Industry Analysis vs. Apple Inc.

1. Industry Analysis vs. Apple Inc. Team 2 Amy, Marlee, Jenn, Logan, Corbin, & Josh

2. Computer Hardware: History • Started in 1970’s with mainframes • In 1980 the first PC was introduced- Altair 8800 • The Altair 8800 was based off of two key concepts that are still the basis of PC’s today • Chips • Open-system Architecture

3. History Continued… • Open system design Included • Microprocessor from Intel and Windows operating system from Microsoft • Graphical User interface • Graphical user interface • Eliminated the commands required on the previous operating system

4. History Continued… • Today the original Idea behind the PC has partnered with other computing platforms • Servers • Workstations • Servers- customers could now request stored information through a network • Workstations- incorporated advanced graphics and capabilities to handle intensive applications

5. Market Definition: Hardware • The computer hardware industry is comprised of many components • PC’s • Peripherals & Devices • Storage • PC’s- Desktops & Laptops • Peripherals & Devices- PDA’s, calculators, GPS navigation systems • Storage- memory sticks, removable hard drives, external hard drives

6. US Market Value: Hardware • In 2009 the market equaled $63.3 billion • Represents a 6% compound annual growth rate (CAGR) in the period 2005-2009 • Expected to grow by 11.7% by 2013 • The most profitable market is PC’s • Total revenue= $27.4 billion which is 43.3 % of total market value • The future CAGR in 2014 is 8.4% increasing to $94.9 billion

9. Global Market Value: Hardware • In 2009 the computer hardware market equaled $193 billion • Equating a CAGR of 5.4% in the period 2005-2009 • PC’s represent $104.9 billion total revenues • = to 54.3% total market value • In 2014 the market forecasts a CAGR of 6.4% with a total revenue of $263.8 billion • European and Asian-Pacific markets= $71.4 billion

12. Established Market Trends: Hardware • Prices of hardware have continued to drop since the computing revolution • As vendors are dropping prices, they are incorporating more added- value to consumers • “Upgrade Cycle”- Vendors introduce new versions of products to incorporate new innovations • “Killer Applications”- to compensate for the upgrade cycle, vendors are creating products with more processing power, larger memory, and other new features • Examples) Microsoft Office products

13. Market Strategies: Hardware • Major mergers and acquistions between companies • Merger of HP & Compaq- 2002 • Merger of Acer & Gateway-2007 • Merger of IBM & PricewaterhouseCoopers-2002 • IBM made 12 acquisitions in 2007 and 17 more in 2010 • Major companies moving to the services industry • Adding post purchase value to consumers • Value innovation strategies • Companies are adopting strategies to cut down costs while adding more buyer value to products

14. Future Industry Trends: Hardware • Tablet market is significantly expanding • Prominently moving into the corporate sector • PC’s market will remain the most profitable • Because.. • The accessibility for typing, spreadsheets, and other work related activities • Expansion of network computing • Growth of cloud computing

15. Seasonal Fluctuations • Slow period for international markets during summer • Business activity decreases in the summer, therefore slowing sales • Fourth quarter sales expand • Businesses usually close books in December and manager seek to eliminate capital spending • Industry sales goals end at year end • Experience growth due to holidays • Sales growth during “back to school” campaign

16. Economic Downturn: Hardware • In the period 2002-2008 sales shipments significantly decreased • In the period 2009 we have experienced a slow increase in shipments and expect significant growth by 2014 • The earthquake in Japan during 2011 stalled the supply chain

17. Demographic Profile: Hardware • Through innovations in technology and affordability for consumers, the PC market has spread in to nearly every household as well as businesses • The following charts describe the trend of households who own and operate computers from 1984 to 2009

20. Demographics: Workplace • The computer industry has made a significant impact in the corporate sector • The following charts paint a picture for the use of computers in the “corporate world,” with each chart providing more in depth detail

21. PC to Employee Ratio by Industry

22. Totals By Industry

23. Hardware Top Competitiors • Acer Inc. • Hsichih Taipei, Taiwan • Dell Inc. • Round Rock, Texas • Hewlett-Packard Company (HP) • Palo Alto, California

24. Acer Inc. • One of the top upcoming companies in IT hardware products. • Structured as a single business segment. • Hardware specialties • Personal Computers (PC’s) • Notebook PC’s • Mobile Devices

25. Acer Inc. cont. • Variety of brands under Acer Inc. • Gateway • PB brands • eMachines • Projectors, LCD monitors, HDTV’s • Personal Computer Uses: • Personal • Business

26. Acer Financials • 2007 Revenue – $14.2 million • 2008 Revenue – $16.5 million • 2009 Revenue – $17.3 million • Based on Revenue, Acer Inc. has been steadily growing its market share and has begun to make a recognized name for itself in the Hardware industy.

