Porter's+Five+Forces

http://0-galenet.galegroup.com.library.svsu.edu/servlet/BCRC?vrsn=unknown&rcd=sic&locID=lom_saginawvsu&brv=3660&srchtp=ind&c=1&iType=sic&mode=i&ste=85&tbst=tsIS&cind=3660+-+Communications+Equipment&tab=1024&docNum=I2501600070&bConts=7970

http://www.consumerreports.org/cro/electronics-computers/phones-mobile-devices/cell-phones-services/cell-phone-service-buying-advice/cell-phone-service-brands/cell-phone-service-brands.htm

http://www.nytimes.com/2009/10/19/technology/companies/19nokia.html

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Threat of New Entrants
-High Economies of Scale -Patents -Brand Identity -Switching costs

Industry Rivalry
-Brand Identification -Switching costs -Market Growth

Bargaining Power of Suppliers
-Many suppliers

Bargaining Power of Buyers
-Many buyers -Little threat of buyers entering the industry

Threat of Substitutes
No strong substitution from close substitutes. -Payphones: On the decline -Laptops: Not as portable -Internet Cafes: Fixed locations -Home phones?: fixed location

Complementors
-Software developers -Wireless Carriers

The threat of new entrants is low in the telecommunications equipment industry. This is due to the high economies of scale present in most manufacturing industries, the presence of patents on specialized technology, brand identity, and switching costs. The high economies of scale are necessary to offset the large investment in physical capital. For example, at the end of 2008, Nokia had over two billion Euros in their Property, Plant, and Equipment account. An example of patents on specialized technology would be Apple’s patent on Multi-Touch. Industry rivalry among cellular phone manufacturers is low. This is due to brand identification, switching costs, and expected market growth. In the cellular phone industry, brands are easily recognized by consumers, lowering industry rivalry. Rivalry is also reduced by high switching costs. Since cell phone users are typically tied to a phone through a contract, they generally cannot switch their service without a penalty. Also, since manufacturers such as BlackBerry and Apple ship their phones with proprietary software, significant switching costs could arise if a user has a preferred set of applications. Further, the number of cellular phone subscribers has grown significantly in recent years, and that growth is expected to continue. The saturation of the global wireless market was one percent in 1997. The bargaining power of suppliers is low. Due to the firm’s large size, it is able to negotiate with suppliers to get affordable prices. It also has enough bargaining power to choose its suppliers based on environmental responsibility and owner diversity. The bargaining power of buyers is low. The buyers in this market segment are individual cellular phone users. They do not have a credible threat of backward vertical integration, nor do they generally purchase cellular phones in great numbers. Once again, switching costs prevent buyers from having bargaining power. The threat of substitutes for cellular phones is low. Payphone presence in many areas is declining. Home phones could be viewed as a distant substitute to cellular phones, but in the current culture of constant connection, a home phone does not fulfill the communication requirements of consumers who spend any time away from home. Further, payphones and home phones do not have the additional features found on modern cell phones. Internet cafés could also provide a substitute for cellular phones. Internet cafés allow users to access the internet for a fee. This would allow users to telecommunicate with others while away from home. However, internet cafés would not be convenient since users would need to travel to the nearest café. Another possible substitute is the laptop. With the rise of wireless hotspots as well as modems available from wireless providers, the laptop provides much of the functionality of the cellular phone. However, laptops generally do not match the portability of cellular phones. 