Computer Industry Analysis

Prepared by: Scott Billups Anne Homme James Porter Stephan Rogers Jerome Wade


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Dominate Economic Characteristics Six Forces Competitive Position of Major Competitors Competitive Analysis of Personal Computer Manufactures PC Industry Trends Key Success Factors Industry Prospect and Overall Attractiveness Conclusion

Dominate Economic Characteristics

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1. Market Size 2. Scope of Competitive Rivalry 3. Stage in Life Cycle 4. Number of Companies within the Industry 5. Customers 6. Technology/Innovation 7. Product Characteristics 8. Scale Economies 9. Learning and Experience Effects 10. Capital Requirements 11. Industry Profitability

6 25. according to research released by IDC and Gartner.Market Size The computer industry consists of hardware.4 141. The worldwide PC market finished 2004 on a strong note.1 257.2 173.5 40. software.3 63.2 207.4 129. 2004-2008 Region 2004 2005 2006 USA (M units) Consumer 21.0 111.0 46. service and an endless array of products our group chose to narrow the research to PC‘s.4 88.9 78.           U. and Worldwide PC Shipments and Growth.3 41.9 67.4 82.9 Total 179.5 .9 230.6 49.0 157.4 Commercial 114.S.9 Total 58.6 Commercial 36. with double-digit percentage growth for the year.8 23.1 2008 32.5 Worldwide (M units) Consumer 64.0 75.0 100.3 284.2 2007 29.

The top companies consist of Dell. Gateway and Sony.      A few factors of competitive edge: • New technology • Custom built PCs • Reliability • Customer Service . Apple.Scope of Competitive Rivalry  The competition within the PC industry is extraordinarily cutthroat. HP.

the growth of PC sales has not decreased due to the globalization trend taking place within the multinational corporations. . However.Stage in Life Cycle  The stage of the PC industry life cycle can be described as mature.

• Sony .The world's #1 direct-sale computer vendor provides a broad range of computer and entertainment products for the consumer and enterprise markets. • Gateway . it is now targeting business customers (mostly small and medium-sized companies). businesses.HP's Personal Systems Group (PSG) markets desktop and notebook PCs to consumer. and schools. Apple Computer has been relegated to niche status in a market dominated by "Wintel" machines (computers using Microsoft Windows software and Intel processors). .Number of Companies within the Industry      • Dell .Once the world's top PC maker. • HP . government agencies. • Apple .Perhaps the purest PC play among the leading computer makers. Gateway has been hit particularly hard by slowing sales in that industry.Sony has refocused its approach to selling computers: Instead of appealing primarily to consumers.

Ranging from music manipulation.Customers  Involving interests of the PC community can be described as diverse. The bottom line is that any person can find a useful attribute for a computer: which provides the industry with revenue higher than the auto and chemical industries combined. money management. research. video enhancement. . school. there are many uses for the PC. Therefore this means the customers that buy the computers are diverse and use their machines in a variety of ways. playing a game or managing your calendar. Advantages consist across the board for the PC user. science and a myriad of others. The computer offers an efficient way of running a business.

with the retina as the screen -according to IT pioneer and futurist Raymond Kurzweil. therefore making the industry fiercer. Instead. .implanted. for example.Technology/Innovation   Technologies as well as innovation are advancing every year. in eyeglasses. Ten years from now chances are there will be few computers in home. people will be wearing computers -.

A device that hooks your computer up to the telephone line . • Video Display Adapter . NOT MEMORY! The Hard Disk Drive is like a filing cabinet .no more. it can ONLY OUTPUT the computer     information in the form of a video signal that is human readable (via the monitor). pictures. and finding things is usually easier. • Modem .A STORAGE device.Keyboard. There are two main types: analog and digital. Digital Camera. no less. etc. Retrieval is faster.The box all the parts (except monitor. Digitizer.Unlike your eyes. and printer) are stored in • Mother Board . but it is still just a filing cabinet. Scanner. Pen. keyboard. • Monitor . and data on.Like pieces of scratch paper that information is temporarily stored on ONLY WHILE you are actually working on the computer. Mouse.The main printed circuit board in the computer. which the CPU (see below) plugs into • CPU (Central Processing Unit) – The CPU is the actual "brains" of the computer RAM (Random Access Memory) .The actual display you see the words. • Disk Controller – The Disk Controller allows your computer to interact with your disk drive storage devices • Hard Disk Drive . • Input Device .Product Characteristics        Components: • Case . mouse.