27. Dell Inc. • Founder was Michael Dell who founded the company in his dorm room at University of Texas. • Dell specializes in IT systems and how they are comprised, sold, designed, manufactured, and multiple different markets. • Strategy over years has been to reach out to large corporations as well as smaller/medium sized businesses.

28. Dell Inc. cont. • Hardware products include: • Desktop/mobile PC’s • Servers • Networking • Storage devices • Mobility products

29. Dell Inc. cont. • Personalized Customer Hardware Products • Dell XPS • Graphics, Gaming • Optiplex • Large business • Inspiron • Personal Use with power • Precision • Mobile workstations • Vosotro • Small business • Alienware • Gaming notebook

30. Dell Inc. cont. • Developed a tablet to compete against the Apple iPad to try and gain a fair share of the market.

31. Hewlett-Packard Company (HP) • Large Global leader and contributor of technology products, solutions, services, and software. • United States • United Kingdom • Israel • Ireland • China • Japan • India

32. Hewlett-Packard Company cont. • HP has a variety of multiple hardware products: • Servers • Storage • Notebooks • Desktops • Netbooks

33. Hewlett-Packard Company cont. • Is a global leader in providing consumers with personal computers all over the world. • Leading in PC world: • Personal computers • Handheld computing devices • Calculators • Business workstations • Inkjet printers

34. Hewlett-Packard Company cont. • HP produces under both names of HP as well as Compaq. • HP also produces a tablet in order to compete with the newly discovered tablet market and the Apple iPad.

35. Software Industry: History • 1955 Computer Usage Company • First software company • Introduction of low price micro computer by Digital Equipment Corporation • Software was able to expand • 1970s advent of Personnel Computer (PC) • Computers in the hands of the office worker • Created ever expanding applications market…games, utilities… • Microsoft's DOS became industry leader • Operating System

36. Economic Trends • Great Recession of 2008-2009 • Global revenues and growth decreased • Complete turn around until late 2011

37. Shiny Things

38. Software Market • Two Main Segments • Systems Software • Control, manage and monitor computer resources • Found in Operating System • Compilers and Interpreters • Translates programs to commands • Applications Software • Wide variety of functions: word, graphic design, financial application… • Typically packaged and sold separate from hardware • Companies have custom application software created for company use

39. Software Market Segmentation • 6 Main Product Segments • General Business Productivity • Network and Database Management • Cross Industry & Vertical Application • Operating Systems Software • Other Systems Software • Other Applications Software

40. More Shiny Things

41. Another Shiny Thing

42. Industry Trends • Mergers & Acquisitions (M&As) • Extremely high purchase rate of technology industry…specifically software • Hardware Co. buy Software Co. • Increase hardware functionability • Software Co. buy Software Co. • Expand technology reach through diversification • Why M&A? • Cost efficiency • Expand customer base

44. Industry Trends • Software-as-a-Service (SaaS) Business Model • Aka on demand software • Success due to high internet use • Benefits: • Lower vendor cost • Lower customer cost • Increased customer satisfaction

45. Shiny Objects

46. Industry Sensitivity

47. Government Regulations • Very few if any government regulations • Anti-Trust Lawsuits • Microsoft • Anti-Piracy Laws • Global Effort

49. Software Top Competitors • Microsoft • Redmond, Washington • Google • Mountain View, California • Research in Motion • Ontario, Canada

50. Microsoft • Founded in 1975 by Bill Gates and Paul Allen • Microsoft develops, manufactures, licenses, and supports software products and services, including operating systems, server applications, information worker productivity applications, business solutions applications, computing applications, software development tools, and video games.