Price trends of personal computers Essay

Charles Babbage invented the first computer in the 19th century. Since then various models have evolved and advancing technology has created machines that can achieve superhuman tasks within seconds leaving no room for error. These processing machines have revolutionized all aspects of human lives starting from simple typing and calculations to enabling complex business transactions and connecting millions of individuals to huge volumes of data and information available at their fingertips. An individual can now access unlimited information through the Internet, communicate online through emails and chats, carry on business meetings sitting in their homes with delegates located at the other end of the globe through video conferencing and reach out to millions of potential consumers for their products and services with the help of e-commerce applications. The computer has come a long way in the past few years and the increased utility and broadened scope has raised the market demand for this gadget in the global market. Market Demand for Personal Computers The market demand for personal computers has witnessed huge increase in the past few years. Initially computers were purchased by only a handful of individuals and organizations limited to government and large corporations. This was largely accountable to the huge costs involved in acquiring a computer added to the space constraint that it posed due to its big size. The computers would occupy a single room with too much wires and power requirements that required heavy maintenance and careful handling. However, with advancing technology the size of computers began to get smaller and smaller and the manufacturing of smaller processing chips made this possible. The smaller size of computers made it possible for the consumers to purchase for their businesses and eventually for their homes. Today the economy is greatly driven by the computers and their all-pervading applications that have transformed the way business strategies are designed and implemented. The e-commerce and online training and learning applications have created a huge market demand for computers in all spheres of life. This gadget has made it possible for individuals to carry on working from the comforts of their homes without having to commute to their offices on a regular basis. Schools, colleges, other educational and training institutions, along with shops and establishments, malls, small or big business enterprises cannot do without computers. Most business establishments have computerized their operations and departmental processes to catch up with times and reap the extraordinary benefits of faster and accurate processing of work. The rapid advancement in the telecommunication sector too has made a big impact on the sales of computers. The availability of high-speed broadband connectivity along with cheaper rates has boosted the market for these machines both in developed and developing countries. The sales of computers have gone up in the past few decades owing to these factors. Human beings by nature are possessed with the desire to have the latest technology and this holds much credence with the high tech savvy younger generations who are the prime user groups and consumers of these gadgets. The more advanced the technology the greater the appeal it holds for this group of consumers. The first personal computer MITS Altair 8080 was launched in the year 1975 and only a few thousand machines were sold within a period of 1 year of the launch. The market for personal computers has now reached to more than 4. 4 million units of personal computers sold in the year 2007 (source: just4business. com). The market share for macintosh gradually declined from 3. 2 percent in the year 1999 to 1. 98 percent in the year 2004 and the IBM personal computers gaining stronghold over the market. Source: Ars technica Price trend of computers Pricing of a product is an important determinant in establishing the market share and personal computers too have witnessed a steady fall in the price segment largely to attract greater market share. The pricing trend in the computer industry is to a great extent influenced by the rapid pace of advancing technology that renders the existing one obsolete in matter of a few years. The users are left with no other option but to upgrade their existing machines or invest in new improved versions equipped with latest features and enhancements. This trend is unique to the computer industry and can be evidenced in the regular pace of new models and versions that have in fluxed the market within the past one-decade. The massive supercomputers have given way to smaller desktops that rapidly paved the way for portable laptops and notebooks. Another essential factor that has influenced the pricing trend of computers is the universality in applications of computers today. The wide range of tasks and areas in which the computers have found universal acceptance has created a huge demand for these machines. The growing demand and increasing applications thus play a significant role in determining the price of computers. Initially the price of supercomputers ranged approximately between US$ 5 million to US$ 25 million. With advancing technology and increased usage the price of computers started dropping heavily. The price of personal computers has been witnessing a downward curve in the past few years despite growing demand. A survey carried out by the German Association for Information Management, Telecommunications, and New Media the number of computers sold in the year 2007 reached 4. illion units. The prices have dropped owing to the increasing demand and supply of various models in the market. Owing to the huge market demand for personal computers many suppliers have entered the market manufacturing on a large scale resulting in increased supply of machines. Moreover, the computer industry being very dynamic in character accounts for new models featuring enhanced technology and improved capabilities being introduced at a rapid pace. This renders the old models obsolete requiring regular upgradation and feature enhancements. The extraordinary pace at which technology is producing new versions and chips having increased processing capacities the market are always flooded with new models and new technology. If the supplier wants to reap benefits from the market he needs to keep the models within accessible price range to lure the customers into buying his product. High price ranges will shift the consumers to other models having similar features or even better the assembled personal computer that can be very cost effective for the consumers. Too many alternatives and choices available in the market have spoiled the consumers to a great extent. The Gartner report on computer sales states that the ongoing replacement cycle has defined the increasing sales of personal computers. It is observed that the last strong phase for the sales of personal computers was in the year 1999 and the recent years have witnessed increasing sales of laptops and notebooks as replacement to their desktop computers. More and more suppliers have in fluxed the market with new models and features in laptops and notebooks and the prices of these categories of computers have dropped by nearly 25 percent since 2006. This strategy is aimed at attracting more consumers to buy their brands and the manufacturers also realize that since the consumer has several alternatives available to him price can be an important decision making factor in influencing purchase. The basic law of demand and supply influences the principle of price economics. There are many theories attached to pricing strategies adopted by businesses globally but the fundamental principle lays the same for all products or services. â€Å"Many factors affect the quantity and type of goods producers supply and the quantity and types of goods consumers buy, and all these variables are integrated into one unit: price. In a free market, prices are based on the interaction of supply and demand, which themselves are based on individual judgements and values, not on executive caprice. Prices are not subjective† (Saraka, 2008). Conclusion The 21st century has witnessed many changes in the computer industry with new enhanced operating systems making their way into the market and better-equipped hardware attracting the consumer attention. The market share for both personal computers and laptops increased steadily with exploding demand from all corners of the globe.