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Industry Analysis vs. Apple Inc. Team 2 Amy, Marlee , Jenn , Logan , Corbin, & Josh. Computer Hardware: History. Started in 1970’s with mainframes In 1980 the first PC was introduced- Altair 8800 The Altair 8800 was based off of two key concepts that are still the basis of PC’s today
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Industry Analysis vs. Apple Inc. Team 2 Amy, Marlee, Jenn, Logan, Corbin, & Josh
Computer Hardware: History • Started in 1970’s with mainframes • In 1980 the first PC was introduced- Altair 8800 • The Altair 8800 was based off of two key concepts that are still the basis of PC’s today • Chips • Open-system Architecture
History Continued… • Open system design Included • Microprocessor from Intel and Windows operating system from Microsoft • Graphical User interface • Graphical user interface • Eliminated the commands required on the previous operating system
History Continued… • Today the original Idea behind the PC has partnered with other computing platforms • Servers • Workstations • Servers- customers could now request stored information through a network • Workstations- incorporated advanced graphics and capabilities to handle intensive applications
Market Definition: Hardware • The computer hardware industry is comprised of many components • PC’s • Peripherals & Devices • Storage • PC’s- Desktops & Laptops • Peripherals & Devices- PDA’s, calculators, GPS navigation systems • Storage- memory sticks, removable hard drives, external hard drives
US Market Value: Hardware • In 2009 the market equaled $63.3 billion • Represents a 6% compound annual growth rate (CAGR) in the period 2005-2009 • Expected to grow by 11.7% by 2013 • The most profitable market is PC’s • Total revenue= $27.4 billion which is 43.3 % of total market value • The future CAGR in 2014 is 8.4% increasing to $94.9 billion
Global Market Value: Hardware • In 2009 the computer hardware market equaled $193 billion • Equating a CAGR of 5.4% in the period 2005-2009 • PC’s represent $104.9 billion total revenues • = to 54.3% total market value • In 2014 the market forecasts a CAGR of 6.4% with a total revenue of $263.8 billion • European and Asian-Pacific markets= $71.4 billion
Established Market Trends: Hardware • Prices of hardware have continued to drop since the computing revolution • As vendors are dropping prices, they are incorporating more added- value to consumers • “Upgrade Cycle”- Vendors introduce new versions of products to incorporate new innovations • “Killer Applications”- to compensate for the upgrade cycle, vendors are creating products with more processing power, larger memory, and other new features • Examples) Microsoft Office products
Market Strategies: Hardware • Major mergers and acquistions between companies • Merger of HP & Compaq- 2002 • Merger of Acer & Gateway-2007 • Merger of IBM & PricewaterhouseCoopers-2002 • IBM made 12 acquisitions in 2007 and 17 more in 2010 • Major companies moving to the services industry • Adding post purchase value to consumers • Value innovation strategies • Companies are adopting strategies to cut down costs while adding more buyer value to products
Future Industry Trends: Hardware • Tablet market is significantly expanding • Prominently moving into the corporate sector • PC’s market will remain the most profitable • Because.. • The accessibility for typing, spreadsheets, and other work related activities • Expansion of network computing • Growth of cloud computing
Seasonal Fluctuations • Slow period for international markets during summer • Business activity decreases in the summer, therefore slowing sales • Fourth quarter sales expand • Businesses usually close books in December and manager seek to eliminate capital spending • Industry sales goals end at year end • Experience growth due to holidays • Sales growth during “back to school” campaign
Economic Downturn: Hardware • In the period 2002-2008 sales shipments significantly decreased • In the period 2009 we have experienced a slow increase in shipments and expect significant growth by 2014 • The earthquake in Japan during 2011 stalled the supply chain
Demographic Profile: Hardware • Through innovations in technology and affordability for consumers, the PC market has spread in to nearly every household as well as businesses • The following charts describe the trend of households who own and operate computers from 1984 to 2009
Demographics: Workplace • The computer industry has made a significant impact in the corporate sector • The following charts paint a picture for the use of computers in the “corporate world,” with each chart providing more in depth detail
Hardware Top Competitiors • Acer Inc. • Hsichih Taipei, Taiwan • Dell Inc. • Round Rock, Texas • Hewlett-Packard Company (HP) • Palo Alto, California
Acer Inc. • One of the top upcoming companies in IT hardware products. • Structured as a single business segment. • Hardware specialties • Personal Computers (PC’s) • Notebook PC’s • Mobile Devices
Acer Inc. cont. • Variety of brands under Acer Inc. • Gateway • PB brands • eMachines • Projectors, LCD monitors, HDTV’s • Personal Computer Uses: • Personal • Business
Acer Financials • 2007 Revenue – $14.2 million • 2008 Revenue – $16.5 million • 2009 Revenue – $17.3 million • Based on Revenue, Acer Inc. has been steadily growing its market share and has begun to make a recognized name for itself in the Hardware industy.
