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Porter's Five Forces of Computer Industry

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B. Industry Analysis (Porter’s Five Forces)
1. Rivalry Among Competitors
The competition in personal computer industry is very intense and fierce. The five main manufacturers namely IBM, Dell, Apple, HP and Compaq are in competition to produce the least expensive and most efficient machine. Apple focuses more on innovation while Dell focuses on distribution channel and services, which create differentiation to some extent. Price competition has become severe in the industry as PC has become a more commodity-like product. This in turn has drives the industry to embrace any cost-cutting measures in an effort to increase their decreasing profit margin. Since the quality of a personal computer is largely determined by the microprocessor and application system installed, the profitability and prosperity of the industry is dependent of the profitability and prosperity of these suppliers.
2. Potential New Entrants
The threats from new entrants to the personal computer industry is weak to moderate due to the presence of dominant players deters the entry of new players to immediately enter the market and establish their own brand. In such a competitive market, these companies have invested heavily on their research and development, customer service, and marketing departments. This creates an increased competition between companies who are competing to build superior products. Due to increased standardization in operating system and microprocessors, it is easy for any new entrants to clone and manufacture white-box personal computers. However, this treat would be low since the companies have created strong branding awareness.
3. Bargaining Power of Buyers
Organizations, governments and schools that purchase computers in a large volume have bargaining power in relation to price, feature and service plans. While personal computer buyers are price sensitive and do not

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