Pc Industry

• The consumer electronics market is highly competitive with rapid changes in consumer demand patterns.

The PC industry has started to develop fast in the 80 's when IBM launched its first PC series and later on when numerous small companies entered the market. PC is a new product and companies had to create the demand to it from the scratch.

The PCs became a commodity. Microsoft grew to be the leader in the operating system market continuing to develop their Windows GUI line. With Windows, software standards have been established allowing software developers to certify their products to meet Windows requirements and deliver controlled performance. In addition, the PCs allowed numerous hardware manufacturers to

In such a competent and market-leading organization, how did HP overlook these incorrect assumptions? Root cause analysis showed these reasons:

The large capital requirements to enter the computer industry combined with established brand identities of the current incumbents make barriers to entry high, not to mention the economies of scale and distribution channels that incumbents enjoy which make entry barriers even higher. The current PC incumbents enjoy demand-side benefit of scale in the business sector where PC buyers prefer to buy products from large trusted companies, raising the level of entry barriers.

Dell Computer Corporation was founded in 1984 by Michael Dell. From the early 1990s until the mid-2000s, Dell was ranked as a PC market leader relying on their distinctive marketing pattern “Direct Model” which undertook direct communication with customers and provided customized products. Recently, the PC industry is facing inconceivable worldwide competition, and Dell is gradually losing their competitive advantages by using its direct model in critical business segments. The company is facing shrinkage of growth, increasing competition, declining quality of customer service, and limitation of expansion. These issues have an enormous impact on Dell’s position as a technological giant in the PC industry.

* In 1985, Compaq and IBM do a research and development (R&D) and make move Apple into the mainstream by becoming low-cost producer and joint venture with IBM. This’s one of Apple failure moment and Apple Gross margin drop to 34%.

• DELL experimented with retail channel in 1990, resulting in brisk sales, but lower margins, resulting in retail losses, in 1993, DELL withdrew in 1994.

The PC industry is highly competitive and constantly changing as technology evolves and customer needs change. Some of the top competitors in the PC industry are IBM, Hewlett-Packard, Dell and Apple. Theses rivals are constantly jockeying for the top competitor’s position. They compete in prices, product innovation, advertising, etc.

MICROSOFT (windows server) 2. INTEL ( cutting-edge technology) 3. SAP ( IT infrastructure) 4. VMWaRE ( virtual infrastructure solutions) 5. ORACLE ( database solutions) 6. BMC (data centre automation.) 7. BROCADE ( networking solutions) Cost structure36 1. Cost of Revenue $48260m 2. Sales & Admin expense $7664m 3. R&D Expense $856m 4. Capital Expenditure $675m 5. Total Acquisition $2562m 6. Total Operating expense $57640m 7. Software&network 33 %&39% increase Revenue streams21 Key resources35 1. Acquisition 2. Brand equity 3. Long ability (as high per company) 4. Intellectual property 5. R&D and revenue stream 6. Human resource 7. Core competence Key activity37 1. Support & deployment Services 2. Cloud & security services 3. Software & peripherals ( Printer, TV, networking, wear less product, anti-virus) 4. Client product (PC, Monitor, note book, work station, tablet, Smart phone) 5. Developing technologies ( in 2011 its open the dell silicon valley research and development centre ) Value proposition 1. Dell customization 2. Direct sell approach 3. Product configuration 4. Pre & post sell customer

Dell Computer Corporation, the second leading computer manufacturer, began by selling PC's directly to consumers. Their first customers ordered over the phone and Wold Wide Web. To this day Dell still has no brick and mortar retailers and does not distribute its product to resellers. In the business to business market Dell has excelled, but until recently, the profitable company was not so profitable in the home-user segment,(Industry Survey, Apr. 2000). The company's new strategy, to gain market share, has proven very effective. Dell now posts a 62% gain in world wide PC shipments and a 2.6 share-point gain from 8.2% in `98 to 10.8% in `99,(Industry Survey, Apr. 2000). Recently Dell's presence has been felt in the growing PC market. This has forced competitors to be very careful about pricing in this highly elastic industry. Dell's profitability is also notable, since it has minimal distribution costs and does very little advertising Dell is extremely profitable. However, rough times may be on the horizon for Dell. Analysts are worried because profit growth

After 2004, most of the growth has come from retail market. The biggest growth can be found in mid-sized cities and small towns, where end users have less savings to spend, know less about computers and therefore prefer to receive advice from retailers before they make the decision to buy a computer. After buying this computer, convenient technical service is required after bringing the PC back home.

By the late 1990s, HP’s business was facing major problems which are reflected in its financial results. Despite a 9.71% increase in total net revenue, HP faced declining net earnings of 6% from 1997 to 1998. The company had also experienced a slow and decreasing growth in revenue in comparison to its main competitors. From 1996 to 1998, HP’s annual revenue growth decreased from 21.89% to 9.71%, while one of its main rivals, Dell, was able to maintain an over-40% revenue growth in each year within the same period. Moreover, HP’s failure to satisfy customer needs and catch

Both Dell and HP are two strong players in PC industry which refers to an industry where companies produces PCs (desktops and notebooks), handheld devices (smart phones and tablets), and workstations. However, with growing global expansion, Dell and HP’s performance differs. Dell, once the world’s largest PC maker in 2001, has continually lost its market share to HP and Acer since 2007 (Guglielmo 2009). The cause is rooted in two differences of these companies: company diversifications and core competences. Therefore, how firms can continually survive in the PC business is more of an issue for Dell than for HP.

In 1984 when Dell Computer Corporation was first founded, the company was in business to “design, manufacture, sell and service High performance personal computers compatible with industry standards”(Ruback, 2003, p. 1). At the beginning the company would take older computers from IBM and they would upgrade these computers