Based on the news report by Leong Hung Yee, June 24 of 2011 on The Star, Maxis has the largest
subscribers on their packages and plans toward their smartphone products. The
sales of smartphone are boosting the revenue of Maxis. This is because the chief operating officer Jean-Pascal van Overbeke said “There's
a real demand for smartphone products from consumers. They were waiting just to
get the latest smartphone device.”
During the start-up stage of smartphones
being introduced to the world, the price of the devices is very expensive. When we look in
depth the price of the iPhone generation from the first iPhone to iPhone
5, there are the different from pricing. From the result, when we compare the
iPhone 3G and iPhone 5 the cost approximately $299 and $199 for the same
storage capacity. The reason of iPhone few years back is very expensive because
it dominated the smartphone market. However, there are many smartphones being
introduced today in the market and causing high barrier to entry. This affected
the price of iPhone decreases when it reaches to the maturity stage of product
life cycle because there are competitive among other smartphone brands. This
will causes the numbers of supplier of smartphones are increases will cause the
surplus of smartphones in market and the price of the smartphones decreases.
Therefore, the smartphone manufacturer will supply lesser when the price is
decrease. For example when iPhone 4 S is available in Maxis stores, once iPhone
4 is sold out there will no new stock available because when the price of
iPhone 4 is decreases and the supply of iPhone 4 will also decreases due to the
law of supply.
Besides,
sales of smartphones will increase the sales of Maxis packages. Maxis offered
packages include local call, local Short Message Service (SMS), local internet,
local Multimedia Message Service (MMS) and Wi-Fi. Every month, subscribers will
need to pay the fee to Maxis until the end of the contract. Besides, the
initial payment for smartphones is lower than the original price. However, the
smartphones is more expensive than the original price when we calculate it in
long term. For example one of the iPhone 4S package offered by Maxis is RM 899
for 8 GB storage capacity and monthly fee is RM 100 (excluded service tax) for
12 months contract. The total price after 12 months is approximately RM 2099
while the original price of iPhone 4S for 8 GB storage is RM 1890. Thus, when
the sales of smartphones from Maxis increase, the revenue of Maxis will
increase this is because smartphone is a complimentary with internet service
offer by the network communication organization.
Since
smartphone and internet service has complimentary effect, when the price of the
package offered by Maxis is increase will decrease the demand of smartphone. On
the other hand, the same result will happen when the smartphone price is
increase by the manufacturer, the demand of Maxis package will decrease.
However, there is a way that Maxis could use to solve this problem when the
price of smartphone increases. Maxis can extend the period of contract with the
same monthly fee and decrease the price of initial payment. This could let the
consumers to enjoy the benefit of the package for longer time with same monthly
fee and the initial payment is affordable by them. The only extra payment for
this solution is applied on the extended period which means the consumers need
to pay for another few months fee.
In
additional, our Prime Minister, Datuk Seri Najib Tun Razak said there will be a
Youth Communication Package for 21 to 30 years old Malaysian with income below
RM 3000 will have the RM 200 rebate to purchase a smartphone. This rebate will
encourage more youths to purchase smartphone and the quantity demanded of
smartphone will increases. Thus, the youth will enjoy the benefit and the
suppliers will enjoy the growing number of buyers. However, this will decrease
the current sales of smartphone in Malaysia before the rebate is launch in 2013
due to expected future price. The buyers will wait until the rebate is launch
to purchase the smartphone.
In
my opinion, pure competition in the market is giving benefit to the buyers to
enjoy lower price because when the market is monopolizing by a single firm, the
price will very high. The increase of numbers of manufacturer in smartphone
market is bringing down the product price because they need to attract customer
to purchase their product. This will let the price achieve market equilibrium
where the supply and demand is equal. Thus, the number of buyers of smartphone
is growing because the law of demand stated that when the price is lower, the
quantity demanded will increase compare to few years back when the price of
smartphone was high the quantity demand was less.
In
conclusion, I agree that smartphone is bringing high revenue to the network
communication firms because smartphone need internet service to online.
Moreover, our Prime Minister, Datuk Seri Najib Tun Razak announced in the
budget 2013 regarding rebate RM 200 for smartphone as a Youth Communication
Package. This will result increase of demand on smartphone in next year in
Malaysia. However, the current demand of smartphone will decrease. Besides, I
strongly supporting on pure competition in the market because it will bring
benefit to buyers to enjoy low price demand. When the market is monopolized by
a firm, the price of the product will very expensive. Thus, pure competition will achieve market
equilibrium when the price balances the plans of buyer and sellers
-Sum Calvin
-Sum Calvin
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