Dell Inc. • Founder was Michael Dell who founded the company in his dorm room at University of Texas. • Dell specializes in IT systems and how they are comprised, sold, designed, manufactured, and multiple different markets. • Strategy over years has been to reach out to large corporations as well as smaller/medium sized businesses.
Dell Inc. cont. • Hardware products include: • Desktop/mobile PC’s • Servers • Networking • Storage devices • Mobility products
Dell Inc. cont. • Personalized Customer Hardware Products • Dell XPS • Graphics, Gaming • Optiplex • Large business • Inspiron • Personal Use with power • Precision • Mobile workstations • Vosotro • Small business • Alienware • Gaming notebook
Dell Inc. cont. • Developed a tablet to compete against the Apple iPad to try and gain a fair share of the market.
Hewlett-Packard Company (HP) • Large Global leader and contributor of technology products, solutions, services, and software. • United States • United Kingdom • Israel • Ireland • China • Japan • India
Hewlett-Packard Company cont. • HP has a variety of multiple hardware products: • Servers • Storage • Notebooks • Desktops • Netbooks
Hewlett-Packard Company cont. • Is a global leader in providing consumers with personal computers all over the world. • Leading in PC world: • Personal computers • Handheld computing devices • Calculators • Business workstations • Inkjet printers
Hewlett-Packard Company cont. • HP produces under both names of HP as well as Compaq. • HP also produces a tablet in order to compete with the newly discovered tablet market and the Apple iPad.
Software Industry: History • 1955 Computer Usage Company • First software company • Introduction of low price micro computer by Digital Equipment Corporation • Software was able to expand • 1970s advent of Personnel Computer (PC) • Computers in the hands of the office worker • Created ever expanding applications market…games, utilities… • Microsoft's DOS became industry leader • Operating System
Economic Trends • Great Recession of 2008-2009 • Global revenues and growth decreased • Complete turn around until late 2011
Software Market • Two Main Segments • Systems Software • Control, manage and monitor computer resources • Found in Operating System • Compilers and Interpreters • Translates programs to commands • Applications Software • Wide variety of functions: word, graphic design, financial application… • Typically packaged and sold separate from hardware • Companies have custom application software created for company use
Software Market Segmentation • 6 Main Product Segments • General Business Productivity • Network and Database Management • Cross Industry & Vertical Application • Operating Systems Software • Other Systems Software • Other Applications Software
Industry Trends • Mergers & Acquisitions (M&As) • Extremely high purchase rate of technology industry…specifically software • Hardware Co. buy Software Co. • Increase hardware functionability • Software Co. buy Software Co. • Expand technology reach through diversification • Why M&A? • Cost efficiency • Expand customer base
Industry Trends • Software-as-a-Service (SaaS) Business Model • Aka on demand software • Success due to high internet use • Benefits: • Lower vendor cost • Lower customer cost • Increased customer satisfaction
Government Regulations • Very few if any government regulations • Anti-Trust Lawsuits • Microsoft • Anti-Piracy Laws • Global Effort
Software Top Competitors • Microsoft • Redmond, Washington • Google • Mountain View, California • Research in Motion • Ontario, Canada
Microsoft • Founded in 1975 by Bill Gates and Paul Allen • Microsoft develops, manufactures, licenses, and supports software products and services, including operating systems, server applications, information worker productivity applications, business solutions applications, computing applications, software development tools, and video games.