Research On Pricing Mechanism Of Smart Mobile Operating System Based On Two-Sided Market Theory

July11,2008, Apple Company introduced the iPhone-based platform of content and services, namely application store-App Store, this platform’s appear increases the added value of iPhone, also found a new growth point for Apple Company’s revenue and profit. With the success of the App Store, other smart mobile operating system vendors have also launched their own application store, and this brings the smart mobile operating system a new model to earn profit, smart mobile operating system vendors become the key aspect of the mobile Internet industry chain, it also has a very significant impact on the development of the entire Internet industry chain. Meanwhile, various smart mobile operating system vendors’market shares are also undergoing tremendous changes, rise and fall of the development of intelligent mobile operating system vendors also will appear. Rise and Fall of an alternative smart mobile operating system vendors obvious, and market shares difference, monopolistic tendencies seem to exist, but this is due to the characteristics of the two-sided smart mobile operating systems’market, there is a two-sided market cross-network externalities makes trading platform existing incentives to attract users to join, prompting users to have been expanding, and only when it has a critical mass scale, it will form a stable platform structure, in which case there will be a single or oligopolistic market structure.Meanwhile, the current smart mobile operating system’s profit model has been extended from collecting royalties from the initial single manufacturer to charging the registration fee to allow application developers to publish their applications in their own operating system, and share its charge for application downloads and advertising revenue in applications; share revenue with the telecommunications carriers. In many profit mode, smart mobile operating system trading platform pricing attract more attention of people, because the smart mobile operating system trading platforms exist pricing which is below the marginal cost, free or subsidized pricing, this phenomenon does not seem consistent with rational people Economics Assuming the premise, or even suspected of predatory pricing, the traditional single market theory can not explain this, this article attempts to utilize the two-sided market theory and pricing models to explain the existence of this phenomenon, as well as providing a wealth of application cases for two-sided market theory.The first chapter introduces the research background, meaning, content, method and innovation of the problem, the second chapter is the theoretical basis, it describes the theory, classification, characteristics of the platform-dependent two-sided market and the smart mobile operating system’s pricing relevant theoretical researches, laying the groundwork for subsequent research. The third chapter discusses the industry background of the smart mobile operating system platform, the profit model and its two-sided market characteristics. The fourth chapter is to study how the competition platform charges registration fees through establishing a mathematical model in three cases. The fifth chapter is to demonstrate the availability of earlier models with Apple’s mobile operating system iOS. The last part is the conclusion, summarizing the conclusions and deficiencies, and proposing further research directions.The study concluded:the factors which impact smart mobile operating system vendors’ pricing factors are mainly cross-network externalities, product differentiation and sellers’ credibility and platform matching rate. Smart mobile operating system platform will lower the price of the users which has stronger network externalities and smaller product differentiation’s degree to attract more users to participate in the platform, the scale of the users’ expansion will enhance its network externalities, then it will attract more users to join the other side of the platform, and then to impose a high price in order to cross-subsidize the cost of the side who has stronger network externalities and make a profit. In addition, the platform matching rate and sellers’ reputation also has some influence on pricing, higher platform matching rate and sellers’ reputation will attract more users to join the platform, thereby increase the trading volume, intelligent mobile operator system vendors can puerile profit by reducing transaction costs; while more users over the trading platform will further expand the scale, which brings the trading platform further enhance cross-network externalities and brings more profits to enterprises.This paper is to use the competitive and symmetrical pricing model to study the pricing issues of the mobile operating system, and inconsistent with the actual situation in fact, which the Android operating system accounted for the major share of the market conditions, and assuming smart mobile operating system users are single ownership in the model two-sided platform, which is not consistent with reality, so it’s necessary to develop realistic and asymmetric pricing model which consider the competition between platforms to explain the smart mobile operating system pricing.