to which Value Line attributes the low growth prospects in the computer and peripherals indus try. First is the "unsteady" American economy. Unsteady refers to the lack of a clear direction for movement in the level of economic activity. Even without a recession, however, conditions are sufficiently uncertain as to cause potential buyers to be quite cautious with respect to major investments, such as the purchase of computers and peripherals. Thus, the consideration, at this time, of an export program is quite appropriate for Computers Unlimited.
The second negative factor relates to the shortened pro duct life cycles which tend to characterize the computer and peripherals industry, as a result of rapid technological change. There is a strong fear among potential buyers that a product purchased today may become obsolete "before an accept able return on investment can be obtained" (Value Line Inves tors Service, 1986, p. 1084). Companies, of which IBM is one, which "have consistently offered customers a clear upward migration path . . . have largely sidestepped this . . . pit fall; companies that haven't . . . suffered as a result" (Value Line Investors Service, 1986, p. 1084).
IBM also faced a major marketing problem with respect to its PC product line. Low cost, high quality clones produced in developing countries in Asia began to gain increasing market shares, at the expense of IBM. IBM's solution to this prob lem was to introduce a completely new PC product line, which was not compatible with its earlier PC product line, and which is much more difficult to copy. The introduction of the PC 2 series has been successful; however, in 1988, PC 2 clones beganto appear on the market.
In 1987, IBM adopted a new product strategy with respect to its PC product line. A completely new product group was introduced. This introduction rendered existing IBM PCs obso lete. It also rendered all of the existing IBM PC clon...