We
are living in a fast-paced world, surrounded by all the advanced technology.
One of the evidence that reflects the advancement of technology would be the
invention of smartphones. There are plenty of smartphone brands today, where
the prominent ones are Apple, Samsung, Sony Ericsson and HTC. The rapid
launching of so many types of smartphones has cause the market to fluctuate
throughout the years. Nowadays, the consumption of smartphones keeps on growing
regardless of which group of people in the society. Due to the increasing
number of consumption, smartphones market faced the problem of high demand when
they first released their product.
The
high consumption of smartphones when they first established creates a high
demand in the market, yet it exceeds the supply. The demand of smartphones is
higher than the company’s expectation. The supplier is not able to produce as
much as it demands. Therefore, it causes a shortage of smartphones when it first
launched. Latest news showed Apple fans are willing to queue up days and nights
for Iphone 5 and it hits a peak when first released. (The Star, 2012) This
obviously shows how high the demand can be among humanity. There are various
factors that cause the demand of smartphones to be high. It is due to
customer’s taste or preferences, the number of population, technology and
income. As for supply, the number of suppliers, limited resources, cost of
production and government policy causes the supply unable to meet the high
demand of smartphones.
Demand
clearly defined as the amount of goods or services that consumers are willing
and able to purchase during a specific time, at a given price. (Sloman, Wride
and Garratt, 2012).For instant, when you plan to buy a new phone that you wish
for after so long which you can afford it, you will simply demand it.
One
of the determinants would be the customer’s taste or preference that affects
the high demand of smartphones. The more you desire on a good, the more likely
you will purchase it, the higher the demand it will form. There is a current
news stated that Samsung smartphones get an award due to their product enables
to build responsiveness to customer’s taste or preference. (Samsung, 2012) The
features and functions of smartphones match customer’s taste or preference and
attracts them in ways, people have the desire to own it, therefore creates the
demand of smartphones to be so high. As shown in graph, the desirable of people
increases based on the customer’s taste or preference will shift the demand
curve towards the right which shows a high demand of smartphones.
The
number of population also the factor for demand as it rises the demand of
smartphones in the market. As the population grows every year, it means the demand
of goods also upsurges. Malaysia as an example, it was recorded that the total
population has increased from 8.1 million people in 1960 to 28.9 million people
in 2011. The number of citizens shows an escalation indirectly causes the
consumption on smartphones to rise. Population is a kind of nature good or
basic commodity which can lead to high demand in the smartphones market. We can
observe through the graph below, the demand curve will shift to the right due
to the number of population increases.
Table
below shown the population of Malaysia
Furthermore,
the alteration of technology will affect the changes in demand. Technological
advanced has transform mobile phones to smartphones. Not to mention that,
everyone possesses a touchscreen smartphones in their pocket. A recent updates
showed an increase in number of Australian kids using smartphones. (News.com.au,
2013) Even kids today own a smartphone, this wider the smartphones user,
therefore, it leads to the high demand of smartphones. Flash back when we are
still a kid, do we use smartphones, or even own a phone? Changes in technology
somehow lead a rightward shift in the demand curve.
Shift
in demand curve can be influenced by the income. As income of one has risen,
their demand for goods or services will increase as well. When man get richer,
they will definitely purchase a normal good instead of inferior good. For example,
Sharon’s income increases for this month, she would like to spend it on the
latest product which is Samsung s4. People would demand for something they
prefer due to their acceleration of income. This causes the shifting in demand
curve of smartphones towards the right.
In
economics, supply is meant by the amount of goods or services that producers
can supply during a particular time, at a certain price. (Sloman, Wride and
Garratt, 2012).There are numerous determinants why supply is not able to meet
the high demand of smartphones when they first released.
Factor
that causes the low supply of smartphones would be the number of supplies. Lack
of suppliers in numbers cause a limited stocks of smartphones for consumer to
make their purchase decision. People who are willing to buy it will have to pre-order
due to low supply by the suppliers as compared to the market demands. A newest
article mentioned that demand has surpassed the initial supply which causes consumers
need to pre-order. (Guglielmo, 2012) This shows the low supply for smartphones
and shifts the supply curve towards the left because of the number of
suppliers.
Moreover,
limited resources considered as another determinant that affect the low supply
of smartphones. A survey in an article showed the components of Apple Iphone 5
faced a shortage. (Seitz, 2012).The combination of these new components in the
device causes the supply constraints. Therefore, it causes a low supply in the
market of smartphones. The supply curve will shift leftwards due to the limited
resources.
