Hewlett Packard, better known as HP, is a major manufacturer of computer hardware in the computer industry. The computer industry serves a variety of customers, ranging from typical home users who surf the web to multinational conglomerates. HP’s products consist of a variety of computer equipment including desktops, laptops, printers, monitors, and servers. HP designs and markets these products to server the entire computer industry. In order to better meet the needs and expectations of all of their customers, HP segments their customers into three categories. HP’s first category consists of home users and small office or home businesses. HP attempts to meet their needs by offering lower end performance computers that are more economical for customers with limited funds. The second category for HP consists of small and medium size businesses. The equipment HP offers at this level is more expensive then the equipment offered to the first category, but the equipment is also of a higher quality. The third and final category is targeted to meet the needs of large enterprise businesses and conglomerates. The equipment at this level is the most expensive but it is also HP’s top of the line equipment. HP attempts to reach their target markets through store-based retailers like Best Buy or Circuit City, online retailers like CDW and Insight, and by reaching the customer directly through HP’s website. HP also has a partnership program where computer consulting firms can apply to become authorized to sell HP products. This is extremely helpful for HP to reach their larger customers since the complexity of a computer solution for their large customers is generally higher then that of their low and midrange customers.
Even though HP reaches a great deal of customers, the computer industry is very competitive. Companies like Dell and Sony are primarily competing with HP for their smaller customers that HP targets while IBM and Sun Microsystems compete with HP for their larger customers. With intense competition in all of their target markets, HP needs to find ways to keep costs down while providing a high level of quality and service to their customers in order to remain competitive in the computer industry.
Constant change in the computer industry forces companies to remain resourceful and agile. These changes can be attributed mainly to the constant improvement and development of computer technology. In 1965 the co-founder of Intel, Gordon Moore stated that capabilities of digital electronic devices (i.e. processing speed, storage capacity, picture quality, etc.) will double every two years. This theory, later coined as Moore’s Law, has been repeatedly tested and remains evident even within the computer industry today. The pace in which technology changes computer components presents many challenges to computer equipment providers. The most obvious issue is the challenge of component obsolescence. Most consumers understand that technological advances improve computer components every day. Therefore, they accept the fact that a desktop computer that they purchase today will not be as fast as one that is produced tomorrow. However, they would be unwilling to purchase the desktop computer if in one month the computer they purchased no longer held any value. Therefore, computer equipment providers must ensure that they are providing a product that the consumer will value based upon the life expectancy of the product. This starts with properly managing their supply chain. Computer equipment providers need to work with suppliers that can quickly offer products that are technologically marketable and that are of a high quality. Suppliers that can offer computer components that are state-of-the-art are highly coveted because computer equipment providers know that they can charge the customer a higher price because the customer holds a higher value for newer computer components. Computer equipment providers can also order larger...
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