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How and why did the personal computer industry come to have such low average profitability?
The PC industry has started to develop fast in the 80's when IBM launched its first PC series and later on when numerous small companies entered the market. PC is a new product and companies had to create the demand to it from the scratch.
We shall apply the Porter's 5 Forces model to examine the PC market and see how forces of competition influence the profitability of the market players.
(See Appendix 1 for detailed description of how does certain parameter influence the market.)
Entrance barriers are:
The initial investment is relatively low (1.1)
Brand loyalty is average to low (1.2)
Switching costs of the market player are average. (1.3)
The threat of new competitors lowers the profitability of the market
Customers bargaining power:
It is very hard for the customers to join forces and fight for their interests. (2.1)
According to the modern way of life the need for computer......

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Approximate Word Count: 1154
Approximate Pages: 5 (250 words per double-spaced page)

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