Computer Industry Analysis. Prepared by: Scott Billups Anne Homme James Porter Stephan Rogers Jerome Wade. Introduction. Dominate Economic Characteristics Six Forces Competitive Position of Major Competitors Competitive Analysis of Personal Computer Manufactures PC Industry Trends
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Scott Billups Anne Homme
James Porter Stephan Rogers
The computer industry consists of hardware, software, service and an endless array of products our group chose to narrow the research to PC’s. The worldwide PC market finished 2004 on a strong note, with double-digit percentage growth for the year, according to research released by IDC and Gartner.
With most multinational corporations there are two separate economies operating between the actual company and the markets. The separate economies are internal and external.
Internal: Tech Economy, Managerial Economy, Financial Economy, Marketing Economy, Research & Development
External: The external aspects of scale economies consist of the distribution centers and retailers. For example; Apple, Sony or HP manufacture computers, while retailers arrange for computer deliveries to the customer. One exception is Dell, which has excelled in custom-built computers delivered straight to a consumer’s home.
The computer industry is mature and here to stay. In the US computers are found in most homes with access to the Internet. Students are taught to use computers in school at a young age and competency is only going to increase.
However, there are people who struggle with applications and user activities such as installing new drivers or connecting a monitor. One of the largest complaints within the industry is support. Dell, once again is an exception. Dell observes great rewards when consumers give praise in regards to customer service. Since the industry is so mature the complaints are few due to the reliability of the PC.
The capital required to enter and actually compete with the big names in the computer industry are ridiculous. Taking into account that HP spent 3.9 billion on research and development last year alone makes a person think twice about embarking in the industry. New components and ideas are always being developed by the large companies, which few can compete. Furthermore, the brand name products distributed by Apple, Dell and HP are household names.
However, if a person is technologically savvy and creates new language or some sort of new innovation they could sell the idea to the large companies. This would be the most probable situation when attempting to create a profit within the PC business.
The fact remains that the PC industry doesn’t produce only PC’s. Every company that creates PC’s also has its hand in other industries and markets. An important question to ask is how profitable is the industry. And the answer is billions upon billions upon billions of dollars. The industry is constantly redefining itself as well as every other business on the world due to its deep routes within every industry. As for what company ranks the highest in profit at the moment is Apple, but the numbers are skewed due to other hardware Apple provides. The industry is extremely competitive and profitable.
Intel and Microsoft are the two most dominate suppliers in the PC industry.
Suppliers: Intel’s microprocessor chips are used in approximately 80% of personal computers.
Microsoft operating systems are used in 90% of computers, giving it substantial bargaining power.
Given that Microsoft and Intel control the majority of the PC supplier market of major component parts, the business world has named the two “Wintel.”
Buyers: The strength of the PC buyer has basically evolved from the personal computer becoming a commodity-like item.
Backward integration is also a factor in the strengthening of the PC buyers bargaining Power because more and more people are building their own computer systems
Price Wars: Ex. In 1999 the average PC cost $ 1,699. Now the average price of a PC is under a thousand dollars.
TNE: The chances of a new PC vendor entering into the market and gaining significant market share is pretty slim, entry barriers are higher now than they every have been. Two of those entry barriers that are making entry into the PC market so tough are cost and distribution.
Concentrated: it is estimated by analysts that in the near future the top 5 vendors may control 70% of the global personal computer market.
Stakeholders: Environmentalists and E-waste are the major stakeholders for the PC industry; the dumping of high-tech trash like computers in landfills.
Hewlett-Packard, IBM and Dell have recently started up a computer recycle program, recycling in all computer brands for a small fee.
Dell Inc. :
Soyo Group Inc.: