Pc Industry, Then and Now

Barriers to Entry
In the 1980s, when personal computers first made their debut in the market, the barrier to entry was low. This was due to the relatively low startup cost, which is a huge contrast to the present industry.

Meanwhile, the barrier to entry today is moderate. While the threat of new entrants is low in most places, the same cannot be said about emerging economies such as India and China. Apart from the high capital cost required, qualities of the PCs are of the most important purchasing factors. As such, brand awareness is high. However, customers in countries such as India and China are willing to forego qualities for cheaper priced or less commonly known brands.

Degree of Competitive Rivalry
The degree of rivalry is strong for both in the early 1980s as well as in the industry today. A few large market players had always characterized the PCs manufacturing industry; in the 1980s the market was dominated by IBM while the current market leaders are HP, Acer and Dell. However, the competitive rivalry is relatively more intense today as compared to 20 years ago. This can be seen through the investment in innovation and new products as well as intensive promotion. Apple Inc gives us an example of how a tech company can use promotion as a strategy to create hype for their products or to differentiate them.

Threats of Substitutes
The threat of substitutes in the 1980s is low while it is very strong today. Since the beginning of the 21st century, there has been a rise of whole new classes of personal computers that came in the forms of smartphones, tablets and even games consoles. These devices function as alternatives to PC by being able to perform similar tasks in addition to their basic features. In addition, smartphones and tablets are more compact and portable, and they are constantly advancing and gaining popularity.

Bargaining power of customers
In the 1980s, the buyers’ power is high. As Microsoft software dominates the market, its users care less about the brand of their PCs.

Meanwhile, the buyers’ power is moderate today. As Apple successfully builds a strong image over the last decade, there is now a significant divide between Apple users and Microsoft users.

One of the reasons behind the differences in the industry over the past 20 years is that technology today is developing at an accelerating rate. This leads to more intense rivalries and thus places greater emphasis on the importance of product differentiation (a strategy adopted by Apple Inc.) or price differentiation. In addition, the adoption rate today is also much faster as compared to 2 decades ago because what we have today are just extension to what we are already familiar with. For example, almost half a million of Ipad was sold in the first week of its release alone. Customers do not view the product as a completely new invention, but as a modification of an already available product (the Ipod touch). As seen in the mid 2000s, there are also movements towards mobile PC. PCs were no longer confined to homes, and the ever-increasing demands for mobile PCs or a connecting device pushed the industry to keep innovating itself.