Apple Inc Pc Industry

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Threat of substitute products was low in PC industry. The function like type, web browser could only provided by PC in the early stage, before the invention of smartphone and tablet.

The rivalry within PC industry in the early stage was at intermediate level. The marketing of PC was expanding in the early stage due to high annual sales and many new entrants of industry. Those new entrants focus on the price and service to promote their product.

Later Stage

The entry barriers in the later stage became high. Under the situation that four top manufactures, HP, Dell, Lenovo and Acer sharing the market, as the Exhibit 3b shows, the four top manufacture get almost half and more than half of worldwide shipment. First, The capital requirement is high due to the high fixed cost in the facilities establishment in PC industry. The economies of scale they got allow them to have large competitive power with low fixed costs. So the entry barriers are high for new entrants to get into the economies of scale. Second, since the PC industry is developing and changing so fast, the new entrants required to have high investment on innovation to keep pace with the industry changing. Third, the access to distribution channels is unequal for new entrants. It’s hard for retailers like superstores and electronic retailers to accept new entrants. Finally, since the four top manufactures have the established brand, they became the first choice for existing customers.

The bargaining of suppliers is relatively high, especially for the supplier of manufactures who provides CPUs and OS. As the most important part of PC, Intel and Microsoft took the most part of the market share. The few substitutes also strength the power of supplier.

The bargaining power of buyer is medium. On the one hand, individual buyers like home consumers take the most segments of buyers; they are the price takers mostly. Also relative high switching costs limited their power. Some consumers get used to the specific PC so they don’t want to change. For example, the Apple has its unique operating system that attracts several bunches of people who are willing to pay a higher price. On the other hand, the increasing competition and emerging of substitute gives buyer more option to chose, which means buyer has relative bargaining power.

The threats of substitute products are become increasingly high. Smartphone and tablet could conduct the similar function of PC, and they become more and more popular now days.

The rivalry among top PC manufacturers in industry is intensive in later stage. With the situation of the industry was act as intensive competition, decreased profitability and increased revenue. All of the manufactures with equal size and power are trying to provide products with low price. So they should come up with different strategies.

Major Competitive Advantage

Apple’s retail strategy has had a great impact on the company. Opening up their own Apple stores was a great idea thought of by the company. Most major electronic companies don’t have their own storefronts due to risk of it being non profitable and successful, but Apple has been successful due to their customer service. Although Apple products are sold at retailers such as Wal-mart, Target, Best Buy and etc, consumers would prefer to visit the Apple store when purchasing an Apple product versus going to a Big Box retailer due to the experience.