Journal Essay Example | Topics and Well Written Essays - 1500 words - 1

Journal - Essay Example The market In the recent times, the growth in the smartphone market drives the industry for microprocessors. By 2014, it is expected that the total market size for cell phone users alone shall be 1.7 billion primarily driven by the surge in smartphone demand in emerging nations (Fan, Liu, Zhang and Zhao, 2008). As for the market captured by laptops, they completely acquired sales for desktops and face stiff competition from netbooks and tablets who have reported tremendous rise in sales. There are two basic components that hinder entry into the microprocessor industry is prices and innovative technology. Competitors are spending huge sums in new product development, technological upgradation and innovations that can allow patents and hence target market advantage. Companies also need huge economies of scale in order to compete in prices. Off late the substitution in the phone markets has evolved greatly but the substitution of CPU’s is virtually unavailable. The microprocessor industry is extremely competitive in prices. Product differences between major producers like Intel and (Advanced Micro Devices) AMD are virtually absent. Microprocessor industry is a one that entails huge fixed costs but very low marginal costs. This gives each company, the power to undercut the other. Exit costs of the microprocessor industry are also very high owing to huge sunk costs involved. Technology products are characterised by very short product life cycles. Technology changes and industry standards evolve as rapidly as they expire. Innovation here becomes the key to survive. The case of Apple Inc can be cited as a perfect example of innovation that led to market leadership where innovation of the iPhone took away margins and sliced away profits of other cellphone manufacturers who could not keep up. Competitive Business Strategies The desktop market is characterised by slow growth in the recent times. It is presently the largest and one of the most important microproces sor markets with a total of 150 million unit sales globally. The growth figures don’t seem as impressive. Intel, a leading firm in the microprocessor industry, has significant technological and resource advantage in the segment. The low end segment is price sensitive and so companies like Dell and Intel should keep its strategy aligned to prices to maintain itself as a market leader (Fan, Liu, Zhang and Zhao, 2008). In strike contrast to the desktop market, the laptop market needs an entire different strategy. Here front end technologies and processor performance drive sales for a company. In the fig 1 below, it is observed that concentration of exterior design is not as important as data protection. Figure 1: Consumer Need Preference Hierarchy in the Laptop Market (Source: Fan, Liu, Zhang and Zhao, 2008) With a view to capture the laptop market, key industry competitors are targeting the new generation. The trend requires thin and light laptops that do not need batteries and coolers like in CPU’s. Secondly, firms like AMD are increasingly trying to differentiate their laptops by bundling as done in the Centrino platform. The company also seeks to specialise in technologies, like the vPro to enhance security of data, a huge demand fulfilment of the business class. Thirdly, companies like Intel are trying to take on market leadership in the emerging nations via the price advantage. The use of Atom processor has strengthened Intel’