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IBM, HPQ, Cray, Pinnacle Data Systems, Teradata Corporation, and Silicon Graphics are the major five direct competitors which make up the diversified computer system industry. The industry also indirectly competes with specialized corporations-national and multinational (Yahoo Finance,2011). For instance, Dell, Acer, ASUSTeK, Apple, Accenture, Infosys, Sony Corporation, SAP, and Wipro, Oracle etc specialized companies in the product and service range of PCs, printing & imaging, data services, hardware devices, enterprise resource planning systems and operating systems etc. (HP annual Report, 2010). The global PC industry, which is expected to grow at a rate of 3.8% during 2011, is a major contributor to the diversified computer system industry’s growth momentum and sustainability (Gartner, 2011). The overall industry is facing the surge in competition due to recent consolidation efforts by major players in the industry. Furthermore, the industry dynamics are also changing rapidly as changing global demand and emergences of new technologies are putting pressure over industry players to aggressively compete in the price war.
PORTER’S FIVE FORCES FRAMEWORK case study analysis has been undertaken to explore the current competitive rivalry in the diversified computer systems industry by specifically using the Porter five forces model. This study would also shed lights how HP by using porter five forces model better understand its competitiveness and build competitive advantage in the long-run.
HP-Hewlett-Packard, having its headquarters in Palo Alto, California, USA, is a multinational information technology corporation operating in the diversified computer system industry. Being the largest technology company in the world in terms of revenue, HP is ranked 26 in the Fortune Global 500. Since 1986, HP has tried to emerge as a global technology firm by following acquisition-led strategy. Over the years, it has made a total of 116 acquisitions where its largest acquisition was its merger with Compaq, a PC manufacturer, in 2002 for the US $ 25bn. With this merger, HP was able to fetch market share of the personal computer market worldwide from Dell. Its product range comprises of PC’s, laptops, handheld devices, printing & imaging solutions, software, and enterprise solutions and data services etc. which are marketed to consumers, small and medium-sized businesses, large corporations, public sectors such as health, government, and education. The strength of the company can be witnessed from its USD 126.033 bn revenues and Operating income of USD 11.479bn during 2010 (HP annual Report, 2010).