This action might not be possible to undo. Are you sure you want to continue?
We first analysed the PC industry using a Porter¶s five forces.
Porter¶s five forces: Rivalry among existing competitors ± HIGH In the early days of PC industry, IBM established an ³open architecture, which helped IBM standards to gain dominant market share and allowed many other manufacturers to produce IBM-clone PCs. As a result, completion among players was very high.
Threat of Entry ± HIGH White box manufacturers held a significant market share globally and they had a strong cost advantage since they were able to reduce overall operation costs by not engaging in marketing and promotion activities. There were also many contract manufacturers (OEM), many in Asia, stood ready to make PCs on behalf of other firms. As a result, PC industry allowed easy market entrance for some players.
Pressure from substitute ± LOW There was virtually no single substitute for PC, which can perform many functions. It could be possible to find a substitute for individual function such as word processor for typewriter, networking for telephone, and gaming for other entertainments but PC was the only one that satisfies the various needs of end users. Substitute could include non pc-buyers who preferred a convention/traditional method but they tended to be a small demographic.
Intel and Microsoft. 3) for resellers. Most importantly the technology was becoming a commodity and PCs were produced at very low cost. PC market is a mature business with high price elasticity of demand since there was a little product . the economy was stable in large parts of the western society and the rapid growth in Asia (China/India) supported demand for cheap PC¶s globally. and resellers were accounted for two third of total sales of PC manufacturers. and had an access to 100. As PC margins were typically highest during the early days of a microprocessor generation. They all had moderate to high bargaining power because 1) for retailers. distributors. All these facts lead to a conclusion that buyers had substantial power to PC manufacturers. we can assume that each PC maker demanded more supplies from Intel during this time but Intel had a great control over how they distribute new products among PC makers.000+ resellers. had very high bargaining power for PC makers. they carried a full range of computer hardware and software.Power of input suppliers ± HIGH Because Microprocessor and operating system were accounted for approximately one third of total manufacturing costs. they had sales people played a significant role in helping customer¶s selection among models and manufacturers 2) for distributers. survey showed that 93% of end users accepted reseller recommendations for computer purchases. The external environment in 2004 that influenced the PC industry was mainly characterized by the fact that internet was soon to be a commodity globally with the rapidly decline of PC¶s prices. Power of buyers ± HIGH Retailers. who were the monopolistic suppliers for Microprocessor and operating system respectively.
differentiation among PC manufacturers. . The reason for a little product differentiation can be explained by common use of standalised components and OS.