Market Structure, Firm Conduct, and Performance –A Case Study of the Wireless
Networking Industry in Taiwan
E10119017
103 7
i
IC

(Two-firm Concentration Ratio,CR2)(Herfindahl -Hirschman Index, HHI)
(2)SWOT4P
(3)
(4)
(4)


ii
ABSTRACT
In recent years, due to the large increase in demand for mobile bandwidth, China,
India, Japan, USA, and many European countries have actively constructed broadband
networks to enhance national competitiveness and promoted the growth of the networking
industry. According to the Computing Information Service Center, the wireless
communication industry is worth 91.5 billion NTD, annual growth rate of 12.5%. By
researching and analyzing the business development and market structure of wireless
networking, this article aims to provide suggestions to the Taiwanese government and
industry.
The objectives of this study are explored wireless networking industry management
development and market concentration in Taiwan, the theory ofStructure-Conduct
-Performance (S-C-P) that developed by Mason-Bain is used to analyze the market
structure, manufacturers’ behavior and operation performance. (1) The study used
Tow-Firm Concentration Ratio (CR2) and Herfindahl- Hirschman Index (HHI) as the index
to measure the concentration of the market. (2) The models of SWOT, 4P and Five Force
analysis are used for investigating the organization is havior and the strategy. (3) The
performance evaluation index is used for evaluating the performance of wireless
networking industry by the financial point of view. (4)Finally, we use case study and
experts visiting to find out the operation guide, competitiveness and future planning for
these companies.
The results showed: (1)The market structure of wireless networking industry in
Taiwan from 2008 to 2012 tends to be highly concentrated. (2)That from the firm conduct,
Taiwan wireless networking industry value chain intact, midstream part of the system
manufacturer specializes in cost control and production capacity, and the ability to
integrate diversified products and technologies, improve operational performance and
competitiveness.(3)Based on the four indicators of operating performance valuation,
Arcadyan has a stable position in the wireless networking industry; on average,Gemtek is
the market share leader of the wireless networking industry, because of its effectiveness
scale of operation and management capability. However, due to mastering technology
development and new product time to market, Arcadyan and SERCOMM have growing
profitability. Therefore, the performance indicators show that the two companies have
performance. (4)Case company has excellent soft, tough, and hard ware integration, so its
R & D capability is fundamental to the company. By changing the market layout from
iii
retail market to higher margin telecom market, the case company’s revenue can be
expected to grow relatively.
Herfindahl-Hirschman Index (HHI)


!

v
.................................................................... 48
.................................................................... 57
.................................................................... 66
- ................................................................... 73
........................................................................................ 74
............................................................................ 81
2 -- .................................................. 23
3 -- .................................................. 25
4 ..................................................................... 27
5 ..................................................................................................... 29
7 ......................................................................................... 34
9 2012 WLAN ……………………..……….…….42
10 2013…..…...…………………………42
12 2008 2012 ......................................... 48
13 2008 2012 ................. 50
14 2003 2007 ......................................... 52
15 2003 2012 ................. 54
16 SOWT ... ........................................................................ 59
17 .................................................................................. ..66
18 ................................................................... ….…67
19 ….. .......................................................... 68
20 ............................................................ 69
21 ........................................................................ 70
23 ........................................................................................................ 75
24 ................................................................................................ 76
25 ................................................................................ 77
26 ................................................................................................ 78
27 ...................................................................................................... ..78
28 ................................................................................ 78
33 ........................................................................................ 86
34 ................................................ 87
35 ........................................................................ 89
36 ........................ 90
38 WLAN () ....................... 92
39 ................ 94
40 .................................................... 95
41 ............................ 96
3 Michael Porter ............................................................................... 10
4 ……..…………………………………………………………………...12
5 ……. ........................................................................................................ 13
7 ......................................................................................... 33
11 10 .......................................................................... 43
12 ............................................................ 45
13 WLAN ............................................................................... 45
14 WLAN ........................................................................................... 46
15 2008 2012 ......................................... 49
16 2008 2012 ..................................... 50
17 2008 2012 (CR2) ............................ 51
18 2008 2012 (HHI) ........................... 51
19 2003 2012 ......................................... 52
20 2003 2012 ......................................... 53
21 2003 2012 ..................................... 54
22 2003 2012 CR2 ................................................. 55
23 2003 2012 HHI ................................................ 55
24 ........................................................................................................ 67
25 .................................................................................. 68
26 ........................................................................... 69
27 ...................................................................................... 71
x
Network,WLAN)

(Broadband Wireless Access)

1,6451,6091,225
(2012)
(AsymmetricDigital Subscriber Line, ADSL)

