Changes in leadership in the mobile phone industry: the case of Asian handset firms catching-up

Abstract

The aim of my thesis is to understand the most important factors behind the so called “catching up” phenomenon, responsible for the great part of the changes in leadership occurring in industries. For the purpose, I will use as example one of the most highly competitive and dynamic sectors, which has revolutionized many theories related to this process: mobile phone industry. The case of mobile phone industry is emblematic, considering that since it was born, wars among handset brands have not stopped and leadership has been carrying on changing. However, an interesting trend has been affecting this industry lately: Western dominance over the sector has started to cease its power to latecomer Asia. Mindful that to be the factory of shoddy toys and low end shoes won’t last forever, this vast continent has made giant steps to slowly upgrade from its low cost manufacturer position in the industry; and now it is able to stand ground to the most developed countries in the world. Asian challenger firms have been capable of speeding up their catching up process, entering simultaneously countries from the developing and developed world, in order to offset their desire of increasing market shares with the necessity of building new competences, respectively. This has been particularly evident in the handset industry since Asian brands have both gained enormous amount of cash replicating the same strategies in other Asian developing countries and engaged in a sequence of successive alliances and acquisitions to be able to instantly access foreign firms’ advanced technology. We have started to be aware of this catching up only lately, with those series of Western brands’ remarkable acquisitions made by the Asian counterparts, which have upsided down world equilibria. My purpose in particular is to show step by step that “much less visible process” which has helped Asian handset companies to raise and has originated the mobile phone industry we are witnessing today. In the first part, I will start by discussing the most prominent theories related to the catch up phenomenon. In particular, I will show how Asian developing countries’ firms, not only regarding mobile phone industry, have been able to better off their indigenous R&D and upgrade their latecomer status by coupling investments in absorptive capacities with the acquisition of foreign advanced technologies. Moreover, a brief introduction of the industry life cycle will be provided, considering that a sector point of view will be used over the entire course of my thesis. In the second part, I will give an excursus over mobile phone industry’s evolution. This way, I will explain in details how Asian firms have been capable of progressively inserting into global handset industry and upgrading from their low cost manufacturers’ position. To be able to prove these statements, and considering the difficulties of finding such information via traditional methods, the following sources have been used: Business Source Complete and Lexis Nexis Academic’s databases; handset firms’ annual reports and newsletters; articles from newspapers or other business oriented reports, such as Wall Street Journal, Forbes, Sole 24 Ore, Financial Times, Businessweek, Asymco, Business Insider, The Economist, etc.; several case studies, almost all from Amity Research Centers; business intelligence sources, like IDC, Gartner, Marketline, Strategy Analytics, etc; and other sources. All these have been used to reconstruct the system of alliances between Western and Asian firms, used by the latters to improve their capabilities and expand. In addition, several online distributors and mobile phone databases have been employed, which provided several information regarding features of devices introduced.