Crossing the chasm : Launching and re-launching in the Swedish mobile phone industry

University essay from Högskolan i Jönköping/IHH, EMM (Entrepreneurskap, Marknadsföring, Management); Högskolan i Jönköping/IHH, EMM (Entrepreneurskap, Marknadsföring, Management)


The 1990s is commonly referred as the Golden Age for High Technology and during this time the industry grew with a rapid speed. As a result, the consumers were presented with a various number of innovative products such as the Internet, computers and mobile phones. Within the High Tech frame, one of the fastest growing industries is the mobile phone handset industry. In 2006, 800,2 million mobile phones were sold worldwide and the market value was $104,3 billion. Forecasts about the mobile phone market predicts that the market will grow to 1,8 billion units in 2011 and have a value of $211,9 billion.


However, during this time, the researcher, Geoffrey Moore, identified a problem for the High Tech companies, i.e. the chasm. The chasm is a gap between the early market and the mainstream market that has arisen due to the characteristics of the high tech industry and the differences between these two groups. Due to the fact, that the early market only represents 10-15% of the total market it is vital for companies to cross the chasm and reach the mainstream market, in order to cover the high initial R&D costs.


Therefore, the purpose of this thesis is to conduct a qualitative study within the Swedish mobile phone industry to understand how the manufacturers’ products are crossing the chasm.


The research has been carried out as a case study, and two of the largest mobile phone manufacturers were used as cases, Sony Ericsson and LG Electronics. The data collection was of qualitative nature and four respondents were chosen to be interviewed.


In the Swedish mobile phone industry, the researchers have identified two types of products; class products and innovation product, which have been identified, defined and named by the researchers themselves. Class products are defined as “mobile phones with no significant innovation value for the consumers”, whereas innovation products are defined as “mobile phones with high innovation value”. The main difference is that class products will never attract the interest of the early market and therefore they are usually launched directly to the mainstream market, ignoring the chasm. Factors such as incremental changes, development of IT, changes in how to market new technologies and overlapping groups in the life cycle has narrowed down the chasm in the industry for innovation products. The most important strategy in order to reach the mainstream market is partnerships and alliances and it is impossible for a manufacturer to survive on their own.


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