OEM1/ODM2
2 19982012
1 2010 2012 WLAN () 2010 2011 2012


2,776 67.3% 2 ,969 66.3% 3,280 66.9%
289 7.0%
420 9.4%
450 9.2%
248 6.0% 204 4.6% 271 5.5%



WLAN

--



WLAN 70 % 2008 2012
100
( 3062) (
3596)( 4906)
( 5388)
(Wi-Fi Alliance) IEEE 802.11
()
1.2003 2007 (2009)

2008 2012

(Structure-Conduct-Performance, S-C-P)
3 SWOT4P2012
-



()SWOT
SWOT (strength)(weakness)
(opportunity)(hreat)SWOT
1.SWOT SWOT SWOT


(1948)(Marketing mix)

Jerome
(promotion) 4PArmstrong and Kotler (2001)
4P
1.(product)

2.
(social)(technological)(natural)(geographical)(competition)





Porter (1980)




3.


(Competitive Strategy)

CR2 (Two-firm Concentration Ratio)
(Herfindahl- Hirschman Index,HHI)
SWOT4P


12
-Bain (1956)
Mason (1939)
--(Structure-Conduct-Performance,
--
-
(barriers to entry)


(established seller)
differentiation)(absolute cost advantage)
S-C-PBain (1968)
Scherer (1990)Bain (1968)
Scherer (1990)Bain (1968)

(market conduct)
(market performance)


6
17
--



()(market structure)
(Organizational characteristics of a market)
(S)

(C)

(P)
18
(industrial structure)

(market- share)(concentration ratio)
N
0
= 65~75%CR4 = 50~65%CR4 = 35~50%CR435%
(1991)P.2
1
0 0
2.

Bain (1968)
Bain (1968)



1990)
1000HHI(10000s)1800
HHI(10000s)1800
(2000)P.551
20




(skimming)

Bain (1968)
3.
4.()÷

(2008)--PET(2009)
Vlachvei (1998)Scholtens
1980~2000Pervan (2010)

--23
23

(2007)
3D(3)
2001~2008


(2011)

-


Telser (1964)
Scholtens (2000)

-
100
(1)–
2011 (2) 2013


WLAN WLAN
(2007)


(2008)

27


(2011)


(2006)
WLAN
WLAN
(2007)
(2011)
2008
2012

WLAN (Radio Frequency,RF)
(Wireless LAN card) IEEE 802.11
(Access Point, AP)
(Wireless Wide Area
Network,WAN)(Wireless Metropolitan Area Network,MAN)
(Wireless Local Area Network, LAN)(Wireless Personal
Area Network,PAN)5
WAN GSM/GPRS/EDGE/3GPP 802.20/802.16e MAN HiperMan & Hiper Acces 802.16/WiMAX LAN HiperLAN & Hiper LAN2 802.11/WiFi PAN HiperPAN 802.15/Bluetooth
2009

ALOHNET
WLAN1985(Federal Communications Commission,FCC)
ISM (Scientific and Medical Radio Bands)902~928MHz2.4~2.483GHz
5.725~5.875GHz
802.11WLANIEEE1997IEEE
IEEE802.112.4GHz


Standardization)
model)

100MbpsIEEE802.11ac
802.11ac802.11ad

6IEEE 802.11
6 802.11


802.11 1997 DOSS 2.4GHz 20MHz 2 Mbit/s 802.11b 1999 CCK 2.4GHz 20MHz 11Mbit/s 802.11a 1999 OFDM 5GHz 20MHz 54 Mbit/s 802.11g 2003 OFDM 2.4and 5GHz 20MHz 54Mbit/s
802.11n 2009 OFDM, 4×4MIMO 2.4and 5GHz 20 and
40 MHz
600 Mbit/s

802.11ac 2012 OFDM,
8×8MIMO MU_MIMO


Infrastructure WLAN

Dongle Sip)(WLAN Access Point)(WLAN
Router)
WLAN

10 ; Peer-to-peer
IrDA;Bluetooth; UWB; Zibee
HotSpotNB PCPDA

(WLAN Bridge)WLAN NIC
WLAN BridgeWLANWLAN
IEEE
802.11
IEEE 802.11 IEEE 802.11
WLAN
()
WLAN //(Bridge/Router/Gateway)
1.(WLAN Network Interface Card )

(Ethernet)

2.(Access Point, AP)
WEP
2.
SOHO WLAN
WLANAPsWireless
1.
37

(Hotspot)WLANWISP

WLANGPRS+WLANCDMA 1x+WLAN
WLAN+GPRS
)
()
2013

3G4 G LTE
(Long Term Evolution)
38
FMC( Fixed Mobile Convergence)

