Smart phone demand: An empirical study on the relationships between phone handset, Internet access and mobile services
Introduction
According to the online PC Magazine Encyclopedia (http://www.pcmag.com/encyclopedia/), a smart phone is defined as “a cellular telephone with built-in applications and Internet access. In addition to digital voice service, modern smart phones provide text messaging, e-mail, Web browsing, still and video cameras, MP3 player and video playback and calling.” Among others, the Internet access is without doubt the most important feature for a mobile phone to be called a smart phone. Many of the built-in applications of a mobile phone; e.g., e-mail, Web browsing, rely on its Internet access via Wi-Fi or 3G network.
For a consumer to actually use a mobile or a smart phone, three elements are indispensable: (1) a mobile or smart phone handset, (2) a subscription to the 2G/3G network, and (3) mobile services such as voice calls, SMS (short message services) or some value added services such as GPS via the mobile Internet. This is to say that to enjoy the services provided by the use of a mobile/smart phone, a consumer has to pay for all these three kinds of product and/or services, even though what he/she really needs is actually the third one only; i.e., mobile services, in most cases.
In economics terms, the demand for a mobile/smart phone handset and subscription to the 2G/3G network, much like the travel demand (Mokhtariana and Salomon, 2001, Mokhtariana et al., 2001), is called the ‘derived demand’, derived from the direct demand for the mobile service, which yield direct satisfaction to the consumers. To examine consumers’ demand for a mobile/smart phone, an overall perspective from the direct and indirect, which covers all these three different elements or dimensions, is needed. In the literature which tried to examine the demand for mobile/smart phone, however, none is found to have clearly identified these different demand dimensions and have given an overall view covering the above three. Most studies have been focused on examining a single dimension of mobile/smart demand, including topics in a wide range from micro to macro perspective, from IT to commerce, and from individual behavior to global market analysis. For example, some studies adopted macro perspective to examine the market of mobile/smart phone handsets and made international comparisons and some examine the penetration rate of 2G/3G subscription demand, mostly from a macro view also.
Among others, studies on the mobile services from a micro perspective maybe the most diversified. Take the m-commerce for example, in their review of 149 m-commerce articles, Ngai and Gunasekaran (2007) grouped the themes into five distinct categories: (1) m-commerce theory and research, (2) wireless network infrastructure, (3) mobile middleware, (4) wireless user infrastructure, and (5) m-commerce applications and cases. Category (2–4) is the research related to IT, while category (1) and (5) related to the behavioral or social science and most of them are related to commerce.
Recently, more and more studies examine the mobile/smart phone use behavior of individual consumers by aiming at their perception of mobile/smart phone attributes. For example, Leung and Wei (2000) found that affection/sociability, entertainment, instrumentality, psychological reassurance, fashion/status, mobility and immediate access are the major factors driving consumers to use mobile phones. On the other hand, Leung (2007) found that sociability, instrumentality, reassurance, entertainment, acquisition and time management are the critical factors. In addition, he also defined six categories of gratifications of the SMS use, namely, entertainment, affection, fashion, escape, convenient and low cost as well as coordination.
Although the literature on mobile/smart phone use is abundant, they do not seem to have given an overall view on consumers’ demand covering the three aforementioned elements. The purpose of this study, therefore, is to examine the individual consumers’ demand for smart phone in Taiwan from the three dimensions described above and examine the relationship between them. We hypothesize that there are dependent relationship between the direct demand; i.e., mobile services, and the derived demand; i.e., mobile/smart phone handset and subscription to the 2G/3G network. In addition, we also consider the effect of consumers’ socio-demographic characteristics on these direct and derived demands in this study.
The remainder of the paper is organized as follows. In the next section, it discusses the three dimensions of smart phone demand by reviewing some relevant literature. It is followed by a section describing the research framework and the data collection on the smart phone demand in Taiwan for empirical analysis. In section four, it shows the data analysis results. Finally, it gives a summary and draws the conclusions in section five.
Section snippets
Mobile/smart phone handset
Mobile phone handsets have a high turnover rate. Their potential life span is approximately ten years, but most users change their phones frequently, causing the usable life of these devices to decrease to 12–24 months (Paiano et al., 2013). The characteristic of the mobile/smart phone handset industry is multi-faceted; e.g., rapidly evolving nature with short product life-cycles (Tseng and Lo, 2011), the addition of new features to the mobile phones, and fierce competition among numerous
Theoretical framework
Based on the three dimensions described above; i.e., smart phone handset, subscription of mobile network and usage of mobile services, this study builds a research framework to examine the relationship between the different dimensions of demand for smart phone, as illustrated in Fig. 1. In this research framework, the mobile services are considered the dependent variable, which is affected by the other two dimensions, attributes of smart phone handset and the mobile network subscription.
Sample description
Table 1 shows the profile of our sample. Most of them have a college or university degree with an average age of nearly 29 years old and with an average monthly income of USD895.4. 83.19% of the respondents who have a paid job working as general staff. Taiwan’s mobile telecommunications market is an oligopoly, with a leader, Chunghwa Telecom (CHT) and two primary followers, Taiwan Cellular Corp. (TCC) and Far Eastone Telecom (FET). The percentages shown in Table 2 reflect this fact in terms of
Discussion and conclusions
This study explored the smart phone demand by emphasizing the differences between the three demand dimensions: (1) mobile or smart phone handset, (2) subscription to the 2G/3G network, and (3) mobile services, and then examined the relationship between them, and the effect of users’ demographic characteristics on these three dimensions as well, by an empirical study in Taiwan. Although the authors made effort to examine all the possible relationship and effect across all the attributes of
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