Pestel Analysis of Mobile Phone Industry

Political Mobile phones have now become a tool with which political parties can directly target voters. People with smartphones can now receive video advertisements and messages via the internet. According to the Economic Intelligence Unit (2012), 83% of Americans who own a smartphone or tablet are registered to vote. This new gimmick is called “m-campaigning” and is currently most common in America. Barack Obama and Mitt Romney are both using this as a medium for their campaigns. Former French President Nicolas Sarkozy set up a Twitter account to help him in his re-election bid.

This shows the growing importance appreciation of mobile phones by politians. There is potential here for some companies to use this strength as a bargaining tool with governments and potentially charge political parties to have built in apps on the phones. (Economic Intelligence Unit, 2012) “Thanks to location-tracking, potential supporters may receive an automated message urging them to drop in just as they are passing a voter-registration office, or to turn up to a nearby rally” (EIU, 2012) The mobile phone market in Africa is one which is heavily affected by politics.

The more unstable a country is the more the economy is constrained. This has a negative effect on imports going into these countries. Africa has a history of political instability and coups. According to AfricaGoodNews. com the last few decades have seen a huge decline in the number of war torn countries. The number of countries in Africa considered completely(11) and partially(34) free today has risen tremendously since 1972(3 and 10 respectively). These figures suggest that, from a political point of view at the very least, Africa has turned a major corner. A new more stable standard of life looms over the horizon.

This may signal a new era of stability in the continent. (AfricaGoodNews. com) According to Techwireasia. com China is the biggest telephone market in the world. They boast over 1 billion mobile phone subscribers. However political factors have a huge influence on the market. The three biggest players in the market China Mobile, China Unicom and China Telecom are majority-owned by the Government. This can be a potential oportunity or threat. It can be an opportunity as long term agreements with these providers can cement a companies place in the market and provide a platform for further growth.

On the other hand these companies in the next few years may begin to promote and seek to make deals with China based manufucturers and slowly dilute the market share of the market leaders. (Techwireasia. com, 2012) Economical The global smartphone market is quite an competitive market. Across the globe people are paying high prices for these products. In Ireland the prices for the top three phones on the market are the HTC One X (€519. 99), the Samsung Galaxy SIII (€569. 00) and the iPhone 5(€579. 99) (Carphone Warehouse, 2012). These phones are in excess of €500 to buy which is expensive to the average person.

At such a high price, such goods are very sensitive to a customer’s economic situation. We will look now at such economic indicators which could influence sales in this industry. The growth of an economy can be measured by its Gross Domestic Product(GDP). According to figures released by Trading Economics (2012) the GNP in the Euro area is -0. 4%. This figure represents the effect of the financial and economic crisis Europe now finds itself in. European countries like Italy(-2. 6%), Greece(-6. 3%), Portugal(-3. 3%) and Spain(-1%) are all in recession.

Other countries which have a positive GDP are experiencing very slow growth like Germany(0. 5%), France(0. 25%) and Austria(0. 2%). The smartphone industry will suffer in Europe due to these figures and sales growth will be slowed significantly. These figures can be used to highlight countries and regions where economic growth is strong. It is shown in tables 2,3 and 4 (Appendices) that there is strong economic growth in Asia, Eastern Europe and Africa. (Trading Economics, 2012) These are areas in which the mobile phone industry should concentrate marketing strategies.

Countries which show huge market opportunities are China, India and Australia. These countries are booming.

• China has a population of 1. 3 billion and GDP of 7. 4%.
• India has a population of 1. 2 billion and GDP of 5. 5%.

The mobile phone industry should place huge emphasis on trying to gain a share of these expanding markets. Africa is a continent known more for its poverty than prosperity. However, it is a continent with great potential. From an economic perspective many countries are showing strong economic growth such as Rwanda and Nigeria for example which have a GDP of 9. % and 6. 3% respectively. “Over the past decade six of the world’s ten fastest-growing countries were African.