4G LTE 2012 LTE iPhone 5
LTE EET
(http://www.eettaiwan.com) IHS iSuppli 2016 LTE
10 ( 8) 2011 2016 5
139%!2017 TD-LTE
1.4 (SoftbankBharti
Airtel) SI (EricssonAlcatel-Lucent )
TD-LTE
2015 4 WLAN ( 9)
DVD/

WLAN 2015
20 WLAN
In-Stat WLAN
WLAN
2.802.11n 2014 ( Handheld
game console) 32%
WLAN
PCBMemoryFlashPower
PA (poweramplifier)AnadigicsSiGeRFIC
Microsemi
802.11ac(Market Intelligence
8WLANWLAN

WLAN RouterWLAN
WLAN/Sip
WLAN/Sip
8 2012 WLAN ()
9.2% 4.50
WLAN Router
WLAN /Sip
802.11ac
WLAN AP/RouterWLAN/Sip
66.9% 32.8
802.11ac WLAN AP/Router
WLAN AP/Router

(http://www.iii.org.tw) 2012
915 12.5% 10 IEK
(http://ieknet.iek.org.tw) 20132012
3,99420134,1554
12Q3 13Q2 13Q3 Q/Q Y/Y 13Q4 2011 2012 2013(e)
1,067 1,041 1,096 5.3% 2.7% 1,063 3,769 3,994 4,155 4.0%

1,270 1,243 1,134 -8.8% 10.7% 1,097 6,781 5,417 4,344 19.8%

2,337 2,284 2,230 -2.4% 4.6% 2,160 10,550 9,411 8,500 9.7%

994 1,067 1,089 2.1% 9.6% 1,093 3,884 3,990 4,331 8.5%

3,331 3,351 3,319 -1.0% 0.4% 3,253 14,434 13,401 12,831 4.3%
(http://www.sercomm.com)
(11)
IT IS(http://www2.itis.org.tw) 2013
7Ethernet LAN SwitchWLANDSL CPECable CPEIP STB00
WLAN AP/Router
DIGITIMES (http://www.digitimes.com.tw) 2013 10
10 2012

11 2013 10 10 (%) (%) 10 (%) 28.25 -7.90 3.40 254.3 -6.00 16.00 -19.53 -1.77 182.2 -17.16
17.25 4.90 36.15 133.7 14.49 10.63 -13.37 35.27 103.8 31.56 19.08 -15.31 4.60 192.4 -9.40 14.69 15.12 21.80 143.6 21.50 14.02 -8.40 -33.41 170.0 -23.78 15.45 -2.27 -0.05 158.1 -4.38


(12)


(13)WLAN

WLANWLAN
WLAN
WLAN
IEEE • 802.11b • 802.11a • 802.11g • 802.11n • 802.11ac
• Conexant • Intel • Atheros • Broadcom • Marvell • TI
• •
• D-Link • Buffalo • Atheros • Netgear • Belkin • SMC • TI
• Notebook
ADSL
• Charter • Hynle • Silterra • CSMC
• Cisco • Proxim • 3 Com • Symbol • Netgear • HP • Nortel • Avaya
• Router • PDA • Geteway • Enterpris • AP • Wireless • Switch

• CPU • IC • ASIC() • PC • • • • Adapter • DRAMSRAM • Flash Memory
• LAN • • • ISDN ( Terminal
AdapterRouter Card Modem )
• •

•
46

(http://www.sercomm.com)( SMT

7.9%
(http://www.iii.org.tw/) 2013 9 Wi-Fi SiP
802 11ac WLAN 17%
2014 1,432 13%
4G TD-LTE 4G 2013
2014 4G TD-LTE
Small CellDongle
4G
/
xDSL IAD8GPON9
8 IAD (Integrated Access Device) Access RouterDigital. PABX/KTS xDSL 9GPON Gigabit-capable PON 2.5 Gbps
( ATMEthernetTDM)OAM&P
IP STBOTT(Over-the-top)LTELTE
Small Cell


(3596)(4596)(5388)
(Two-firm Concentration Ratio ,CR2)(Herfindahl-Hirschman Index , HHI)
12 2008 2012
15 2008 2012

12 2008 2012
2008 18,134,292 10,541,537 10,360,963 8,488,652 47,525,444 2009 15,541,710 11,487,139 12,017,474 6,794,111 45,840,434 2010 20,459,767 16,122,308 12,540,139 8,153,833 57,276,047 2011 25,993,264 14,704,136 12,293,662 10,811,908 63,802,970 2012 24,070,973 11,979,538 9,404,464 16,599,157 62,054,132
12 2008 2012
(CR2)(Herfindahl-Hirschman Index,HHI)
2,053
13
2012 2011 20
40.74% 38.79% 2% 2012
2012

