Five Forces Analysis of PC Industry
Threats of Entry
The threats of new entrants in the PC industry are low in the U.S. market.
The advanced technology is required to make and design PC. The US PC market was dominated by a few big names in year 2007, for example HP, Dell, Apple, and they have their own differentiate products. It is thus hard for new competitor to break into the established brand and customer loyalty. Each firm has contract or has built tight ...view middle of the document...
Small firms lack the resources and capability of acquiring enough capital to compete with the existing large firms. The established distribution channels of either retail stores or outlet also somewhat prevents the small firms from entering.
The bargaining powers of suppliers
In the PC industry, the big suppliers such as Intel and Microsoft have a relatively large power over its differentiate products (microprocessor, Windows system) while the mass small firms that produce other simple components lack of bargaining power, and faces great competition in price and design.
The Bargaining Power of Buyers
Home and corporate users dominate the five categories of buyers on PC consumption. There are large amount of these buyers in the market that are price sensitive with low switching cost on the products, which raises the overall buyers’ power.
Threat of substitutes
The emergence of PDF, smartphone and iPad (not yet in 2007) stands as the greatest threats to the PC industry. These substitute products are evolving with greater design yet cheaper price that threatens PC.
PC industry is a highly competitive and fast growing market. Companies compete for price, advertising, branding, and design. Constant innovation is the key to succeed in this industry.