1. Which of the 5 Forces of Industry Competition is having the greatest negative impact on the revenue and profitability of current PC makers? Explain how this force has negatively impacted both Revenue and Profitability of PC firms.
Substitute products such as tablets have the great negative impact on the revenue and profitability of current PC makers.
First, tablets have relatively attractive price and are readily available. After announcing IPad in 2010, Apple had sold almost 200 million IPad to date. Android tablets performed even better recently. In 2013, android grabs top spot from IPad with 62% market share. According to a report from IMS research, the average sales price of tablets is $386 in 2012, which is even lower than the average Windows laptop costs, $456.
In addition, tablets have comparable performance compared to PC. Admittedly, tablets are still weak when they are used to creating content. However, highly portable tablets could give consumers full control of the screen, features and applications. By just using fingers, consumers can directly touch the screen to interact with tablets. This experience is great especially in entertainment aspects. Compared with PC, tablets are small and light. Most tablets offer size from a 7-inch to 10-inch display screen and weigh less than 1pound. Most people only carry a tablet with them for a trip if they are not required to create content.
Finally, PC consumers have low costs in switching to tablets. Because of some software and applications, PC consumers could easily sync their data between their PC and tablets. Tablets like IPad are greatly easy for consumers to operate. Most people could work with it without any instruction, which could further lower the switching cost. Consumers could immediately enjoy the products. Consequently, when considering to purchase a second electronic device, consumers are probably choose a tablet but not a PC.
2. What steps should PC makers take to address this...