2008201123.55%2012
2012201123.05%19.3%
13 2008 2012
CR2(%) HHI(10000s) 2008 38.16 22.18 21.80 17.86 60.34 1,948 2009 33.90 25.06 26.22 14.82 60.12 1,837 2010 35.72 28.15 21.89 14.24 63.87 2,068 2011 40.74 23.05 19.27 16.95 63.79 2,191 2012 38.79 19.30 15.16 26.75 65.54 2,220 37.46 23.55 20.87 18.12 62.73 2,053
(%)
51
%
(2009)
(2009)14
14 2003 2007 2003 8,318,557 1,174,895 9,165,738 3,798,774 22,457,964 2004 12,354,019 4,917,636 12,210,744 5,011,697 34,494,096 2005 10,328,021 4,274,386 13,494,421 5,640,959 33,737,787 2006 12,444,019 7,581,223 11,278,538 9,120,147 40,423,927 2007 12,459,352 9,528,921 11,539,231 10,170,774 43,698,278 2008 18,134,292 10,541,537 10,360,963 8,488,652 47,525,444 2009 15,541,710 11,487,139 12,017,474 6,794,111 45,840,434 2010 20,459,767 16,122,308 12,540,139 8,153,833 57,276,047 2011 25,993,264 14,704,136 12,293,662 10,811,908 63,802,970 2012 24,070,973 11,979,538 9,404,464 16,599,157 62,054,132
20032007 2009

53
15(2009)20032007
HHI
54
15 2003 2012 CR2(%) HHI(10000s) 2003 37.04 5.23 40.81 16.92 77.85 3,038 2004 35.81 14.26 35.40 14.53 71.21 2,565 2005 30.61 12.67 40.00 16.72 70.61 2,537 2006 30.78 18.75 27.90 22.56 58.68 1,726 2007 28.51 21.81 26.41 23.27 54.92 1,510 2008 38.16 22.18 21.80 17.86 60.34 1,948 2009 33.90 25.06 26.22 14.82 60.12 1,837 2010 35.72 28.15 21.89 14.24 63.87 2,068 2011 40.74 23.05 19.27 16.95 63.79 2,191 2012 38.79 19.30 15.16 26.75 65.54 2,220 35.01 19.05 27.49 18.46 64.69 2,164
20032007 2009
%
55
%
HHI(10000s)


()
()
56
()
WLAN Module802.11x SiP ModuleNIC
()








()(weaknesses)

AP






59
16 SOWT (S) • • • •
(W) • OEM/ODM • • • •
(O) •
•
• • • IT •

•

60
3.IAD (Integrated Access Device)FemtocellIAD IP STB
ASP

xDSL IAD VoIP
802.11ac Small cell
LTEIMS (Small and Medium Business, SMB)

LTEDigital Home
SME(Small and MediumEnterprise)
(Print Server)

()(TSMCUMC )
()(D-LinkBuffaloNetgearBelkin
)



IAD/VoIPGatewayAP/Gateway
IP Set-top Box


SMB






1.
1967 6
1

MP 3

3C
22 24 BBWF

LTE
......
(http://udn.com) 2013 1 21


B2B
20
IP 20
(http://www.chinatimes.com) 2013 12 31
5~10
LTE 2014
2013 LTE 2014

(Small Cell)4G
Small Cell
Small Cell 3G
2014

()2013

2013249


(Wireless Gateway)(Wireless Router)





OEM
OEM

()
/
20082012
24 2008 2012

18 % 2008 2009 2010 2011 2012 6.27 4.20 1.96 0.04 3.83 3.26 6.81 5.35 3.91 3.95 2.96 4.60 3.54 5.54 2.94 5.33 0.74 3.62 3.88 3.02 3.86 5.39 4.55 4.14
%
2009 4.46% 2012 9.59%


19 % 2008 2009 2010 2011 2012 10.14 5.62 3.29 0.40 7.27 5.34 14.72 10.49 9.09 7.83 4.74 9.37 5.39 8.85 4.81 8.49 0.92 5.69 6.76 4.46 6.12 8.83 9.59 7.15
%
20082009
20112012

20 % 2008 2009 2010 2011 2012 15.13 8.60 5.32 0.15 10.80 8.00 28.76 17.87 14.70 12.42 7.12 16.17 7.88 13.80 7.40 12.75 1.34 8.63 13.48 8.32 12.50 19.87 21.19 15.07
%
2012
27
21 2008 2009 2010 2011 2012 4.61 2.50 1.47 0.04 3.01 2.33 6.50 4.95 4.53 4.15 2.52 4.53 1.14 2.05 1.13 2.01 0.21 1.31 1.86 1.22 1.87 3.29 3.90 2.43
71
2012



