Information Cascades Explaining The Mobile Phone Market
https://www.cnbc.com/2018/11/16/huawei-aims-to-overtake-samsung-as-no-1-smartphone-player-by-2020.html?recirc=taboolainternal
Apple is a dominant technology company worldwide, and controls a firm grip of the global phone market share. The company has made its presence known in both the United States and China over the past few years with more than a majority of the populations adopting the iPhone as their phone of choice. The mass acceptance of this product can be defined through an information cascade model where consistency in production, branding, and purchasing by consumers has shifted the probability of an consumers choosing to go Apple. As this information cascade continues and consumers are shown positive signals of Apple from other happy consumers whether it be from their friends, family or coworkers, then the cascade will continue to grow Apple’s market share.
Although information cascades have helped Apple achieve dominance in the mobile phone industry, other companies such as Samsung and Huawei have developed strong footholds China. Competitors have captured enough market share in countries such as China where the Apple information cascade is being broken. Samsung has generated enough positive signals and approval by consumers in China that the threshold determining whether to buy an Apple or Samsung phone has led Chinese consumers to side with Samsung. Another company Huawei is an interesting case because since launching its first mobile phone is 2010, which is 3 years lagging Apple’s first iPhone release, the company last year passed Apple to claim the second largest phone market share in China. An information cascade in favor of Huawei mobile phones has picked up momentum with increasing amounts of positive press and adoptions by Chinese consumers. Huawei’s presence is everywhere in each of China’s major cities, and the company has improved its phone line to surpass competition.
As of 2020, Samsung is expected to lose its number one position in Chinese phone market share to Huawei, which means that Huawei would have passed both Apple and Samsung in only a matter of 3 years. Such rapid growth and approval from a technology based company can be attributed to the large effect information cascades have on determining consumer purchases. Network theory explains how small clusters can develop footholds against larger clusters, and eventually expand and grow in size. The rise of Huawei as a dominant market contender leading both Samsung and Apple after being once a startup trailing both companies demonstrates the profound impact of information cascades.