Five Forces Analysis of Desktop Manufacturer

Internal rivalry is very high, competition between major companies in the desktop personal computer manufacturing industry, which includes Apple, Dell, and, Lenovo, Hewlett-Packard, Samsung and Acer, is fierce. The iron grid of the industry is better technology. Incumbents have to adapt themselves to new technologies in order to keep their position and gain more market share.

Barriers to entry is low to moderate because the market has been fully segmented and targeted by the differentiated PCs produced by the main incumbents such as Apple and Dell. They have established efficient sales channels, supply chain systems and customer service, as sell as brands and reputations. Moreover, high cost of technology made it ever more difficult to make entry into desktop personal computer manufacturing industry.

Threat from substitutes products is moderate. Portable PCs, such as laptops, notebooks, and tablets have long been stealing desktop sales. Consumers are interested in buying tablets such as iPad and Kindle. Many companies in desktop personal computer industry have been invested in developing their own tablets line in order to adapt in this trends.

Bargaining power of suppliers is low to moderate. Microsoft and Intel, the software-chip duopoly, have a more bargaining power to the device companies, because their products are highly differentiated and technology advanced. But other suppliers, such as Foxconn which produce less sophisticated components and oftentimes has labor intensive manufacturing plant in Indian or China, have relatively less bargaining power.

Bargaining power of buyers is moderate to high. Home and corporate are the main buyers of desktop personal computers. There are many desktop brands and models in the market and they are not highly differentiated, so the price is the most important factors to affect the purchase behavior of the buyers. In other word, consumers are price sensitive and the switching cost is low, which results in the drastic price competition with the desktop PC manufacturers and high power of the buyers.

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