In eight of the past ten years, Africa has grown faster than East Asia, including Japan” (The Economist, 2011) If we look at unemployment figures released by the IMF (2012) we can see a similiar trend that shows unemployment rising across europe with the notable exception of Germany. The rate for the euro area for the second quarter of 2012 is 11. 2%, up from 7. 6% in 2007. Rates in North America don’t look too good either with Canada at 7. 2% and US at 8%.

Again we can see that the shining lights are in Asia with China, Korea and Japan showing the lowest unemployment rates (need figures?? ). Even though many of the industry’s products are made in Asia, but the markets over there seem to have the most potential to grow. Socio-Cultural The way we use phones is constantly changing. A recent OECD publication goes into great detail about how people are using the internet and mention a study called the Global Internet Phenomena Report in Canada (OECD, 2012). Table 1 in the Appendices show that people’s demand for real time entertainment is growing rapidly over the last few years.

In 2012 the video streaming service Netflix accounted for 32. 9%, almost one third, of all downstream traffic in the United States. This suggests that consumer preferences are moving towards high quality video streaming and audio features. People want more entertainment from their phone. There is an opportunity the industry to notice this and focus resources on achieving these demands. (OECD, 2012) There is surely a fear amongst those companies in the market that somebody is going to come along with a new product which yet again revolutionises what we define as a mobile phone.

The good news for the market is that even though technology and demands are constantly improving and increasing we feel it is worth mentioning that a mobile phone is still an essential device for almost everybody. Nowadays people have a wide selection of devices with which to use the internet, blackberrys, iphones, pcs, macbooks, ipads and tablets. Everyone has their own favourite device. Some people have switched from pc to mac. Some people prefer tablets. But everybody needs a phone and its capabilities seem to be consolidating all those of other devices.

It can send e-mails, it can browse the web, it has Facebook and Twitter, it has live tv, it can be a music player etc. There is very little you can no longer do on a phone. From a social point of view there is nothing that could threaten the need for mobile phones Environment Environmental issues are becoming more prominent in the mobile phone industry in recent times. The WEEE Directive was introduced in the EU 2005 whereby any waste electrical or electronic equipment can be returned to the retailer free of charge provided that you purchase an item similar to the returning item (Selin & VanDeveer, 2006).

This means to help the environment, mobile phone companies are required, by law, to take unwanted mobile phones. It is estimated that two million phones will be replaced this year causing 2,000 tons of waste (Kavanagh Environmental), proving it is anthropogenic what has caused radiation issues. For several years now, many people have speculated about the dangers of radiation from making calls. The main worry is that this could be a cause of cancer. It is reported that the risk of gliomas (brain cancer) has increased by 40% since the introduction of mobile phones (Kovach, 2011).

Radiation from mobile phones may have serious consequences to humans as it is causing the population of bees to decline who are essential for crop growth preventing food shortages (Lean & Shawcross, 2007). Legal There is a lot of legislation associated with the mobile phone industry. Patents are currently a big advantage in the mobile phone industry. [pic] Source: The Atlantic, 2012. One can see that the common denominator is Apple. They are the only company which own valuable patents with regards to design and hold a strong market share in the market in which these phones are sold.

According to the Atlantic (2012), Apple are making the lions share of operating profits while Samsung and HTC are the chasing pack. Ownership of these patents is a competitive advantage. Issues arise again and again over patents, which is most notably seen in the Apple versus Samsung court case, which only came to a final decision in recent weeks. According to the US Daily Mail, Samsung had to pay $1. 05 Billion to Apple for copying their iPhone in the manufacturing of the Samsung Galaxy range (Murphy, 2012).

A law went into effect in San Francisco early last year which required that all retailers must display how much radiation each phone emits (Kang, 2010). With just under 300 million Americans using mobile phones, this is something which has the potential to hit the industry very hard if any significant study shows a link between phone use and cancer (Kang, 2010). The EU has introduced new legislation in the last few years aimed at significantly reducing the cost of making international calls and roaming. It is now 68% cheaper to make a call while abroad than it was in 2006 and it is 81% cheaper to receive a call.

The price of text messages has been reduced by 60% (Europa, 2012).

