The applications business now is said to have a winner take all structure, where one or two providers have 70 percent to 90 percent market share. The smartphone business long has been dominated by Apple and Samsung. The telecom business likewise seems to operate with a “few providers” structure.
So it is hard to ignore those basic observations when formulating business strategy, almost anywhere in the internet and communications ecosystems. AT&T, for example, now seems to see such limited results from offering a robust array of phones that it is simplifying its line.
BayStreet Research analyst Cliff Maldonado argues that while AT&T is streamlining its phone lineup, since it does not see too many marketing advantages from offering “AT&T-only” phones, while Verizon still appears to believe that device differentiation provides advantages.
Nor does AT&T feature some traditional device promotions (buy one, get one free, phone-service bundles). In part, those changes reflect a mature market where customers understand they can make a phone decision separate from a service provider decision (using unlocked phones), since service providers no longer require such device bundles.
Internet and communications markets, at least for the foreseeable future, will be highly concentrated in terms of market leadership.
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