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Jul 13, 2006
Comprehensive Analysis of the Computer Industry
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Comprehensive Analysis of the Computer Industry
COMPETITIVE FORCES
The U.S. computer hardware industry is one of the biggest in the world with Compaq, IBM, Dell, Gateway and Hewlett-Packard being the main players. This was one industry that was selling 150 million units in one year, (jpmorgan.com) but with economy not looking so good, things are likely to change for PC makers too. Now more than ever before, the companies in the computer industry are competing as fiercely as possible to make things better for their firms. They are fighting for new customers and are targeting markets they were not willing to exploit before. Traditional approaches and market strategies are giving way to newer ideas and innovative moves.
RIVALRY AMONG EXISTING COMPANIES
Rivalry among competing firms
The competition among the firms fighting for market shares has been intense Just as growth was slowing in the computer industry, Dell launched an all out price war in the fourth quarter of 2000 to gain market share. Hewlett Packard and IBM responded to this by saying the price war was “irrational”, (fortune.com). This helped Dell leap to number one in the worldwide market share and has left its competition scrambling to catch up. The only player to follow Dells lead has been Gateway and they lost 523 million in the first half of this year, laid off 3000 workers and closed 37 stores (Business week online).
The implications of this intense competition are that companies have no room for error or inefficiency’s. International Data Corp said that the price war has driven down prices on average 25% this year. This means shrinking profit margins and layoffs at all major companies, (Dell 5700, HP 6500, Compaq8500.) Even though consumers are benefiting from lower prices now, in the long run they may see less technological...