Analysis of competition in the mobile phone markets of the United States and Europe

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Volume Title
School of Economics | Master's thesis
Date
2011
Major/Subject
International Business
Kansainvälinen liiketoiminta
Mcode
Degree programme
Language
en
Pages
112
Series
Abstract
Competition in an economic context is a widely studied phenomenon with a significant body of accumulated research and theory. However, competition in the mobile phone industry, despite its prevalence in public discussion, has received significantly less attention in academic research. Within the international business (IB) context there are very few academic studies that seek to analyze and compare the different geographical mobile phone markets from the viewpoint of competition. This thesis examines competition in the mobile phone markets of the United States and Europe in light of interviews and secondary data covering years 2002 - 2011. The framework used for the analysis is founded on concepts drawn primarily from industrial organization (IO) economics, IB theory and micro-economics. The first part of the thesis gives an overview of the U.S. and European mobile phone markets and the second part focuses specifically on Nokia, its actions and performance on the U.S. market. The findings reveal that the U.S. and European mobile phone markets are fundamentally different. Firstly, while in Europe several parallel sales channels exist, the U.S. market is dominated by mobile operators that control access to the end customer. Secondly, in the U.S. market phones are generally sold heavily subsidized and bundled, and either under the operator brand or co-branding agreements. In addition, the U.S. market has historically split in two technologies, GSM and CDMA, as opposed to Europe where GSM is the dominant technology. The analysis of Nokia in the United States shows that the company’s problems appear to be related to the very characteristics of the U.S. market and the way Nokia has reacted. First and foremost, Nokia has had a difficult relationship with the operators who have required tailoring, technology variations etc. In addition to its focus on GSM, Nokia seems to have refused to tailor for operators and insisted on sales under the Nokia brand. Finally, over the years, Nokia’s situation has been complicated by occasional disputes related e.g. to immaterial property rights and recently problems in developing and having operators represent especially Nokia’s high-end models.
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Keywords
competition, mobile phone industry, United States, Europe
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