Scope of competitive rivalry mainly deals with a global focus, however, local computer makers should also be considered. For the large corporations, having a presence in foreign markets is essential. Companies like Dell, HP, Lenovo/IBM, and Acer all compete in multiple international markets. If individuals in a particular country are capable of buying a PC, the top competitors all fight for their purchases. Competition is not cut throat per-se, but if a company like HP falters in any one of its multiple segments, Dell could come in and take its market share.

Stage in Industry Life Cycle

The thing about technology is that it constantly changes. The personal computer, servers, printers, and data storage devices have existed for decades, but constant R&D is employed to make these high-tech machines smaller, run faster, and operate more efficiently. Computers and their peripherals will likely remain in the growth stage for a very long time. Though growth has slowed in developed countries like the United States, it has increased in other developing countries like Brazil, India, and China. On that note, the idea itself has reached maturity. For example, servers (as well as personal computers) can offer long usage time if they are properly serviced over the years. Computers configured four years ago, if built with quality high-end components, can still compete with ones coming out today. New technologies make adding performance to personal computers and servers effortless, which furthers the life of the machines.

Degree of Vertical Integration

According to Thompson and Gamble’s research, “There were too many technologies and manufacturing intricacies to master for a vertically integrated manufacturer to keep its products on the cutting edge.” Therefore, the industry has a very low degree of vertical integration. Companies search for the best manufacturers of parts and services and combine them to create a name-brand computer. Providers need to be accessible for when they are demanded. If they fail, companies like Dell and HP can switch as quickly as living creatures blink.

Ease of Entry/Exit

Because the industry has long been established and defined by the current competition, ease of entry/exit is not exactly easy. In fact, it would be nearly impossible for a start-up firm to enter. A long established company like Sony, for example, was able to enter late in the game because of their existing company structure and size. Only already established large companies would be able to enter the market, unless some entrepreneur discovered a way to enhance existing business models which maximized efficiencies in nearly every aspect of the venture.

Technology Innovation

The industry is highly characterized by innovation, considering it is nothing but technology. New products are constantly developed, daily in fact. Intel, for example, releases computer processing units (CPUs) every three months. As a result, costs decline .5% weekly. These CPUs are among the main components of the computer. Since technology is evolving at a rapid rate, computer companies always look for ways to reduce inventory carryover while still having enough in inventory if demand spikes.

Product Characteristics