Cost
of production also lowers down the supply of smartphones. When the cost is high
in production, the suppliers is not willing to produce more. It explains when
it supplies too much, the cost of production is too high, the lesser the profit
will be earned. For example, microchips and production methods can cause the
cost in manufacturing smartphones turn higher. Cost of production leads the
supply curve shift towards the left.
Last but not least, government policy plays a
vital role in the low supply of smartphones. The
costs will raised by government in the context of taxes. High taxes cause the
suppliers to generate fewer products. It somehow affects the low supply is
incapable to meet the high demand of smartphones and shifts to the left in the
supply curve.
Shortage
exists when the demand exceeds the supply which means that the inability of
producer to form the amount of products to satisfy the buyer’s willingness. (Sloman,
Wride and Garratt, 2012).According to the article I go through, there is a
shortage occurs in the smartphones market when they first launched. It shows a
high demand yet low supply in the market. However, the smartphone companies has
come across this problem and overcome it in ways. In order to solve the problem
of shortage, smartphone companies like Apple and Samsung will increase the
number of supplies. As the number of suppliers upturns, they are able to
manufacture their products in an efficient way within the given time. The burden
of job can be dividing into parts among their suppliers and resulting in better
outcomes. By raising the number of suppliers, it will then increase the supply
of smartphones. Seek for cheaper resources or replacement components will also
resolve the shortage matters. Smartphone companies try their best to search for
those resources or components which costs lower price yet never lose the
originality or good quality of their products. Low-priced resources or
components will cause an increase in the supply of smartphones.
A
growth in the price of smartphones ensures in solving the shortage issues. When
the price of smartphones increases, it enables the smartphone companies to
cover their cost of production. The profit earned from smartphones sold will
definitely cover up the expensive cost in producing their products. The supply
of smartphones will rise as the price of smartphones increase. Make a change in
resources of smartphones will do in settling the shortage concerns. In order to
have the capability to afford the taxes stated by government, smartphone
companies will alter the resources with the same function but using
different type of resources. Although there are changes in resources, it still
remains the same quality as usual. Changes in resources will increase the
supply of smartphones in the market. Above solutions shows a growth in the
supply of smartphones due to the high demand of smartphones during the first
few releasing week. Increase the number of supplies, seek for cheaper resources
or replacement components, increase in price of smartphones and changes in
resources will lead the movement along the supply curve to move upwards. As a
result, both the demand curve and supply curve will meet a point and forms the
market equilibrium point where the demand equals to supply.
In
conclusion, smartphones can be unnecessary for everyone to own it. However,
smartphones actually benefits us in plentiful ways. Young generation may demand
for smartphones which advantages them in education and communication yet by not
following the trend. They have to think rationally in making their purchasing
decision. As consumers like us should spend wisely in buying smartphones in
order to avoid a shortage where demand exceeds supply.
References:
Guglielmo. C (2012) Apple Says Iphone 5 Demand Outstrips Supply As Pre-orders ‘Shatter’
Previous Record [Online] Available from: http://www.forbes.com/sites/connieguglielmo/2012/09/17/apple-says-iphone-5-demand-outstrips-supply-as-pre-orders-shatter-previous-record/
[Accessed 5 June 2013]
News.com.au (2013) Rise in number of Australian kids with smartphones [Online]
Available from: http://www.news.com.au/lifestyle/parenting/rise-in-number-of-australian-kids-with-smartphones/story-fnet085v-1226630247931
[Accessed 7 June 2013]
Samsung (2012) Samsung Awarded “Device
Manufacturer of the Year” by GSMA at Mobile World Congress 2012 [Online] Available from: http://www.samsung.com/latin_en/news/globalnews/2012/samsung-press-release-mwc-gsma-award-device-manufacturer-of-the-year-mobile
[Accessed 6 June 2013]
Seitz. P
(2012) Apple iPhone 5 Hampered By
Component Shortages [Online] Available from: http://news.investors.com/technology/092512-626993-apple-iphone-5-shipments-slowed-by-parts-shortages.htm?p=full
[Accessed 4 June 2013]
Sloman, J., Wride, A. and Garratt, D.
(2012) Economics. 8th ed. England: Pearson Education Limited.
The Star (2012) Apple iPhone 5 fever rages
despite grumbling over maps [Online] Available from: http://biz.thestar.com.my/news/story.asp?file=/2012/9/22/business/20120922130115&sec=business
[Accessed 6 June 2013]
