In recent years customers have more alternative options to the Personal Computer such as Laptops, Tablet, etc. Because of the availability and thinness of these items, they have become increasingly popular and making PC more obsolete. In order for the personal computer to compete with these newer alternative options, it must differentiate itself in order to regain market share.
Suppliers: Bargaining Power of Suppliers: Low Suppliers in the personal computer industry can be categorized into three groups:
· Hardware suppliers
· Software suppliers
· Service suppliers
Generally their products are standardized and these companies compete on better price on new products and also they attempt to differentiate by these items. So all companies in this industry can easily switch their suppliers. The main part of the PC is Microprocessor which shows the quality of PC and all software which can install on it. Thus suppliers of hardware and software in this industry play a critical role in the pricing of products. If a firm is following a high quality strategy then it can be expected that their prices will generally be higher to reflect the higher prices they are paying their suppliers. For example, the operating system in Apple’s MacBook Pro, known as the OS X, is considered to be one of the best in the industry and their prices reflect this.
Service suppliers offer internet, tech support and repair services. These suppliers focus highly on operational performance and relational performance in order to increase customer satisfaction. These companies offer a variety of customer loyalty programs to attract and expand their customer base
Potential Entrants: Threat of New Entrants and Entry Barriers: Low The threat of new entrants in the personal computer industry is very weak. Currently the market share of PC industry is dominated by five major competitors. Because of the market requires significant investments in R&D Department to continually develop innovative products as well as large fixed start-up costs for manufacturing and employees and customer service.
Large firms can manufacture products at lower prices because of the advantage of economies of scale (per unit costs is low in their large scale production). All new entry companies in this market will initially have smaller production and will consequently have higher prices. In mean while this industry currently much emphasis on price because this item PC have become more or less a commodity in personal life therefore customer are more sensitive of price. In addition Big companies will have to deal with the brand loyal customers that have trusted the existing players in the industry for years.
On the other hand New entrants do not have equal funding for R&D so they cannot compete which big companies in innovative products will not only have higher prices but they will likely have a less innovative product.
Substitutes: Threat of Substitutes: High Although it is very doubtful for a new entrant to join the PC industry, but there are other growing industries such as tablets & smartphones which are affected the sales of personal computers. These products offer almost similar capabilities to consumers that a personal computer has. So it causes selling of PC will likely decline, as some consumers see these products as alternatives for one another. For example the internet is accessible though smartphones and tablets and they are more portable than PCs.
Industry Competitors: Rivalry among Existing Firms: High There is tough competition between the PC manufacturers companies. All of them are fighting to produce a low cost, powerful machine with the most efficient operating system. But all big company tries to specialize in different fields in order to compete amongst their rivals. Some companies focus on innovation and new technology and some others may focus on their distribution…