Type: Process Essays
Sample donated: Seth Foster
Last updated: April 17, 2019
Along with the explosive growth of the Internet came the changes in consumer wants, technological development, greater convergence between industries and growth slowdown in the existing PC and home appliance market. A consequence of such developments has been a growing interest in post PC products.
The companies in PC, home appliance and information and telecommunications industries are recognizing the newly emerging post PC market as an attractive business opportunity.What does post PC mean?Many and different approaches are possible in defining the concept and the scope of post PC, but, to put it simply, post PC refers to the information devices that have been introduced after the PC with different physical appearances and functions to the PC. That is, post PC products are non-PC information devices designed with a specific function, and can connect to the Internet and conduct simple computing. Those products are also characterized as being cheap and user friendly.Post PC products include Smart Phone, Feature Phone, PDA, HPC, Web Pad, Internet TV set box and Internet white goods.
These next-generation information devices are usually called IA(Internet Appliance or Information Appliance). This is post PC product.The most significant difference between the post PC products and the traditional PCs is that while the PC is a general-purpose information device integrating various functions, post PC products are information devices that break up the functions of the PC to specialize in one area.Another characteristic of post PC products is that they are at the forefront of the convergence of industries: they are equipped with computing function like a computer, with data communication and Internet function, and with user convenience like a home appliance.
Hence, post PC products provide the basic Internet and computing functions at a cheap price with convenience. And for these reasons, the post PC products would appeal not only to the PC users but also to those who have found PC rather a difficult gadget to learn and those who have been concerned more about the price tag on a PC.Infinite growth potentialIt is for this reason that post PC products are regarded as a breakthrough for the traditional PC and home appliance industries that are currently faced with slowdown in growth, intensive competition and declining profitability.It is forecasted that the post PC market, which is now in the stage of formation, would have infinite growth potential. Although market forecasts differ significantly, experts generally agree that the post PC market has the potential of achieving an explosive growth.
For example, some expert forecasts that the post PC market would grow from 2.8 million or $4.8 billion in 2000 to 8.9 million worth $17.8 billion by 2005, posting an average growth rate of 33.5%. Dataquest anticipates that the size of the post PC market would grow from 20.
8 million, worth $5.6 billion in 2000, to 390 million worth $91.2 billion by 2005, posting a huge annual growth rate of 283%. If that were the case, the post PC market would form an enormously big market, reaching 1/3 of the present PC market in terms of amount.Multiple competitionsHowever the post PC market is quite different from the existing industries and so there is considerably a high risk of companies facing problems previously unexpected. Therefore, it is important that the companies planning to enter the market device necessary measures through detailed analysis of those factors of risk.In particular, the post PC market is characterized as having low entry barriers; heterogeneity between companies in the market; product diversity; and continuous launching of new-concept products through industry convergence. Given such characteristics, the post PC market would go into fierce competition.
First, competition between products would center on price and performance, as well as function, design, service and application. Post PC products are not only diverse and highly heterogeneous but they also make possible various competition modes because there is no competition composition clearly dominating the market at present. Therefore, when establishing their competition strategy in the post PC market, companies need to break away from the conventional way of thinking that it is only good quality and cheap price that will succeed, but think of various factors of differentiation.Competition between production groupsThe nature of competition in the post PC market is made more complex by the fact that there is also competition between product groups.One good example is the fierce competition between various post PC product groups like Web Pad, PDA, Smart Phone and Feature Phone for market control.
With respect to product concept, PDA seems to have a comparative advantage by being equipped with sufficient computing performance and portability. However superiority in performance and function does not guarantee success. It is consumer recognition and the strategic concern of the communications service operators that make it highly possible for Smart Phone or Feature Phone to secure a much bigger market. Despite their efforts to integrate, those post PC product groups are expected to continue competing with each other for some time to come.A third characteristic of the post PC industry is that the competition between companies appears to form a network. There is network competition between PC makers and between home appliance companies, but in the post PC industry, such a tendency is expected to become more salient.
Competition for standardizationOn the other hand, there is a keen competition for standards in the parts and OS areas, where there is no market standards established yet. For example, in the post PC industry, there are various operations systems competing with each other and they include Window CE, Linux and EPOC.And the producers of hardware can turn this particular characteristic of the post PC industry into an opportunity to acquire flexibility and a relatively stronger bargaining power in designing products.
Recurring profit modelsEven in the stages of sales, retail and service in the company’s value chain, the post PC industry is different from the traditional PC and home appliance industries in that the former has greater distribution channels. Apart from wholesalers and retailers, the post PC industry’s distribution channels are becoming complex and diverse with the rise of Internet service providers and solution companies.In addition, the post PC industry has the possibility to create recurring profit models not just from selling the post PC product but also selling the related hardware and applications, providing Internet service, and through Internet advertising to continuously create profit whilst the product is in use.Leading companies’ strategiesThe post PC market has different characteristics and competition rules to the existing IT industries and therefore entering the post PC could accompany substantial risks for the companies accustomed to the conventional competition strategies.
Rather than participating in all stages of the value chain, the leading companies enter a particular territory in the post PC market based on their core competencies and then diversify into related businesses sharing high correlation. Through this method, the leading companies are able to enjoy the profit opportunity in post PC market while reducing potential business risks.An example of post PC strategy is found in the establishment of market standards. It is a strategy of setting market standards, used mainly by the market leading companies in the parts and OS areas. These companies present platform standards for post PC hardware, rather than actually producing the post PC products.
By doing so, they are able to participate closely in the process of forming market standards to maintain and increase their influence over the market. The companies could earn a huge sum of revenue in royalty if the proposed platform standards actually become standardized in the market.Another major strategy of the leading companies is one of expanding hardware portfolio. This strategy is pursued by many of the companies in PC, home appliance and information and telecommunications businesses that have already entered, or are seeking to enter, the post PC market.
Those companies extend their business territory to the post PC industry based on the strengths in various stages of the value chain, including competency in planning and development, competitiveness in production cost, distribution channel and sales organization, and brand power.The leading companies maneuver into the post PC industry through related diversification based on their core competencies and they need to do so after closely analyzing the characteristics of the post PC industry and the strengths of their own company.