The meet of new Competition on profitability is a very important phenomenon that we learn in Managerial Economics. The growing in competition drives the price closer to marginal cost, slide economic profit. The competition can come from more companies producing the equal product or producing close substitutes. A good power can be seen from the recent profit publications of KPN. KPN is the star(p) telecommunications and ICT service provider in The Netherlands, offering wireline and wireless telephony, earnings and TV to consumers, passim telecommunications and ICT services to business customers. In their Q1 results multitude call* with analysts,CEO Eelco Blok started by saying Q1 has seen lower than expected revenues in the Netherlands mainly in consumer and business segments. To explain the poorer than expected number he referred to the advert of services like Whatsapp. He said, In consumer mobile we mother been surprised by the acceleration in usage of devoid alternatives for SMS and voice. Customer behavior is rapidly ever-changing as a result of smart phones and new applications booster cable to substitution of SMS and voice by selective information. This wind is especially recognisable amongst young people and results in strong growth of selective information usage and substantially less SMS and voice messages....
This trend has a negative jolt on SMS and voice revenues. He quantified the impact of the move of customers towards a substitute which is practically free: chokely twelvemonth, jar against, we have seen a 10% growth on SMS year on year and currently we see a 10% decline year on year in March o! n SMS and a percentage is increasing. Thats the trend we ar seeing currently in the Netherlands and accelerating over the last duet of months. More importantly, he said What we see disaster in the Netherlands in our customer base Im convinced that will happen around the globe. The key read/write head is What does this lowly for the Telecom companies around the world? Smart-phones...If you want to give rise a full essay, order it on our website:
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