The Computer Industry

Computing is a diversified industry that includes sectors devoted to computer hardware, software, maintenance, and services. The computer industry is a multibillion dollar market whose products are sold globally. Despite the global characteristics of its marketplace, the vast majority of major computer industry vendors are American firms.

Certain segments of the computer industry are characterized by near monopolies. These include the disk operating software and microprocessing sectors, dominated by Microsoft and Intel, respectively. Once the major force in the personal computer sector, IBM has been relegated to a fourth place position behind rivals Compaq, Apple, and Packard Bell.

IBM is staking its corporate future on the provision of networking services. The focus of these services is the corporate sector. Toward this end, IBM recently acquired Lotus Development Corporation and its $300 million-a-year business based on Notes, a network software popular among the business community. IBM also established a public data network with 11 international telecommunications companies.

Although IBM is banking on corporate networking as the wave of the future, surveys indicate that the home computing market will grow at a rate double the pace of the business market over the next five years. Therefore, IBM must hedge its bets and expand its corporate mindset. IBM should pursue strategic alliances with companies that are capable of making innovations i

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tel control the two key components of personal computer architecture, the two giants have been successful in consolidating a large portion of the computer industry. Microsoft's share of the disk operating software market has been estimated at between 80 percent to 90 percent. The company's revenues and profits have risen an average of 40 percent annually (Economist, 1994, p. C8). IBM has virtually admitted defeat in its battle to develop and market a disk operating system to rival Microsoft's products. As mentioned above, the leading competitors in the computer industry are based in the United States. For example, of the top ten personal computer companies worldwide in 1993, eight were American firms. The only two foreign firms were the Japanese companies NEC and Toshiba. Although Toshiba has held steady in the highly competitive environment of personal computers, its compatriot companies have not been as fortunate: "Japan's computer companies, such as Hitachi, Fujitsu and NEC, have been left behind as they have focused on their ailing mainframe and minicomputer businesses, and on developing ever-bigger memory chips" (Economist, 1994, p. C4). Although NEC is the market leader in Japan, it is experiencing stiff comp

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