The Industry Structure & The Behavior of Firms in the PC Industry

In this paper I will address the intentness structure and the behavior of firms in the Personal information processing system Industry. The in the flesh(predicate) 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 merely of home/business use machines, not mainframes, databases, or any potpourri of servers or super-computers. The PC industry is a fast-growing, consumer-based oligopoly.I will come up the latter through the use of industry characteristics and firm behaviors by full-grown 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 afoot(predicate) industry leader. CCC boasts a 1999 market share of 12. 8%. However, this numeral has declined slightly from its 1998 share of 13. 4%. The dip is due to dingle Computer Corp. s heavy presence in the sm each PC market, (Industry Survey, Apr. 2000).Compaq has a extensive range of PC products from subaltern, less expensive machines to more costly, high-tech systems. CCC has been most conquestful with their smaller machines, targeted to the home/family segment, because they are sufficient to sell striking quantities. However, Compaq has been unsuccessful in retaining customers because most of them were pleased with their smaller machines and did not upgrade to CCCs more expensive, high-tech systems,(Hamblen 1-2). customer retention has been a problem for the forty billion-dollar high society, (Hamblen 1-2).It is my assessment that Compaq does still wait the leader because their products are very easy to buy for the uneducated consumer. You whitethorn simply walk into the WIZ or BEST BUY and at that place are five or so Compaq machines all competit ively priced with a good range of attri entirelyes, usually not the best that a old hand user would require. For instance CCCs newest product, the iPac, is a very simple-to-use, inexpensive machine. It is supposed to satisfy business workers needs for a useful computer at abject cost,(Wildstrom 1-2).Another problem in CCCs not-to-distant next is their distri stillion be. With the use of the Internet, competitors have been able to reduce and point eliminate distribution costs. To follow suit Compaq plans to increase direct gross sales in the future, according to Micheal Capellas, CEO (Hamblen 4). The future for CCC is quite hazy. in spite of the sales numbers and the heavy bottom line, CCCs line of business price has sat down in the low $30s,(Hamblen 1). contest is increasing daily and Compaq needs to distinguish itself in the marketplace.Theyve already experienced a decline in markets share, only they can change their fate. dingle Computer Corporation, the second leading computer manufacturer, began by selling PCs directly to consumers. Their first customers ordered over the ph wiz and Wold large-minded Web. To this day Dell still has no brick and mortar retailers and does not propagate its product to resellers. In the business to business market Dell has excelled, but until recently, the profitable follow was not so profitable in the home-user segment,(Industry Survey, Apr. 2000).The companys new strategy, to gain market share, has proven very effective. Dell promptly 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 Dells presence has been mat up in the growing PC market. This has forced competitors to be very certain about pricing in this highly elastic industry. Dells 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 D ell.Analysts are worried because profit growth projections were splay at least 10% by CFO Thomas Meredith, who state he is only trying to set more realistic goals and that the company will still post growth, (Burrows 1-2). Recently Dell has do nearly key moves that should boost revenues including beefing-up its web site and a joint supposition with Internet giant AOL, (Money 1-2). Dell Computer Corporation is still a major player in the PC industry and will cross to be in the future. 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 assign of the population would ever own a PC. Obviously, they were very wrong. IBM has not do 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 al l retail selling and go completely direct, IBM plans to sell its Aptiva system just over the Internet in the near future, (Industry Survey, Apr. 000).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-secret government appliances. For HP the PC market is one of many. Originally Hewlett-Packard was the standard in computer electronics however, this is not reality today. HPs reputation declined through the 80s and early 90s because of short(p) quality management.To think the respect they had lost the marketing and engineering departments at HP worked their fingers to the hit the books to create a new image for the company. This was very effective today HP owns a modest 6. 2% of the PC market and a very healthy reputation for quality PCs and peripherals, (Industry Surv ey, Apr. 2000). HP has had some growth in the past few years but has failed to match the industry growth rates. The companys years of poor quality put a considerable hurt on their future growth while HP was busy filling in the heap it dug for itself, industry leaders like Compaq and Dell were basking in their success.