References

• Economic Intelligence Unit (2012), ‘World Politics: Spreading the m-word’, ABI/ INFORM Global. Available Online at: http://search. proquest. com/abiglobal/docview/926036961/139DAC0C8916F0BFAF4/18? accountid=40346 [Accessed 10th October 2012]
• Africa Good News (2012), ‘Fast facts and quick stats about Africa’ AfricaGoodNews. com. Available Online at: http://www. africagoodnews. com/africa/facts.html
• [Accessed 16th October 2012] OECD (pg. 24, 2012) ‘OECD Internet economy outlook’ Available at: http://www.keepeek. om/Digital-Asset-Management/oecd/science-and-technology/oecd-internet-economy-outlook-2012/expanding-connectivity-and-measuring-the-internet-economy_9789264086463-3-en [Accessed 4th October 2012] Techwireasia. com (2012)
• ‘An in-depth analysis of China’s mobile phone market’ Techwireasia [Online] Available at: http://www. techwireasia. com/2733/an-in-depth-analysis-of-chinas-mobile-phone-market/ [Accessed 12th October]
• Carphone Warehouse (2012), Pay as you go smartphones, Carphonewarehouse. ie [Online] Available at; http://www. carphonewarehouse. ie/category/Pay-As-You-Go-Smartphones/1_3 [Accessed 15th October 2012]
• Europa (2012) ‘Travelling in Europe 2012-2013’ Europa. eu [Online] Available at; http://europa. eu/travel/comm/index_en. htm#phone [Accessed 3rd October 2012] IMF (2012)
• ‘Principal Global Indicators’ IMF. org [Online] Available at: http://www. principalglobalindicators. org/default. aspx [Accessed 4th October 2012] Trading Economics (2012), GDP growth rates, Available at: http://www. tradingeconomics. com/gdp-growth-rates-list-by-country [Accessed 4th October 2012]
• The Economist (2012) ‘After decades of slow growth, Africa has a real chance to follow in the footsteps of Asia’ The Economist[Online] Available at: http://www. conomist. com/node/21541015 [Accessed 18th October 2012] Atlantic. com. (2012, August).
• The State of play in the mobile industry in one venn diagram. Retrieved October 1, 2012, from The Atlantic: http://www. theatlantic. com/technology/archive/2012/08/the-state-of-play-in-the-mobile-phone-industry-in-one-venn-diagram/261712/ Europa. (2012). Travelling in Europe 2012-2013.
• Retrieved October 16, 2012, from Europa: http://europa. eu/travel/comm/index_en. htm#phone Kang, C. (2010). Cell Phone Indusrty attacks San Francisco’s ruling on radiation. The Washington Post Kavanagh Environmental. (n. d. ). Environmental Objectives.
• Retrieved October 2, 2102, from Kavanagh Environmental: http://www. kavenv. ie/environment. html Kovach, S. (2011, May 31). Cell Phones may Cause Cancer.
• Retrieved OCTOBER 1, 2012, from Business Insider: http://www. businessinsider. com/cell-phones-cause-cancer-2011-5 Lean, G. , & Shawcross, H. (2007, April 15). Are Mobile Phones wiping out our Bees? Retrieved October 4, 2012, from The Independent: http://www. independent. co. uk/environment/nature/are-mobile-phones-wiping-out-our-bees-444768. html
• Murphy, D. (2012, October). Samsung losing Apple Court Case. Retrieved October 16, 2012, from Mobile Marketing: http://www. obilemarketingmagazine. com/content/samsung-loses-apple-court-case
• Selin, H. , & VanDeveer, S. D. (2006, December). ABI/INFORM Global. Retrieved October 1, 2012, from ProQuest: http://search. proquest. com. ezproxy. wit. ie:2048/abiglobal/docview/224017129/13 99337313516FFA994/1? accountid=40346 Appendices Table 1:
• Aggregate Traffic Compisition, North America [pic] Source: (OECD, 2012) Table 2: GDP in Asia 2012 Q2 [pic] Source: (TradingEconomics. com) Table 3: GDP in Eastern Europe 2012 Q2 [pic] Source: (TradingEconomics. com) Table 4: GDP in Africa 2012 Q2 [pic] Source: (Tradingeconomics. com)