Five Forces Analysis SmartBro (Wireless Broadband Services)
Posted: Wednesday, March 31, 2010 by carlo in Labels: 5 forces analysis, broadband, smartbro, wireless service
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Threat of New Entrant
All people who need internet connection would probably want to have an instant and portable connection yet affordable. Before, it isn’t possible because almost everyone is using a dial-up connection to the internet. Then can DSL connection. Home and office users get their own subscription to the DSL connection which is a proof that users want to have a more reliable connection. Nowadays, there is a wireless method of connection to the internet. People can have an instant access to internet even if they are on the go. This is a revolutionary product that makes people life easier.
One company that provides wireless internet connection is Smart Telecommunications. Their service is known as SmartBro, short for Smart broadband. SmartBro is using the HSDPA technology. It is considered fast but complains from users are escalating ranging from poor signal to unreliable connection. This is the reason why a new company introduces a new product, the wi-tribe.
Wi-tribe is faster than SmartBro. SmartBro is running in 3G technology while Wi-tribe is utilizing the new 4G technology. Also, it is running on a dedicated frequency unlike SmartBro. SmartBro’s network suffers from a lot of collision since the same frequency line is used for data and voice sending. Since you can send SMS messages in your computer using the usb modem of SmartBro.
The most important factor in this kind of service is speed and reliability. People generally want to have a better connection even if they pay more for it. Wi-tribe is marketing their product on the weaknesses of SmartBro. According to testimonials, Wi-tribe is a lot better in terms of speed and reliability. We might see Wi-tribe have a bigger market share if SmartBro doesn’t improve its network. After all, no one will buy services or product if they can’t use it based on their expectations.
Bargaining Power of Suppliers
SmartBro presents their service in the form of a USB modem. This modem is inserted in a USB port of the customers’ computer and voila- they can now connect to the internet (but they have to make sure first that they an existing credit on their account of course).
This USB modem is made by ZTE Corporation, a Chinese telecommunications company. ZTE Corp is the same company that has been dragged to a scandal because of alleged anomalous contract with the Gov’t to build the National Broadband Network project.
ZTE Corp can exercise its power as supplier that directly impacts SmartBro. First, they can dictate the price of each modem thereby affecting the unit cost of each modem. This will directly affect consumers because the price margin of the three service providers namely Sun, Globe and Smart are not that big. ZTE is supplying for Globe’s usb modem also.
Secondly, what if ZTE’s contract with Smart expires and they don’t have an interest in renewing it for some reasons, and another company got hold of the contract, what effect will it have for consumers? Will it make the modem more expensive? Better if it will make the cost go down.
Rivalry Among Existing Competitors
SmartBro’s closest competitors are Globe Tattoo and Sun Broadband. SmartBro vs Globe Tattoo is generally a win for SmartBro. Why? Firstly, SmartBro is faster than Tattoo. Tattoo’s network suffers from greater collisions than SmartBro’s. But still, speed of the service is dependent on the place of application. For example, Globe is better in Pasig and Mandaluyong while Smart is better in Muntinlupa.
SmartBro vs Sun is interesting. First, Sun offers a cheaper connection. For just 50Php per day you can connect to the internet without time restrictions unlike SmartBro which charges customers with 10Php per 30 minutes of use. Also, according to some, Sun is faster than SmartBro. This is because Sun’s network for broadband is different than the ones they are using for mobile phone services thus making the line for broadband dedicated for it alone. The downside for Sun but a strength of SmartBro is the area of coverage. Sun is available in Metro Manila only while SmartBro has nationwide coverage.
Bargaining Power of Buyers
In business, there is such a thing as the customer is always right. Indeed, the most vital of all companies resources is its customers for without them business will not survive. Subscribers of SmartBro have the veto power if they will still continue to use it or not. After all, it is relatively easy to own a modem for prepaid subscribers and you can generally switch to other providers easily.
Some people are actually hacking the modem itself. They are unlocking the modem so that SIM Card of other Telco’s can be used on the modem and enjoy their service. This is a proof that customers will switch if they are not satisfied with the services provided to them. It is scary to know what customers are capable of doing if they are disgruntled with a particular product. The more enraged they are, the more they will try to get their revenge and for sure it is devastating for the business.
Threat of substitute products or service
People who are not generally using internet on the go and they are just in the comfort of their homes would prefer a more reliable wired connection like DSL. DSL is much better than wireless since it suffers from less interference than wireless plus the fact the it is independent of the area or the place of application and its speed is consistent.
That is also the reason why more people especially those who need to be online anytime they want prefer a wired connection. They can’t take the risk of intermittent connection of SmartBro. Also, SmartBro is not meant for business even if the advertisement says so. That also limits their market.