Situation analysis Industry Analysis Market characteristics Market Size As a commercial product the computer industry is over 50 years

old. The computer industry and its technologies are the basis for all information technologies and accounts for over 5% of the world s gross domestic products. PC retail revenue topped $330B in 2007 and 2008, but is in a declining phase due to continued price declines and a shift to low-cost products such as netbooks. The sheer size of the PC industry limits its growth rate, but the yearly worldwide sales will grow by over 40% in the next five years from 231M units in 2006 to nearly 335M in 2012 or a 6.3% compound annual growth rate. Worldwide cumulative PC sales topped 1B units in 2002 and will top 2 Billion in 2007 and 3 Billion in 2011. 2Q11 Company Shipments HP 14,888,086 Dell 10,621,436 Lenovo 10,225,358 Acer 9,298,989 Asus 4,467,611 Toshiba 4,411,400 Others 31,306,987 Total 85,219,865 2Q11 Market Share (%) 17.5 12.5 12.0 10.9 5.2 5.2 36.7 100.0 2Q10 Shipments 14,454,971 10,283,074 8,349,272 11,689,255 4,306,241 4,497,576 29,732,493 83,312,882 2Q10 Market Share (%) 17.4 12.3 10.0 14.0 5.2 5.4 35.7 100.0 2Q10-2Q11 Growth (%) 3.0 3.3 22.5 -20.4 3.7 -1.9 5.3 2.3

Preliminary Worldwide PC Vendor Unit Shipment Estimates for 2Q11 (Units)

Maximum sales of PC are in large industrialized countries and a few of the countries with a large population. China was ranked 12th in 1995 and jumped to 3rd in 2002. Brazil was 15th in 1995 and is now in the 10th spot. India was not ranked in the Top 15 countries until 2002 when it placed in the 15th place. India will continue to move up in the rankings and is projected to be in 4th place in 2013. Market Stage The market has been segregated as mature and emerging markets. The Mature Markets include Australia/New Zealand, Canada, Israel, Japan, United States, Western Europe, and global accounts. The Emerging Markets include Africa, Asia Pacific, China, Eastern Europe, Hong Kong, India, Korea, Middle East, Pakistan, Russia, Taiwan and Turkey.

Industry forecast Experts forecast that worldwide pc sales will cross 400 Million by 2015. Yearly PC sales for the U.S. and the main regions of the world are summarized in the next figure.

PC Sales by Regions

The worldwide PC revenues were $251B in 2000, which increased to over $333B in 2007. Worldwide PC revenue will decline to $300B in 2010 and will remain in this range for the next five years. Trends and Drivers Major drivers of change The growth of computer usage in the last 50 years has been caused by a variety of factors as shown in the next table. Computers-in-Use Driving Forces Pre 1990
y y y y y y y y y y y

1990-2000
y y y y y y y y y y y y

2001-2010
y y y y y y y y y y y y

Mainframes: 1950-1970 Minicomputers: 19651985 Hobby PCs: 1975-1978 Apple II: 1977-1985 Home PCs: 1980-1983 IBM PC: 1981-1990 IBM-compatibles: 19831990 Apple Macintosh: 19841995 UNIX workstations: 19851995 LANs: 1985-1995 Laptop PCs: 1986

Windows PCs: 1990 Notebook PCs: 1990 Client/Server systems: 1992 Windows 95/98 PCs: 1995 Windows NT Servers: 1994 Internet access PCs: 1994 Win NT workstations: 1997 PCs for intranets: 1996 Under $1K PCs: 1997 Website servers: 1998 Apple iMac & iBook: 1998 Under $500 PCs: 1999

Under $400 PCs Internet PCs Wireless notebook PCs Wireless LANs/access points Server PCs for e-commerce PC appliances Home PC servers Media/entertainment PCs Tablet PCs PCs for developing countries Ultra-Mobile PCs Handheld PCs

Brief Competitor Profiles Dell leads the top enterprise desktop and laptop supplies in the world providing both desktops and laptops to more than half of North American and European enterprises. The figure is double that of its closest competitor in both notebook and desktop PC sales. Dell is winning 60% of the desktop in North America and accounts for 58% of the laptop market. Low prices and product supportare the strengths on which the firm rides high. However, low R&D budget prevents Dell from producing new innovative products. Second position in desktop supplier status is captured by HP which also recently overtook Lenovo for laptops, supplying desktops to 27% and laptops to 21% of North American and European enterprises. The market share of HP has also improved, especially across laptops, registering a 6% and 5% gain in North America and European enterprise laptop market respectively. HP recently initiative to refresh its entire line up of Intel-based laptops in 2007 with Intel s Santa Rosa release, w ensures the growth gain to continue. However, according to surveys of customer satisfaction HP is behind in product quality and product support. Macro environment factors Economical factors The global economy influences various different factors that affect the growth of the PC industry. After the economy slowdown in 2008, pc industry witnessed decrease in business capital spending for small and large corporations, resulting in reduced demand for PCs. Gartner, Inc. forecasted a decline of 4.2% in global IT spending, of which computing hardware spending is expected to decrease by 14.9% in 2009. But it has been witnessed that recession related actions drove actual average to 3.4% in 2009. IT employees as a percentage of total employees declined from 6.1% in 2008 to 5.5% in 2009. This resulted in decrease in sales of the PC industry. Big PC manufacturers like Dell, HP, Acer, Lenovo, and Apple generate sales throughout the world and therefore currency exchange rates are an important factor as well. The exchange rate of the US dollar versus other currencies can directly affect a company s bottom line. The economies in developing countries such as China, India, Brazil, and Latin America are growing at a much faster rate than developed countries and therefore provide better growth opportunities for computer manufacturers, since developed countries like the US and Japan have become saturated. This trend is reflected in the slower single digit growth in the last few years as opposed to the consistent double digit growth in the developing markets Political factors As developing economies are growing at faster rates, the PC industry is fiercely targeting emerging markets. Change in government policies may affect the growth rates of each manufacturer. In 2005, laptop sales growth rate witnessed 94% increase as a result of removal of import duties by Indian government. Government policies are supporting IT industry so as to maintain GDP which is a positive sign for the personal computing industry. Environmental regulations are becoming more and more stringent and hence affecting electronics industry across the globe. Additional testing and certification is required to catch up with the norms and hence affect the cost. Social Factors Social factors like income levels, preferences and education has a tremendous affect on the industry. Government in developing countries are putting efforts to improve literacy rate and is focusing on

education. Indian government is promoting OLPC (One laptop per child) mission under low cost technology is being developed by the government. Also as the middle class in developing countries are increasing at an increasing rate, the income level is increasing. The urban population is increasing, culture is changing as well (number of nuclear families are increasing as a result joint families are decreasing), all these factors may lead to increase in demand of new technology. Technological factors Technological factor is the most important factor in this industry, as you can see the main drivers of PC sales is rapid change in technology. From 1980 s to 2010, computation speed has improved many folds while energy consumption has reduced to a greater extent. Internet penetration is one of the major reasons of PC sales. But the increase in technology has now becoming a threat for the industry. Gartner Inc. has forecasted the PC shipment for 2011 to be 387.8 million, a 10.5% increase over 2010. But the earlier projections were 15.9% growth over year 2010. The difference is due to iPad and Other Media Tablets which is Redefining PC's Place in Consumers Computing Universe.

References: 1. 2. 3. 4. 5. http://www.lenovo.com/ww/lenovo/pdf/report/E_099220110620a.pdf http://www.etforecasts.com/products/inuse.htm http://www.etforecasts.com/products/wwpcmkt.htm http://www.gartner.com/it/page.jsp?id=1744216