The Computer Marketplace

1
The ComputerMarketplace
Section C
The Computer Industry
CHAPTER 6

Page 273
2
Section C
The Computer Industry
Chapter 6
Section PREVIEW
Section D
Section C
You will be able to

• Find reliable information about computer products
• Determine which products are of good quality and
  value

Page 273
3
Section C
The Computer Industry
Chapter 6
Section C

• The computer industry consists of corporations
  and individuals that supply goods and services to
  people and organizations that use computers.
• Before you buy a computer, you should have some
  knowledge of the computer industry.
• effect of product life cycles on price
• tiered structure of computer vendors
• four market channels
• types of publications

Page 273
4
Hardware Product Life Cycle Does the computer
industry introduce new models annually?
Chapter 6
Section C

• The computer industry is not on an annual cycle.
• Life cycle of a computer model includes five
  phases
• product development
• product announcement
• introduction
• maintenance
• retirement
• Vaporware - products that are announced but never
  produced.

Page 273
5
Hardware Product Life Cycle Does the computer
industry introduce new models annually?
Chapter 6
Section C

• Drop in price of a CompaqPresario 1650
  betweenJuly, 98 and August, 99.
• As supply and demandreach an equilibrium,price
  decreases slightly.

low price
average price
Weeks
high price
Page 273
6
Software Product Life Cycle Whats the difference
between a version and a revision?
Chapter 6
Section C

• Software publishers produce computer software.
• begins with an idea, then is tested
• Alpha test - first phase of testing done in-house
• Beta test - conducted by off-site testers
• find bugs
• can cause unexpected glitches in computer

Page 275
7
Software Product Life Cycle Whats the difference
between a version and a revision?
Chapter 6
Section C

• The original version (release) of a software
  program is typically called version 1.0
• a new version is indicated by a new version
  number such as 2.0
• a new version is usually a major improvement
• Revision - a release of software to fix bugs or
  make small changes
• revision number is separated from the version
  number with a period

Page 275
8
Software Product Life Cycle Whats the difference
between a version and a revision?
Chapter 6
Section C

• Street price - average discounted price of
  software
• Version upgrade price - discounted price for
  owners of an earlier version of software
• must show proof to the vendor
• Competitive upgrade - special price for switching
  to a competitors product
• Upgrading software is important
• less technical support for older versions
• may lose eligibility for special pricing

Page 276
9
Market Tiers What accounts for price differences
for same computers from different vendors?
Chapter 6
Section C

• Industry analysts classify computer companies
  into three tiers, which helps to explain the
  price differences between computers.

Page 277
10
Market Tiers What accounts for price differences
for same computers from different vendors?
Chapter 6
Section C

• Top-tier companies
• computer business for many years
• Apple, Compaq, IBM
• more expensive computers
• higher overhead costs
• responsible for many innovations
• financial resources devoted to research and
  development

Page 277
11
Market Tiers What accounts for price differences
for same computers from different vendors?
Chapter 6
Section C

• Second-tier companies
• newer companies
• Gateway, Packard Bell
• less expensive computers, same quality
• high sales volume
• less financial resources than first tier
• minimal operating costs
• limited research and development
• small work force

Page 277
12
Market Tiers What accounts for price differences
for same computers from different vendors?
Chapter 6
Section C

• Third-tier companies
• smaller startup companies
• primarily sell through mail order
• appear to be less expensive
• low overhead costs
• may use poor quality components
• more likely to go out of business
• little to no technical support

Page 277
13
Marketing Channels Is it safe to buy a computer
by mail?
Chapter 6
Section C

• Computer hardware and software are sold through
  marketing outlets or channels
• Computer retail store
• buy from manufacturers and sell to consumers
• qualified staff
• Mail-order supplier
• takes orders by telephone or Internet
• limited service and support

Page 278
14
Marketing Channels Is it safe to buy a computer
by mail?
Chapter 6
Section C

• Value-added reseller (VAR) - combines
  commercially available products with specialty
  hardware or software
• designed for needs of a specific industry
• Manufacturer direct - refers to hardware
  manufacturers that sell their products directly
  to consumers.
• use sales force or mail order

Page 279
15
Marketing Channels Is it safe to buy a computer
by mail?
Chapter 6
Section C
The computer industry provides a variety of
marketing channels
Page 279
16
The Computer Press Where can I get reliable
information about computers to make informed
purchases?
Chapter 6
Section C

• Computer publications provide information on
  computers, computing, and the computer industry.

