State of Personal Computers Market in the UK - Assignment Example

? Personal computers’ market The computer has become part and parcel of human life due to its several applications in the society. The history of personal computer traces back to the initial machines which had low internal memory and big monitors with poor resolution among other features. However, the modern personal computer has advanced features or specifications like increased RAM, Improved portability and software compatibility among other enhancements. However, the prices of personal computers are on a dropping trend despite the advancements and increase in demand, this work tend to explain some factors behind this trend. This work contains two basic parts, the drop in prices and an increase in demand. A certain market research outcome will help explain the actual fall in personal computers prices. United Kingdom market will be used as a case study. In the 2007, the market of personal computers recorded an estimated net worth of 12.27 billion USD. This increased to 12.81 billion USD in the year 2008 (4.4 % increase). The market PC market continued to depreciate to about 11.77 billion USD by the end of the year 2009. However, the same report indicates the market worth was on a growing trend from 2005 until 2008, from which the PC market worth started depreciating (Cook, 2004). There are several factors that boosted the increase in the PC market worth between 2005 and 2008. Several companies register an increase in sales of portable or mobile personal computers like net books, notebooks, laptops and PDAs among others. The introduction of the portable PC in the markets attracted more customers, more so the students who used the personal computers in their studies, researches and assignments among other academic chores (Proctor, 2000). Several institutions also purchased such personal computers in bulk, to replace the desktops which are bulky to transport and regarded obsolete in many developed nations. Technological advancements also called for the use of portable personal computers. Virtual Desktop infrastructure (VDI) is a system where a certain organization has centric server computers (desktop) in which important data is stored then accessed through portable personal computers and gadgets through special fiber networks. In other words, the portable PC must not necessarily have big memory or storage space since it can retrieve data from the centric server within the company (Gillam, 2010). Several companies adopted this technology, hence increased sale of the portable PC but reduced sales of desktops. A good VDI network may comprise of at least one desktop with over 70 portable PC depending on the size of the company. Other clouding technology also followed and led to a further increase in sales of portable PCs. The graph below shows a non-uniform decrease in PCs’ prices as time (in years) advances. Increase in PCs producing firms There have been increases in the number of mobile PC companies venturing into the market. These include Samsung which manufactured laptops, net books, notebooks, tablets and mini laptops among other portable PCs. Apple manufactures iMacs and iPhones among other portable PCs. These products had advanced and efficient applications and specifications that later attracted more customers. Majority shipped their desktops to developing nations while some were treated as electronic wastes. The younger generations were compelled to purchase the portable the portable gadgets since they have social media applications like twitter, Facebook and Skype among other applications. The products also came in smaller sizes but attractive shapes and colors to attract more customers (Bradley, 2005). The aspect of compatibility also enhanced increased demand for the products. One can easily connect his/her portable computer with the sound system or flat screen televisions for entertainment purpose. The companies have stiff competition with regular advancement of the portable computers which has kept the demand on a steady growing trend, since majority dump or ship their portable PCs to create space for the most advanced ones (Ferrel, 2010). The law of demand and supply states the demand will increase as the price decreases and other factors held constant. However, this economic principle does not apply in the personal computer business. Since 2005, the price for the personal computers has been on a falling trend despite continuous growth in demand. Competition is one of the factors behind this economic phenomenon. Currently, there are over 200 companies producing PCs. The consumers are provided with a wide variety from which to select the best. Each company has to subsidize the prices of its products to attract more customers (Anderson, 2008). The companies have to employ good and costly marketing strategies like adverts to convince more customers. However, businesses researches indicate that the majority of the companies resolve in reducing prices to beat their competitors (Marks, 2007). Some companies have also resolved with the use of less costly raw materials or inputs and subsidize the prices of its products by greater percentages to attract more customers, more so in the developing nations. Majority China’s companies fall in this category. Th graph below demonstrates the demand-elasticity curve (Marks, 2007). The regular advancements/ increased efficiency of the PCs have also led to decrease in its prices. Personal computer companies like HP, Dell and Samsung improve the quality of their products in spans less than a month or two. This leads to flood into the market. Some changes or improvements are so negligible that compels the users to retain or maintain their current PCs. The companies are forced to sell their products at much lower prices to meet the production costs. The urge to update to update such PCs is an aspect the companies cannot ignore, with the fear of their competitors will upgrade their gadgets and make more sales. The production of multiple products has also led to flood of PC in the market. For instance, Samsung produced galaxy tab 7.0 and galaxy tab almost in the same period. The two gadgets have similar specifications with very minimal variations. Customers will have a great tussle in selecting a preferred product. This has generally led to decrease in the PCs’ prices. There are PCs with several applications useful to specific age groups in the society. However, it is clear that majority would acquire