Porter's five force analysis on computer industry

1. Companies Products Brands
Dell Mobile Phones ,
Laptops , Alienware
etc..
Inspiron,Latitude,
Precision,studio,xps
HP Printers , Software's ,
Laptops , Tab , Mobile
Phones etc…
HP , Compaq , HP
pavilion,Omnibook,
Elitebook
Apple Desktop pc’s , Mobile
Phones, Apps etc…
MacBook, MacBook air,
MacBook pro
Acer Laptops,Tabs,Mobile
Phones
Gateway, Packardbell
Sony (not
manufacturing now)
Laptops, TV, Sound
system etc…
Vaio

2. 

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

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

5. Capital Requirements

The capital required to enter and actually compete with the
big names in the computer industry are ridiculous.
Taking into account that HP spent 3.9 billion on research
and development last year alone makes a person think
twice about embarking in the industry. New components
and ideas are always being developed by the large
companies, which few can compete. Furthermore, the
brand name products distributed by Apple, Dell and HP
are household names.
However, 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. This would be the
most probable situation when attempting to create a
profit within the PC business.

6. Big 5 Forces

 Suppliers
 Buyers
 Rivalry among Existing Firms
 Threat of New Entrants
 Substitute Products

7. 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.
Microsoft operating systems are used in 90% of computers,
giving it substantial bargaining power.
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.”
Buyers: The strength of the PC buyer has basically evolved from
the personal computer becoming a commodity-like item.
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

8. 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, entry barriers are higher now than they every have
been. Two of those entry barriers that are making entry
into the PC market so tough are cost and distribution.
Concentrated: it is estimated by analysts that in the near
future the top 5 vendors may control 70% of the global
personal computer market.
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, IBM and Dell have recently started up
a computer recycle program, recycling in all computer
brands for a small fee.

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

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

11. Competitors Details
Dell Inc.

Dell Inc. :
 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.”
 Next day delivery
 No middlemen or intermediate retailers
Current Situation:
 Revenue over $56 billion
 Net income of $3.4 billion

12. Hewlett-Packard

Hewlett-Packard:
 Founded in 1939
 HP’s mission: “To invent technologies and services
that drive business value, create social benefit and
improve the lives of customers—with a focus on
affecting the greatest number of people possible.”
 First product was an audio oscillator
Current Situation:
 $86 billion in revenue
 net income of almost $2.4 billion

13. Apple Computer

Apple:
 Founded in 1976
 Mission statement of Apple is as follows:
“Apple will be a leader in providing simple,
powerful, high-quality information products and
services for people who learn, communicate, and
create.”
 Stylish product innovation
 Entrepreneurial
Current Situation:
 $14 billion in revenue
 Net income of almost $1.3 billion

14. Acer(Gateway)

Acer:
 Founded in 1985
 Mission statement of Gateway Inc. is, “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

15. Sony Group Inc.

Sony Group Inc.:
 Founded in 1999
 The mission statement of sony is, “To capitalize
on sony 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

16. PC Industry Trends

 Mass Customization
 Outsourcing
 Electronic Commerce
 Market and Distribution Trends
 New Product and Technology Directions
 New Business Strategies

17. Key Success Factors

 PC Industry Services
 Technology Services
 Consulting and Integration
 Managed Services

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