The evolution of competitive forces in the microcomputer industry and a comparative analysis of the competitive strategies employed by five dominant firms within the industry

Abstract

A retrospective longitudinal analysis was conducted of the growth of the microcomputer industry from 1975 through 1983 and of the competition among five dominant firms in the industry from the summer of 1977 through 1983. Changes in the strategies of the dominant firms and changes in the industry forces were described, explained, and compared. The industry forces of threat of entry, competitive rivalry, power of buyers, and power of suppliers increased significantly from 1975 through 1983. Competitive rivalry became the most significant force by the end of 1983. The threat of substitute products was found to be a relatively insignificant industry force throughout the time period. Each of the five dominant firms in the microcomputer industry did not compete equally or directly with the other four dominant firms. Direct competition was most evident between Texas Instruments and Commodore as well as between International Business Machines and Apple Computer Corporation. Texas Instruments and Commodore engaged in direct competition with respect to several strategic dimensions in 1983. International Business Machines chose a strategy very similar to that of Apple Computer Corporation when it entered the microcomputer industry in November 1981. The Porter framework was operationalized. It was found to be effective for studying industry forces and firm competitive strategies over time within the microcomputer industry.