4G
LTE

2229
22 20082012
(%) 3.26 4.60 3.62 4.14 (%) 5.34 9.37 5.69 7.15 (%) 8.00 16.17 8.63 15.07 () 2.33 4.53 1.31 2.43
73
(IP Protocol)

IAD FTTx Cable DOCSIS 3.0 Small Cell
(Smart Home Control)




29
1992 7
1996 5
1999 3
1999 5
2001 10 2002 11 2003 1 () 2003 5 2003 9 G 2004 1 () 2006 11 G
2007 11
2007 12 2008 2
2009 12 2011 8 NCC
76
23 ()
2011 10 2011 11 () 2012 9 2 2012 12 2013 9 6

WLAN

100 101 102
54 97 126 414 462 464 468 559 590
37.6 37.9 37.6 5.12 6.16 5.83

1% 1% 1% 26% 28% 26% 61% 56% 53% 9% 13% 17%
3% 2% 3% 100% 100% 100%


77
16.73% 11.82% 79.50% 86.52%
3.77% 1.66% 100% 100%
3.
(Router)(Access Point)(Wireless LAN Card)
(Print Server)(IP video Applications)
(Home Plug AV) (VoIP)
(NetworkAttached Storage,NAS)
78
26 2011 2012 %
1,809,001 1,961,706 8.44 8,595,981 12,3641,780 67.08
406,926 275,671 -32.26 10,811,908 16,599,157 53.53
()
(%) 8.83 9.59 (%) 19.87 21.19 (%) 17.68 35.04
35.60 44.65 (%) 5.39 4.55
()
80% SoftbankVodafoneSFR
2011 63% 17% 19% 1%

28 29
28
2011 2012
% % 61,497 0.57 21,586 0.13 3,358,229 31.06 3,322,991 20.02 5,962,730 55.15 12,211,207 73.57 1,413,576 13.07 1,025,638 6.17 15,876 0.15 17,735 0.11


2.

3.
Small Cell


LTE

500 1,000
()
1. 2012 30
30 101 102 1
435,715 116,678 16,599,157 3,631,044
2.62% 3.21%
2. 2012





83






2006 2007 5388 2007 2007 2008 2008 (WiFi RG Femtocll)
2009 DOCSIS 3.0
Pan&Tilt IP
2009 3G Femtocell Ubiquisys 3G Femtocell
2010 IDC 2010 2010 2011 NCC 3G 2011 (MSCI) 2011 TD-SCDMA 2012 Smart Cell FTTx
84
2012 2012 2012 LTE
2013 3 50
2013 A EoC( Ethernet-over-cable) 2014 IP Camera 2014 Small Cell FTTx
2014 IP Camera 2014 iF (iF Design Awards 2014)





802.11ac





33


2013 12 19 10:00~ 12:00


2014 1 3 14:00~16:00

22
2014 1 27 14:00~16:00

87
()?



WLAN




4G TD-LTE FDD-LTE 1. 2.
89









WLAN

Embeded IP Eveywhere
IP


(xDSL/GPON/cabel mondem)
IoE(Internet of Everything)

smart homehealth carevedio cloud 4G

92
?


2.
( Femtocell )
30

94



WLAN

1. 2.

weekly critical review meeting

Diversity



4.

5.

98
4G LTE Small Cell







(IP Video Applications)(VoIP)
OEM/OEM

OEM/ODM
WLAN

2013

2.
101



()

102


103

(2012)201220139 20http://www2.itis.org.tw/pubreport.
(2011) 45761
(2013) 2013102http://www.gemtek.com.tw.
(2008)-

(2011)


(2007)
(2011)--
(2013)


(2008)-
(2012)-

(2011)–
(2013) 2013 10 2 http://www.arcadyan.com.
(2010)
(2009)—
(2006)

(2009)
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Telser, L. G. (1964). Advertising and Competition.The Journal of Political Economics, 72(6), 537-620

4 ……..…………………………………………………………………...12
5 ……. 13
7 33
9 In-StatWLAN.. 40
13 WLAN 45
14 WLAN 46
15 20082012 49
16 20082012 50
17 20082012(CR2) 51
18 20082012(HHI) 51
19 20032012 52
20 20032012 53
21 20032012 54
22 20032012CR2 55
23 20032012HHI 55
24 67
25 68 26 69 27 71 28 20082012 73 29 75




S-C-P



-