PCs as they advance in age ((Anderson, 2008). Counterfeiting has also contributed to a fall of personal computers prices. There are several counterfeits in the current market. Counterfeit machines are made of cheap raw materials as well as technology. This call for their cheaper costs, hence attract more customers. Companies with original PCs have to lower their costs to compete the counterfeiting companies. The huge issue is that very few individuals can differentiate the counterfeit machines from the original. The struggle to eliminate counterfeit machines is far from being won. Demand of any commodity is a subject of several factors as dictated in the demand-supply laws. The demand of PCs is on the rise due to lack of sufficient substitute. Although several companies produce smart phones or tablets that enable online services like sending and receiving mails, editing documents, storing data and managing accounting calculations among others, such services can match the role of personal computers in the modern society. The mobile gadgets cannot handle engineering design software like auto cad and broken among others (Schmenner, 2004). This compels the majority to purchase the personal computers for their chores. Several firms have tried to the extent of producing mobile operating systems like android and window 8, but this can still not match the multitasking nature of the traditional personal computers. Such mobile gadgets have a shorter life span compared to the traditional personal computers. There spare parts or the hardware component is expensive, hence majority resolve to the personal computers whose hardware and software are readily available in the market. The graph below depict the changes in Genuine PCs purchased due to emergence of counterfeit products in the market (Monasa, 2008). Complementary goods or products used together. The cost of software has greatly reduced in the current market. This has been attributed to easy access to the internet so that one can easily download desired software package. Furthermore, there are alternative software in the market, this compels the software companies to subsidize their products to attract the remaining few individuals who still walk to the technology stores to purchase such software. The prices of storage devices like microchips, memory disks, sticks and cards among other complementary products has greatly reduced to attract more customers. Increase in the demand of a certain complementary product will definitely lead to an increase of a certain complementary product. Increase in income has also boosted the increased demand for the personal computers. Global economic growth and life advancements have compelled different companies in all parts of the world to increase their employees’ salaries. The real definition of demand is the number of individuals willing and able to purchase certain products or services. The capability aspect of it is subject of individuals’ income. Technology companies will always conduct a market research before producing certain products. Some of the most common factors put into considerations are the current and expected income scales on the expected market, Availability of similar products in the market as well as their limitations or weaknesses. Personal computers are like part and parcel of the current generation’s life. One will always purchase such products provided his/her income allows that. The graph below shows the relationship between income packages and volume of PCs bought (Ferrel, 2010). There are several implications of political powers in determining the price of certain important commodities. Each country has its industrial and business policies which control the pricing of certain commodities. Developed nations for instance, have entered business agreements with the personal computers like HP and dell among others so that the latter can distribute their products in the countries but at a subsidized price (Monasa, 2008). A contract or agreement is binding; hence such companies are forced to sell their products at reduced prices. Government has the right to ban the distribution of specific electronics based on the technology used, hence the PCs companies have to adhere to all the regulations imposed by the government legislators to maintain their operating certificates. However, some countries may impose high tasks to such electronic good and this will definitely lead to increase in the PCs’ prices. India market for instance is likely to pay extra for the personal computers after its government increased exercise and countervailing duty on personal computers. To conclude, the elastic demand of Personal computers will still remain a challenge to explain. Different markets have different demand, price and supply relations depending on the prevailing economic status as well as the countries demographic characteristics among some factors. Different nations also have different policies or legislations to control its business. Hence the aspect of a global description of the elastic curve with respect to the personal computers is a challenge. The rise in computer demand will still remain on the rise due to the wide applications of the gadgets in the current generations’ lives. Increased economy due to global economic growth has also enabled an increase in the commodities’ demand. Lack of reputable substitute products has made personal computers dominate the current market. However, this ideology or principles do not apply in nations like India whose PCs’ prices are on a continuous increasing trend after the Indian government increased exercise and countervailing duty on the personal computers (Dunfee, 2004). Companies associated with the sale of such products have to hike prices to meet such expenses. Bibliography Anderson, D. 2008. Essentials of modern business. New York: Cengage Learning. Bradley, F. 2005. International marketing strategies. New York: Prentice-Hall. Cook, S. 2004. Measuring customer service effectiveness. New York: Gower publishing Dunfee, T. 2004. Modern business Law. New York: Routledge. Ferrel, O. 2010. Marketing strategies. New York: Cengage publishing. Gillam, L. (2010). Cloud computing. New York: Springer. Marks, B. 2007. Business competions. New York: Prentice Hall. Monasa, B. 2008. Business Today. New York: Wiley Proctor, T. 2000. Strategic marketing: An Introduction. New Jersey: Routledge. Schmenner, R. 2004. Making Business location decisions. New Jersey: Prentice Hall. Read More