The computing industry has evolved tremendously over the past 30 years. The PC revolution started back in the 1970’s when Apple Computer launched their first PC. It was their goal to bring an easy to use computer to the consumer market. The Apple II, sparked a revolution of the personal computer. The tremendous volume of sales of the Apple II led Apple Computer to become the industry leader by 1980. However, Apple’s reign over the PC industry was short lived when only a few years later IBM joined into the market. IBM launched a product similar to Apple, and with the brand recognition and quality behind their product, it dominated the market share of the PC industry for the next ten years.
As the PC industry began to grow in the 80’s, the primary users were business managers with little technology experience. However, as PC’s started to slowly become more available and affordable, it slowly began to transition into a more consumer market. In the early 1990’s, numerous other companies started joining the PC revolution, piggybacking on the Windows OS combined with Intel processor. These manufactures included Compaq, Dell and Hewlett Packard. Within just 30 years PCs had grown to reach a total of 1 billion computers worldwide, an annual growth of approximately 15% every year. Although the quantity increased, revenue growth did not grow in a similar fashion. While the volume growth reached approximately 15% per year, the average sale price of a PC declined about 8% per year. These sales were driven down primary by the competitive nature of new entrants and the transition from business users as primary customers to home buyers. By the end of 2007, PC’s primary users were home buyers (42%) opposed to small business customers (32%).
There have been numerous entrants into the PC market since the 1970’s but as of the late 2010 we have seen a dwindling amount of new competitors. The PC market has reached a mature stage in its growth cycle and most of the large companies in the market have declared their market shares. Others such as Compaq and IBM have even been acquired by other companies. In the past ten years there have been between 6-8 main PC manufactures worldwide. As a result, the industry has been attractive in the sense that there were no real big threats emerging. However, as prices continued to be driven down by price-sensitive consumers and the competition, gross margins have also begun to decline. What was once an extremely lucrative business in terms of profit per sale has now transitioned to a lucrative business in terms of quantity.