Matching Dell

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The PC industry is one of the most competitive industries in the world. The industry had started to develop fast in the 80's when IBM launched its first PC series following which a number of "Clones" made their entry into the market. Along with these clones a number of smaller manufacturers also started entering the market. The reason for this emergence was mainly that IBM had conceded the rights to the 2 most important components of a PC i.e. the microprocessor and the Operating System to Intel and Microsoft respectively. This was due to their "Open Architecture" model. This caused the technology to be available to everyone. We can analyze the PC market using Porter's 5 forces theory

•Industry Competitors: The PC industry consists of a number of companies; hence the threat from industry competitors is high. Due to the product being highly standardized and shifting costs between brands is low, there is fierce competition which leads to lower margins and profitability in the market. The PC industry can be described as being highly competitive •Threat of new entrants: The threat of new entrants is a constant one in this industry which again leads to companies adopting aggressive strategies and lowering margins •Threat of substitute products: The lines between PC's and other devices is blurring, other devices like PDA's, handheld electronics etc. are now coming out with features similar to PC's. This again is driving faster and faster innovation among the PC makers •Buyers growing powers: Unlike in the introduction phase when there were certain people who were loyal to the Apple Mac, loyalty is rarely seen among the customers in the present scenario. Since the financial risk associated with switching between products is lower, customer turnover is increasing. Hence there is competition to retain customers as well •Suppliers bargaining power: With the prices of the inputs required for PC's reducing the suppliers are the people finding themselves in a problem,...
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