Analysis of the Computer Industry Essay

Analysis of the Electronic Computer Manufacturing industry

Prepared By:
Cluster AM107 – Group 1C
Joseph Askew
Greg Dudenhoeffer
Bethany Esterline
Andrew Gross
Taylor Rex

Prepared For:
Professor Anderson
Professor Carter
Professor Holden
Professor Martel
Professor Payne

September 16, 2010

History
The Electronic Computer Manufacturing industry was started in the late 1970’s, caused by the major strides in the study of quantum physics which lead to the first microchip in 1972 (Cringley). Although the “computer” had been around before 1950, the technology to build them for home use was nonexistent to that point. The microchip allowed a microcomputer to be built that was twenty times faster, with more memory, and thousands of times as reliable as its predecessor. (Gilder) The first personal computer to hit the market was the MITS Altair 8800 in late 1974. The computer was a marvel at the time, with thousands of orders being made by US consumers (Cringley). Throughout the rest of the 1970’s, technologies continued to improve and by the beginning of the 1980’s, the industry really began to take off.
International Business Machines Corporation (IBM) led the computer manufacturing industry during the 1980’s, and the US had control of over eighty percent of the global market. Despite losing some ground over the decade, revenues continued to grow and the industry expanded over three times its size. Where in 1979 the computer peripherals manufacturing industry produced thirty-five billion dollars in revenues, in 1989 the US industry was raking in nearly forty-nine billion. (Gilder)
By the year 1990, US consumers had already purchased over 50 million personal computers. Increased competition in personal computer manufacturing has lead to advances that have doubled the processing power of the MITS Altair 8800 time and time again. In fact a single piece of silicon in 1989 could hold a little over 1 million transistors where in 1999 they could hold 22 million, each a drastically higher number than the original 2,300 transistors chips could hold in 1972(CITATION). With the launch of the internet in the 1990’s another driver is added to push the industry to an even higher level of accomplishment.
Within the past decade the industry is evolving once again. Just as in the past, a trend towards faster and cheaper technology continues to take place. Current transistor counts per microchip reach well over 2 billion. Improvements to batteries and efficiencies have given rise to portable computers such as netbooks and laptops, and a major decline in bulky desktop computers sales has been found. The increased availability of the internet on the go, such as Wi-Fi, has decreased the need of desktops to log onto the web, one of its major drivers. With the US economy still recovering, the competitive computer manufacturing industry must push further to build faster, cheaper machines.

Industry Overview
Market Size
The computer manufacturing industry is one with a countless number of players, containing only a couple of leaders. These leaders include Dell, Hewlett-Packard (HP), and IBM; however, there are still many other competitors, none of which own more than twenty percent of the market share. The industry contains over a thousand companies with the majority located in the western region of the United States, 364 to be exact. With the industry on the decline, many companies are slowly pulling resources away from manufacturing personal computers for cost reasons and are moving more towards implementing new software and services due to the higher profit margins that they offer. Once, an industry focused on customization, a tradition introduced by Dell, the current trend focuses more towards standardization. Consumer behavior has shown movement away from knowledge based decisions and towards a less involved buying experience with an emphasis on efficiency. This industry

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