Abstract: The most striking difference between smartphones and traditional feature phones is that:Smartphones can install customized software services. The flexibility of installing customized software service makes smart phone more and more powerful, and become a necessity of human life. At the same time, how to deal with the relationship between hardware manufacturers and software manufacturers has also become an urgent problem for the smartphone industry. In order to achieve the current functions of smartphones, hardware and operating system providers such as Apple, Google, Huawei and Xiaomi are needed to build a basic platform. Meanwhile, third-party service providers, such as game software companies and multimedia service companies are also needed to meet the personalized needs through a variety of software. Platform providers and service providers form a new ecosystem by means of hardware products and software services. Strategies from both hardware and software companies will influence the users' purchase decisions. The core problem of this paper is:In the process of competing for users and gaining revenue, how should iOS and Android ecosystems formulate competitive price strategies and dealing well with the relationship between hardware and software manufacturers.
Starting with hot issues in reality, this paper constructs the price optimization model of hardware manufacturers from the perspective of competition. Furthermore, the actual situation and industry development trend of iOS and Android are combined to extend the model. Considering the relationship between iOS and Android market share, the model is simplified by discussing it in sections. Based on user feedback on iOS and Android hardware vendors' pricing decisions, the optimum price decisions are inducted. The model results provide explanations for the basic logic of "hardware free" business mode. Based on the model results, it is found that high service rate of iOS will reduce iOS's revenue in software services, but it will increase the sales of hardware and increase the revenue for Apple in general. As for Android hardware manufacturers, a significant improvement in brand value is required if they want to compete with hardware products which are based on iOS platform.
This paper mainly focuses on the analysis of the smart phone industry. However, the framework of the relationship between hardware platform and software service and the mathematical analysis model based on it are useful in analyzing, optimizing relationships between various types of enterprises, such as product sales and after-sales service, hardware and software, platforms and content services. Especially the research perspective of hardware products and software services not only reflects the reality of segmentation and inseparable relation between product and service, but also reflects the value changes of various manufacturers' niches through pricing strategies. In the enterprise decision-making process, a strategic view of the overall situation is required, not only their own factors matter, factors of other enterprises in the industrial chain or even industrial ecosystem also of importance.

Key words: hardware, pricing, brand value, iOS, Android