Industry Analysis Essay

2272 Words Mar 22nd, 2013 10 Pages
Industry Analysis

Our group realized that the Instant Messaging industry is a very competitive industry. We make this conclusion after doing the Michael Porter’s five forces analysis. In overall, five sections of the industry can be described as below:

* The existing rivalries in IM industry is high:
By looking through the source of information online, we figured out that there are many competitors within IM industry. Currently, there are at least 12 major players in the market. Among these 12 major players, we found that some of them exist before the founding of LINE apps, which means that they transformed from desktop IM into mobile IM. However, most of these initially desktop IMs are doing so well in the existing market due
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Basically, IM services are provided to end consumers for free. This issue has thus increased greatly the bargaining power of the consumers because they have no switching cost when transferring from one service platform to another. Also, the industry of IM is much influenced by the network effect. For example, in Japan, the population of LINE users is higher, LINE will benefit from its network effect and it tends to attract more users from Japan to join LINE. LINE generates higher value when there are more users joining in their database. However, Whatsapp is one of the IM service providers that require to charge as minimum as $0.99 when users want to use their service. Users are charged when they download the app from Apple’s Appstore and Googleplay. However, value capture is a critical problem in IM industry at this point of time since most of the players still do not know how to maximize their values from its large population of user’s database. LINE has found a way out in Asian’s market.

* Bargaining power of suppliers is high:
The suppliers would direct to the content providers, OS providers and also the Apps store, such as Applestore and Googleplay. Nowadays in mobile application market, the largest mobile OS providers are Google’s Android and Apple’s iOS. IM service providers have no bargaining power when facing the OS giant like Google and Apple. The relationship between IM and

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