Computer Manufacture

The US computer manufacturing industry includes about 1,500 companies with combined annual revenue of $70 billion. Major companies include Dell, Hewlett-Packard, IBM, and Sun Microsystems. The industry is highly concentrated: the top 50 companies generate about 90 percent of revenue.

COMPETITIVE LANDSCAPE

Demand is tied to consumer and business income. The profitability of individual computer companies depends on purchasing and production efficiencies, and on technological expertise. Large companies have economies of scale in purchasing and production. Small companies can compete successfully by specializing in certain products or by developing superior technology. The industry is capital-intensive: annual revenue per employee is about $400,000.

PRODUCTS, OPERATIONS & TECHNOLOGY

Major products include PCs, printers, monitors, mainframes, servers, and disk drives. PCs, including desktop, laptops, and workstations, account for 40 percent of industry revenue. Input/output devices such as printers, monitors, keyboards, and mice account for 25 percent of revenue; mainframes and servers for 20 percent; and disk drives for 15 percent.

The manufacturing process for PCs consists of integrating circuit boards, disk drives, and input/output devices into a final product. Companies typically assemble PCs from components bought from other manufacturers. Key components like "motherboards" are specially made for a particular product, while disk drives and other components may be off-the-shelf parts. Despite automation gains, some assembly work is still labor-intensive. Manufacturers of specialized devices like printers, monitors, and disk drives may also buy some components from outside vendors. The manufacture of some products ...