Teemu Tiitinen Smartphone Industry

2.  Brief History  Industry Analysis  Apple vs. Samsung  Advertising Strategies  Raw Data Analysis  Recommendations Agenda

3. Why Smartphones?  Use the product everyday  Global growth of 23.6%  High Global competition; Mature US market.  Global industry of over $265 Billion  In 2015, 1 Billion Smartphones will be sold globally

4.  "a handheld device that enables users to store and retrieve e-mail, contacts, appointments, tasks, play multimedia files, games, exchange text messages, browse the Web, and more“  Mobile phones with advanced PC-like capabilities  Independent operating systems and allow for installation of software applications by third parties  Android, Windows Phone, and iOS What is a “Smartphone”?

5.  “Mr. Watson, come here. I want to see you”- Alexander Graham Bell (March 10 th 1876)  Motorola introduced 1 st handheld mobile phone on April 3 rd 1973  “Smartphones” came around in the 1990s Brief History

6.  Credited as 1 st “Smartphone”  Sale to public August 16 th 1994  Touchscreen & email  Only sold 50,000 units in 6 months of being on the market  Led the way for future… SIMON

7.  Term “smartphone” first coined by Ericsson in 1997  Apple is credited for making it a mainstream product  Growing due to increased income in emerging markets The Evolution

8. Industry Analysis

9. About the Industry The Supply Chain  Key Economic Drivers  Disposable income  Supply Industries  Parts and manufacturing  Demand Industries  Consumers tastes and preferences  Related Industries  Telecommunications (Verizon, AT&T, T-Mobile etc.)  Smartphone App Industry

10. The Supply Chain

11. Global Market Share  Samsung – 25.2%  Apple – 11.9%  Huawei – 6.8%  Lenovo – 5.4%  Xiaomi – 5.1%  Others – 45.5% Who are the players?

12.  HHI  Global- 902.07  US-2787.7  CR 4  Global-49.3%  US-85.3%  Fragmented so extremely competitive globally  US dominated by few firms Competition

13. Around the World

14. SWOT Analysis

15.  Apple- 42.5%  Samsung-29%  LG-7%  Motorola-6.8%  HTC-6.1%  Blackberry-2%  Nokia-2%  Others-3.4% Market in the U.S.

16.  After closer examination, it is the Android products that is majority  Much closer in US than globally  Clearly dominated by 2 players U.S. Market

17.  Innovators (2.5% of market)  Early Adopters (13.5% of market)  Early Majority (34% of market)  Late Majority (34% of market)  Laggards (16% of market) Industry Growth in the U.S.

18.  The number of new smartphone users added each year will be fewer  The next 60-70 million users will be older and have less disposable income  Sales will become driven by replacement and upgrade sales  Importance of innovation and advertising adding utility! Future of Industry in U.S.?

19. Advertising Strategies

20.  This type of advertising redistributes consumers among brands but does not shift consumer preferences.  Very common when two main competitors are competing for market share. Combative Advertising

21.  Prisoner’s dilemma  Advertising could also be used to keep out new firms when they enter Combative Advertising Market shares 25.2%, 11.9% Samsung would steal market share from Apple Apple would steal market share from Samsung ??,??

22. Persuasive Advertising informative persuasive reminder  Characteristic of mature markets.  Does not increase the size of the “pie”.  Ads are not informing people about what smart phones are.

23. Comparative advertising

24.  Advertising is a means of conveying information to consumers.  Reduce consumers’ search costs  Reduce price dispersion  Direct vs indirect signaling Informative view

25.  Leads to more consumers demanding the product  more profit. Informative view$Quantity MC Demand with low advertising Profit Demand with high advertising

26.  Price references imply value  People will not search for better deals  People will assume it is the best Direct advertising (Samsung)

27.  Advertising can be used to signal quality  Only high quality companies can afford to advertise a lot.  Dominantly experience goods  3 Reasons for indirect info:  1) signaling efficiency  2) match products to buyers  3) repeat business effect Indirect Signaling (Apple)

28.  Advertising creates product differentiation  Demand becomes more inelastic, consumers have higher WTP.  Can lead to higher prices  more profit. Persuasive View Profit Demand with high advertising $Quantity MC Demand with low advertising

29. Apple vs Samsung

30.  Stable preferences  May value prestige  Product Placement Complimentary View

31. Raw Data Analysis

32.  Analyze Primetime Advertising Data 2014  Industry’s Primetime Advertising  Investigate Apple vs Samsung  Similarities  Differences Overview

33. Two Major Players – United States Apple & Samsung 58% of Advertisements Consistent with smartphone users Nearly 70% Apple: Nearly 900 Primetime ads Samsung: Nearly 800 Primetime ads Primetime Advertisements: Industry

34.  Apple  IOS operating system  Apple iPhone  Lifestyle  Samsung  Android operating system  Samsung Galaxy  “Be Different” Apple vs. Samsung

35.  Samsung Expenditures  Total $ Spent  $124 M  Average $ per Ad  $174,788  $ per second  $4,956 Primetime Advertising Expenditures - 2014  Apple Expenditures  Total $ Spent  $162 M  Average $ per Ad  $193,107  $ per second  $4,214

36. Apple IPhone 6 release September January, February, March –Dormant 2015 trends Samsung Consistent Samsung Galaxy S5 release April Similar advertising during release Monthly Analysis

37. Apple Beginning of week Decrease Friday & Saturday Increase Saturday & Sunday Samsung Consistent Weekend increase Day of Week Analysis

38. Apple & Samsung similar strategy Target 8PM – 10 PM Weekly shows After dinner Time of Day Analysis

39. Apple Consistent Advertising CW – Targets weekly audience Samsung Targets 4 major networks Popular shows Network Analysis

40. Apple Targets: Drama Documentary Advertising Samsung Targets: Drama, Reality, Comedy Documentary Advertising Type of Show Analysis

41. In Depth

42. Apple Leads every spending category Sports, Reality, Comedy High CPM Drama Spending Documentary Spending Samsung Sports High CPM Consistent with number of ads Average Spending: Type of Show

43. Apple dominates the primetime advertising Both similar time of day strategies Apple’s spending is not consistent with number of ads per type of show Samsung's advertising is consistent Advertising war lies within the commercial content What can we conclude?

44. Recommendations

45.  Samsung could increase product placement to become more “prestigious”  Global growth will continue but North America market share is dwindling (compared to rest of world) Recommendations

46.  Smartphones need to expand to emerging markets  Focus on persuasive in US  Focus on informative globally  App industry (development) Recommendations