Page 280
17
The Computer Press Where can I get reliable
information about computers to make informed
purchases?
Chapter 6
Section C

• Computer magazines
• contain articles and advertisements for latest
  computer products
• product evaluation
• practical tips
• target users of personal and business computers
• full of product advertisements

Page 280
18
The Computer Press Where can I get reliable
information about computers to make informed
purchases?
Chapter 6
Section C

• Computer industry trade journals
• focus on company profiles, product announcements,
  and sales techniques
• target computer professionals
• not always available on newsstands

Page 280
19
The Computer Press Where can I get reliable
information about computers to make informed
purchases?
Chapter 6
Section C

• Computing journals
• offer academic perspective on computers and
  computing issues
• focus on research in computing
• rarely advertise hardware and software
• found in university libraries

Page 281
20
The Computer Press Where can I get reliable
information about computers to make informed
purchases?
Chapter 6
Section C

• Computer magazines and trade journals maintain
  Internet sites
• articles from back issues
• some current issues
• Computer company internet sites
• product specifications and pricing
• product announcements
• sales literature
• technical support

Page 281
21
The Computer Press Where can I get reliable
information about computers to make informed
purchases?
Chapter 6
Section C

• Television shows - provide hardware and software
  reviews, tips and industry news.

Page 281
22
The Computer Press Where can I get reliable
information about computers to make informed
purchases?
Chapter 6
Section C

• Industry analysts
• Journalists monitor computer industry trends,
  evaluate industry events, and make predictions
  about trends

Page 282
23
Section C
The Computer Industry
Chapter 6
Section A
QuickCheck
Page 282
24
C
Q U I C K C H E C K
Chapter 6

• 1. Products that are announced but never shipped
  are called ______________.

Page 282
25
C
Q U I C K C H E C K
Chapter 6

• 1. Products that are announced but never shipped
  are called vaporware.

Page 282
26
C
Q U I C K C H E C K
Chapter 6

• 2. If your budget is not severely limited, a
  computer in the middle of a vendors product line
  usually gives you the most computing power per
  dollar. True or false?

Page 282
27
C
Q U I C K C H E C K
Chapter 6

• 2. If your budget is not severely limited, a
  computer in the middle of a vendors product line
  usually gives you the most computing power per
  dollar. True.

Page 282
28
C
Q U I C K C H E C K
Chapter 6

• 3. A(n) _________ upgrade is a special price
  offered to consumers who switch from one
  companys software product to a new version of a
  competitors product.

Page 282
29
C
Q U I C K C H E C K
Chapter 6

• 3. A competitive upgrade is a special price
  offered to consumers who switch from one
  companys software product to a new version of a
  competitors product.

Page 282
30
C
Q U I C K C H E C K
Chapter 6

• 4. Computer vendors are often classified into
  three __________ based on market share and
  financial resources.

Page 282
31
C
Q U I C K C H E C K
Chapter 6

• 4. Computer vendors are often classified into
  three tiers based on market share and financial
  resources.

Page 282
32
C
Q U I C K C H E C K
Chapter 6

• 5. A(n) __________ sells complete computer
  solutions for a specific industry, such as video
  stores or medical offices.

Page 282
33
C
Q U I C K C H E C K
Chapter 6

• 5. A value-added reseller sells complete computer
  solutions for a specific industry, such as video
  stores or medical offices.

Page 282
34
C
Q U I C K C H E C K
Chapter 6

• 6. Computer books offer the most up-to-date
  information about computer products. True or
  false?

Page 282
35
C
Q U I C K C H E C K
Chapter 6

• 6. Computer books offer the most up-to-date
  information about computer products. False.

Page 282
36
Section C
The Computer Industry
Chapter 6
Section A
End of Section
Page 282