Marketing Economy. Research & Development External: The external aspects of scale economies consist of the distribution centers and retailers. For example. One exception is Dell. . Apple. Financial Economy. The separate economies are internal and external. Managerial Economy.Scale Economies With most multinational corporations there are two separate economies operating between the actual company and the markets. Sony or HP manufacture computers. which has excelled in custom-built computers delivered straight to a consumer‘s home. while retailers arrange for computer deliveries to the customer. Internal: Tech Economy.

there are people who struggle with applications and user activities such as installing new drivers or connecting a monitor. Dell observes great rewards when consumers give praise in regards to customer service. In the US computers are found in most homes with access to the Internet.Learning & Experience Effect The computer industry is mature and here to stay. . Dell. Since the industry is so mature the complaints are few due to the reliability of the PC. Students are taught to use computers in school at a young age and competency is only going to increase. One of the largest complaints within the industry is support. once again is an exception. However.

the brand name products distributed by Apple.9 billion on research and development last year alone makes a person think twice about embarking in the industry. Furthermore. Taking into account that HP spent 3. .Capital Requirements The capital required to enter and actually compete with the big names in the computer industry are ridiculous. This would be the most probable situation when attempting to create a profit within the PC business. 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. New components and ideas are always being developed by the large companies. However. Dell and HP are household names. which few can compete.

The industry is constantly redefining itself as well as every other business on the world due to its deep routes within every industry. but the numbers are skewed due to other hardware Apple provides. As for what company ranks the highest in profit at the moment is Apple. The industry is extremely competitive and profitable. Every company that creates PC‘s also has its hand in other industries and markets. And the answer is billions upon billions upon billions of dollars. An important question to ask is how profitable is the industry.Industry Profitability The fact remains that the PC industry doesn‘t produce only PC‘s. .

6 Forces        Suppliers Buyers Rivalry among Existing Firms Threat of New Entrants Substitute Products Stakeholders Complimentary Products .

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 .Suppliers / Buyers 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. 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. Microsoft operating systems are used in 90% of computers. giving it substantial bargaining power.‖ Buyers: The strength of the PC buyer has basically evolved from the personal computer becoming a commodity-like item.

and those competitors that do not follow will fall off by the wayside.699.‘ Follow the leader occurs when industry leaders are mimicked by competitors.Rivalry Among Existing Firms  The competition the personal computer industry is also an industry that resembles ‗follow the leader. Now the average price of a PC is under a thousand dollars. In 1999 the average PC cost $ 1. Price Wars: Ex. .

entry barriers are higher now than they every have been. .Threat of New Entrants/Stakeholders TNE: The chances of a new PC vendor entering into the market and gaining significant market share is pretty slim. recycling in all computer brands for a small fee. 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. Concentrated: it is estimated by analysts that in the near future the top 5 vendors may control 70% of the global personal computer market. Two of those entry barriers that are making entry into the PC market so tough are cost and distribution. IBM and Dell have recently started up a computer recycle program.

Substitute Product Functionality PC/Notebook Cell Phone Handheld devices PowerPoint Camera Mp3 player Spreadsheets Word processor X X X X X X X X X X X GPS navigation X X Email X X X .

Competitive Position of Major Competitors 4B Dell 3B Net Income 2B Apple 1B Soya Gateway Hewlett-Packard 25 B 50 B Market Capital 75 B 100 B .

Competitor Analysis of PC Manufacturers .

:     Founded in 1984 Mission Statement: ―To be the most successful computer company in the world at delivering the best customer experience in markets we serve.Dell Inc.4 billion .‖ Next day delivery No middlemen or intermediate retailers Current Situation:  Revenue over $56 billion  Net income of $3. Dell Inc.

4 billion . create social benefit and improve the lives of customers—with a focus on affecting the greatest number of people possible.Hewlett-Packard Hewlett-Packard:  Founded in 1939  HP‘s mission: ―To invent technologies and services that drive business value.‖  First product was an audio oscillator  Multi component system model Current Situation:  $86 billion in revenue  net income of almost $2.

‖  Stylish product innovation  Entrepreneurial Current Situation:  $14 billion in revenue  Net income of almost $1. communicate. and create. high-quality information products and services for people who learn. powerful.3 billion .Apple Computer Apple:  Founded in 1976  Mission statement of Apple is as follows: ―Apple will be a leader in providing simple.

―To invest in our communities and future by providing state-of-the-art technology and technical support.‖  3rd largest personal computer company in the United States  Ranked in the top ten worldwide  Profit pyramid model Current Situation:  $4 billion in revenue  Net income of almost $6 million .Gateway Inc. is. Gateway:  Founded in 1985  Mission statement of Gateway Inc.

:  Founded in 1999  The mission statement of Soyo is.Soyo Group Inc. Soyo Group Inc. ―To capitalize on Soyo‘s market position as a leading distributor of computer and networking products by increasing penetration of existing markets through acquisitions and expanding into new markets.‖  Computer peripheral devices Current Situation:  $38 million in revenue  Net income of almost $540 thousand .

PC Industry Trends           Increasing Clock Speed Mass Customization Outsourcing Electronic Commerce Current Trends and Issues Demand Dynamics Changing Profit Dynamics Market and Distribution Trends New Product and Technology Directions New Business Strategies .

Key Success Factors     PC Industry Services Technology Services Consulting and Integration Managed Services .

Industry Prospect and Overall Attractiveness     Factors that make the Industry Attractive Factors that make the Industry Unattractive Special Industry Problems and Issues Profit Outlook .

Conclusion      Dell Leads Global Market Diversify the Workforce New Innovations PC Improves Society .

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