Porter 5 Forces Analysis of Computer Industry

Microsoft’s approach of creating competition also increases both the variety and the availability of their PCs. PCs can be found almost anywhere that sells other electronics. Each PC manufacturer produces their own configurations. Each retailer sells at least a few exclusive PCs. The end result is many different PC options for the consumer.

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.

Defining an industry can be described as drawing a line between the established competitor and the substitute products offered by competitors outside the industry (Porter 1998). “Porter’s five forces provide a framework for an industry and business strategy development to drive the five forces that determine the competitive intensity and attractiveness of a market. The Porter’s Five Forces model helps identify where improvement can be made regarding competitive forces, threat of potential entrants, bargaining power of buyers, and bargaining power of suppliers and threats of substitute products.

With time, the PC continued to evolve and newer models offered better speed, color screens, more memory and larger hard drives. Further technical evolution continued to deliver higher speeds, larger storage capacity both internal and external. In addition to the hardware progression, the PC world continued to see progress with operating system solutions and advanced software catering to both large and small businesses as well as the home owner.

The five forces used to analyze the level of competition formulated by Porter are the threat of new entrants, the bargaining power of suppliers, the bargaining power of buyers, the threat of substitute products or services and rivalry among existing competitors (M. E. Porter, 2008). Two additional forces, proposed by Boehlje & Olson (2010), provide an external dynamic to Porter’s original five forces, namely technology and other drivers of change. In order to use the Porter five forces as an adequate backbone for describing the competition in our desired sector, we need thorough knowledge of the factors comprising these forces. We begin by providing an overview of general important factors used in recent literature.

customers lack a commercially viable alternative to Windows” (“Microsoft: Court’s Findings of Fact”). The barrier of entry would “prevent an aspiring entrant into the relevant market from drawing a significant number of customers away from a

Porter's five forces framework is a model of competitive industry structure. These are the threat of entry of new competitors, the threat of substitutes, the bargaining power of buyers and of suppliers and the rivalry between the existing competitors. Where these forces are intense, below-average industry performance can be expected; where these forces are mild, superior performance is common. (Jobber, 2007).

Threat of new entry into the marketplace is relatively low due to the dominance of these five and the high cost of capital a new firm would face in entering the marketplace. As it stands, new information and developments made in the PC industry are typically closely watched for by the five major competitors, and attempts are made to buy out any small innovative firms.

Business for the Glory of God states, “You are buying from the person who can produce and distribute a computer cheaper than someone else, and you are encouraging that more efficient manufacturer to stay in business, and you are discouraging the less efficient, more expensive computer manufactures from staying in business” (Grudem, 2003, p. 63). I also take Grudem’s stance on business competition and feel that it can be a wonderful way to push individuals and businesses, which in return creates affordable products and more variety for consumers.

Microsoft’s approach of allowing competition between manufactures increases both the variety and the availability of their Personal Computers. PCs can be found almost anywhere that sells electronics, and most electronics stores carry a large selection of PC’s. Since each PC manufacturer produces their own configurations, and each retailer sells at least a few exclusive PCs along with a large selection of non-exclusive Personal Computers, it is also much easier to find the perfect PC.

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.

True to nearly any commoditized product, pricing and availability became the only two significant differentiators quickly as Intel increased

Michael Porter, an authority on competitive strategy, mentions five forces that the stronger each of these forces is, the more companies are limited in their ability to raise prices and earn greater profit. In carefully scanning it industry, the corporation must assess the importance to its success of each of the five forces. Now, we will analyses these five forces in the inner-city paint corporation. The first one is threat of new entrants which means newcomers to an existing industry. The new entrants typically bring new capacity, if the company wanted to resist the threat of new entrants. They must build an entry barrier which is an obstruction that makes it difficult for a

And these analyses will be done with the help of Porter’s 5 forces (see appendix 1, 2, 3). This analysing toll deals with issues which are from outside the industry that impacts the nature of competition within the certain industry. Thurlby, (1998) stated “Understanding the nature of each of these forces gives organisations the necessary insights to enable them to formulate the appropriate strategies to be successful in their market”1. The analysis of the three industry are given belowPC industry (See appendix 1) This competition within the PC industry is extraordinarily high consisting with top companies like Dell, HP, Apple, Gateway and Sony. In order to gain competitive advantage, the key factors are advancement in technology, custom built PCs, reliability and standard customer service. The life cycle of PC industry can be seen as mature (See appendix 6); however the growth of PC’s has not decline. The reason is due to the globalisation trends taking place within the major firms. The barriers very high where there are already five main firms that dominate the market. Therefore, the chances of new PC companies entering the market and get significant hold of market share is very slender. The main two factors that are making the entry level high are mainly cost and distribution and the top five firms also control 70 per cent of the global personal computer market. Another factor may be is that

One thing is certain about the PC industry as a whole, and that is competition is fierce. We see from our research, the PC industry sales increased by 16% between 2009 and 2010, and given the state of the economy throughout the globe, that is astounding. Even more astounding is the sales of notebook PCs, which saw a 40% increase. So let us look at the marketshare of our competition, and turn to each segment. Dell dominates the desktop PC market with 28.8% (-4.9% growth), followed by HP at 28.8%, Acer at 6.6%, Toshiba aligned with our beloved Apple at 5.3 and 4.4% respectively. Let us be clear about just a few very important points of qualification about the above figures. We at Apple have a much