More Related Content Similar to Computer Hardware Industry Analysis (20) Computer Hardware Industry Analysis1. COMPUTER HARDWARE INDUSTRY
SEC: DEF, TOPIC NO. 7
PUNYASHLOK DWIBEDY (2012223)
RAHUL MISHRA (2012229)
R SUSHANT SINGH (2012233)
RAKESH DUTTA (2012234)
RASHMI RANI (2012236)
S. PREET KARAN BHATIA (2012250)
SHIVAM KUMAR (2012296)
RAKESH DUTTA © 2014
2. COMPUTER HARDWARE INDUSTRY IN INDIA
• 32,500 Cr market – Accounting 32% of IT industry in
India
• Some of the industry metrics
• PC unit sold
• $/storage
• Avg. PC revenue
• Price to free cash flow
• Sales/Employee
Computer
H/W
Industry
Personal
Computers
Network
Equip,
Computer
Peripherals
Storage
Devices
32.50%
13.70%
11.80%
10.40%
2.80%
28.80%
Market Share
HP Lenovo Dell Acer HCL Others
Data source: Gartner, 2013
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7. PORTER’S 5 FORCES
Moderate because of
• High price Sensitivity
• Low Player Differentiation
Bargaining power
of buyers
Strong due to
• Limited number of suppliers
• Suppliers are large, international companies
Bargaining power
of suppliers
Reasonably easy for new entrant to get moderate success because
• Online shopping has grown in popularity over the years.
• Reduced fixed costs for all shoppers.
Threat of new
entrant
Reasonably low but
• Replaceable technology for gaming consoles
• Tablet technology
Threat of
substitutes
Moderate
• Consumers have numerous options to choose from and switching costs for them are low.
• storage costs are high so quick product turnaround is vital
Rivalry
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8. SWOT
Strengths
• Many companies have strong portfolio offerings.
• Research and development - Patent
• Ex: HP
Weakness
• Alternatives to PC’s
• Computer Manufacturing Industry is a worldwide market
and subjected to instability of economies in various
countries.
Opportunities
• Opportunities for growth and advancement as
developing countries increase their need for technology.
Threats
• Likely decline for PCs
• intense competition between the large companies within
the industry which make it difficult for new, smaller
companies to become effective.
• Governments all around the world pose threats to this
industry because of environmental regulations and
currency fluctuations.
S W
O T
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10. PRICING POLICIES
• Use price competition as their products have been commoditized.
• Keep product at as many price points as possible
• Examples are LG,LENOVO, ACER.
• Price discrimination
• large corporate, SMEs, personal PCs
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11. PRICING OPTIONS
• Promotional and bundling pricing strategies.
• For example
1. With HP DESKTOP PC worth Rs. 24,990
Get accessories bundle worth Rs. 2873 @ Rs. 999
And three years onsite warranty.
2. With HP ink cartridge worth Rs 317
Free HP Glossy Photo Paper Pack worth Rs 50
3. Printer + Scanner
• EMI Option
• Segment Visitors According to Their Purchasing Power
• Inter-temporal policy
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13. MARKET BARRIERS (ENTRY & EXIT)
• Entry
• Everybody can start a home-based
mail order business for computer parts
• It takes little government permits
• Wholesaler are open for every
reseller
• There is no need to keep large stock
• Exit
• Investment in specialist equipment
• Specialized skills
• High fixed costs
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14. NON-PRICE COMPETITION
• Nibbler Approach
• Go-to-Market Strategy
• Online sales opportunity
• Hardware maintenance services
• Warranty
• Patent Wars
• Apple vs. Samsung
• Embedded Software Licensing
• Hardware(vertical) differentiation is not enough.
• Example APPLE, SONY.
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15. COLLUSIVE BEHAVIOR OF EXISTING FIRMS
THE SITUATION WHERE A DUOPOLY ACTS AS A MONOPOLIST
• Methods -
• Bidding Collusion
• Price Fixing
• Establish or adhere to price discounts.
• Hold prices firm.
• Adopt a standard formula for computing prices.
• Maintain certain price differentials between different types, sizes, or quantities of products.
• Adhere to a minimum fee or price schedule.
• Fix credit terms.
• Not advertise prices.
• Technology Collusion: Holding back the release of existing technologies so that people upgrade in small
increments
• Ex: DDR II RAM, Overclocking of CPUs etc.
• Deliberate control of supply to inflate prices
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16. UNIQUENESS
• Existing Secondary Market.
• Ebay, OLX, Quickr
• High R&D expenses.
• Mostly products are vertically differentiated.
• PCs are now like cars - Predefined consumer preferences, price sensitive & self awareness.
• Many repeat purchasers.
• Vendors contend with high bankruptcy rates
• Low inventory.
• No inventory (JIT) – Dell (CCC: -14 days)
• Rapid technological changes lead to disruptive innovation.
• rapid price fluctuations
RAKESH DUTTA © 2014