The PC Industry
In this paper I will discuss the industry structure and the behavior of firms in the Personal Computer Industry. The personal computer industry has five leaders: Compaq Computer Corporation (CCC), Dell Computer Corporation, International Business Machines (IBM), Hewlett-Packard, and Gateway, (Industry Survey, Apr. 2000). The PC industry, as discussed in the paper, is comprised only of home/business use machines, not mainframes, databases, or any kind of servers or super-computers. The PC industry is a fast-growing, consumer-based oligopoly. I will prove the latter through the use of industry characteristics and firm behaviors by giving an overview of each leading firm and their behaviors', then by combining them into an industry analysis. The companies will be addressed from top leader to bottom. Compaq Computer Corporation,(CCC) is the current industry leader. CCC boasts a 1999 market share of 12.8%. However, this figure has declined slightly from its 1998 share of 13.4%. The dip is due to Dell Computer Corp.'s heavy presence in the small PC market, (Industry Survey, Apr. 2000). Compaq has a wide range of PC products from smaller, less expensive machines to more costly, high-tech syste
Another problem in CCC's not-to-distant future is their distribution costs. With the use of the Internet, competitors have been able to reduce and even eliminate distribution costs. To follow suit Compaq plans to increase direct sales in the future, according to Micheal Capellas, CEO (Hamblen 4). The future for CCC is quite hazy. Despite the sales numbers and the heavy bottom line, CCC's stock price has sat down in the low $30's,(Hamblen 1). Competition is increasing daily and Compaq needs to distinguish itself in the marketplace. They've already experienced a decline in markets share, only they can change their fate. Unlike Dell and Compaq, IBM has not had extreme success in the PC market. It is known that leaders at IBM never believed that the PC would be an important device and that only a small portion of the population would ever own a PC. Obviously, they were very wrong. IBM has not done a bad job catching up to the pack, though; it now has the number-three market share of 7.6%, (Industry Survey, Apr. 2000). IBM plans some new strategies after its low ranking in the PC market. This new strategy is to end all retail selling and go completely direct, IBM plans to sell its Aptiva system exclusively over the Internet in the near future, (Industry Survey, Apr. 2000). This will lower costs and possibly increase the bottom line for the computer giant. Like IBM, Hewlett-Packard made one mistake and cost itself billions of dollars in revenues. HP is a large electronics conglomerate. HP manufactures everything from calculators to top
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Approximate Word count = 1057
Approximate Pages = 4 (250 words per page double spaced)
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