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The competition in the IT market is so high and HP has to compete with many powerful
competitors in every fields of its operation. Then the level of rivalry within HP¶s environment
can be considered as high. Some competitors of HP are as follow:

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In this part there are very famous and strong competitors that capture the considerable portion of
market and could be consider as the very strong threat for HP as they are all very active in
introducing high technologies and innovative products to the market.



Kodak is a very reputable company in this market for always introducing new and innovative
product, providing imaging technology products and services to the Photographic and graphic
communications markets. The Company revenue in the year 2006 was $10,568 million that
showed growth in comparison with the year 2005 and it will continue for first quarter the year
2007.
Kodak Consumer digital products include digital cameras, digital picture frames, home imaging
accessory products, and snapshot printers and printer media.
In January 2007, the Retail Printing Group was redefined to manage Kodak¶s complete set of
digital printing hardware, media, and infrastructure offerings to retailers.
The Kodakgallery.com site provides consumers with a secure and easy way to view, store and
share their photos with friends and family, and to receive Kodak prints and other creative
products from their pictures, such as photo books, frames, calendars, and a host of other
personalized merchandise. In 2006, Kodak entered a partnership to develop and sell a line of
branded Martha Stewart photo products on Kodak Gallery.
Kodak¶s line of CCD and CMOS sensors provides an attractive market opportunity, including
mobile, automotive, industrial, and professional imaging sectors.




Another powerful competitor in this market is the well-known brand ³canon´ which enjoyed the
raise on sales in 2006 and continuing its pace in rising up the sale for the year 2007 with $77.16
billion up to July 2007.
Canon develops, manufactures, and sells a wide lineup of copying machines, printers, cameras,
optical products and other products to meet a diverse range of customer needs. The Canon brand
is well recognized and trusted worldwide by individuals, families, in offices and industrial
circles.

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In fiscal 2007, Canon¶s 70th year in business, the Company aims to strengthen existing
businesses and identify next-generation business domains to assure sustained growth beyond
2010, while maintaining a high profit margin structure. Canon will make every effort to join the
ranks of the global top 100 companies by 2010 in terms of key performance indicators. The
Company¶s goals for 2010 include net sales of ¥5.5 trillion and a return on net sales ratio of 10%
or higher.

  
There are also some new immerging and private companies exist and try to expand their
activities in the market. The Companies such as Staples, Office Depot, and Office Max are now
gradually become more famous. 

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35% of HP revenue is come up from this part in the year 2006 so HP must consider every
movement of its competitors in this part of market to keep and improve its market share. The HP
main competitors in this industry are Dell, IBM, Lenovo, Apple, Toshiba, Acer, Cisco, and
Xerox.

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In the year 2006, Dell was the No. 1 company considering the volume of sale in Laptop.
Although the Company didn`t pass a very good year, it was the leader company in volume sale
and price. The Company controlled 19% of the market in the year 2006. Dell also has a program
to enter to Imaging and printing industry.

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IBM had a strong year in 2006. Revenue as reported was $91.4billion, up 4 percent, excluding
PCs from 2005 results. IBM began year 2007 very good and kept its increase in the revenue in
this year for the 2 first quarters. The Company revenue was $92.79 billion up to July 2007. The
Company report shows growth in its operation mostly in international market.



Lenovo is the Chinese manufacturer that is very strong in laptop and PC market. In 2006 it
captured 12% of the market. Lenovo claim that the Company dedicated to build the world¶s best
engineered personal computers. Lenovo¶s business model is built on innovation, operational
efficiency and customer satisfaction as well as a focus on investment in emerging markets. The
company develops, manufactures, and markets reliable, high-quality, secure and easy-to-use
technology products, and services worldwide. Lenovo Greater China enjoyed strong growth in its
PC business, which accounted for 38 percent of Lenovo¶s overall revenue during the 2006/07
fiscal year.

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The Company is committed to bring the best personal computing, portable digital music, and
mobile communication experience to students, educators, creative professionals, businesses,
government agencies, and consumers through its innovative hardware, software, peripherals,
services, and Internet offerings. The Company growth is significant in PC in 2006 and 2007 by
showing 30% growth. The Company believes a high-quality buying experience with
knowledgeable salespersons who can convey the value of the Company¶s products and services
greatly enhances its ability to attract and retain customers.

  

There are lots of other companies such as Acer, Toshiba, Cisco, Xerox, Hitachi, Asus, and NEC
which are acting in different parts of IT market and can be consider as the threat for HP
Company as some of them such as Xerox and Toshiba are very powerful and well-reputed in the
IT industry.

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Bargaining power of buyers exists and high when buyers have lots of choice and these choices
bring the price down. And also customer can bargain for higher quality or more services. The
more buyers have choice the power of buyers is high where they can choose any brand they want
like Dell, Acer, Compaq, Sony and more while the bargaining power of customers low when the
buyers have only few choices.

HP must try to reduce the barraging power of the buyer by increasing the product demand; this
means that company has power to control the amount of production and also its products price.
On the other hand, customers have lots of substitute.

IT market, in which companies are using high technology products the market doesn`t have huge
difference between products except companies such as Sony or Apple which its target market is
mostly upper middle and premium class but the other companies all are acting in the same
segment of the market with same technologies so it is a very strong treat for HP if the Company
cannot keep its customers loyal to its products as customer loyalty is the crucial factor in this
kind of market in which the product are the same to some extent.

Another big treat is that the buyers in the market are every fragmented in this industry and this is
means that the buyer will be more powerful as they have so many choices.

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Supplier power is high in this industry especially in providing microchips and microprocessors.
Intel is the market leader of the industry with almost 75% of the market and there is no substitute
for it. The next company is AMD with 15% market share is so far from Intel. Intel is the leader
company in determining the price and it doesn`t left any opportunities for HP or other
manufacturers to have a direct effect on the supplier policies as 80% of them provided by Intel.

On the other hand Microsoft has the same situation with Intel as all the companies except apple
provide its software from Microsoft and Microsoft software and operating system are used in
more than 90% of PCs and laptops.

So bargaining power of suppliers is high following the reasons below:

{ Large number of famous suppliers for HP components like hardware, keyboards, etc
while for certain ACER and Compaq the supplier use a fake components.
{ Microsoft standard for all PC¶s and Intel standard for most PC¶s. HP we can choose
either
{ High switching costs

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In IT industry most of the companies are very big and have strong distribution channel it will be difficult
for a new entrant to come and create a new distribution channel. Product differentiation is not much in
this industry but price very brand to brand and it can be very high. Capital requirement are also high.

Entering to this market is not easy for new companies. It needs high modal to have our own
computer company. The threat of entry into HP is moderate because the HP industry has few
major entry barriers.

HP Threat of entry of new competitors is moderate because:

{ Low investment for independent stores

{ Low product differentiation
{ Brand name may be a barrier to entry where HP brand is known by whole world and long
sale brand and it brand is good compare to Compaq which is new brand which still new
in this industry.
{ Low economies of scale
{ No legal or governmental barriers
{ Decreasing profitability shows that there is a threat of new entrants

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Threats of substitute products: moderate

HP believes in standard-based technology, which represents the opportunity to decide in the item
of preference. HP tries to eliminate barriers by continuous updating processes and presenting
new products to remain successful. HP faces constant threats of substitutes or services from other
computer hardware products; such as, Dell and Apple which are among top competitors.

However, among these competitors, Apple is not a very important competitor due to price there
is huge gap between Dell and Hp and Apple. Moreover, Apple target market is different from Hp
and Dell. So, the competition is between Hp and Dell and customer. On the other hand, there is
not an important substitute for current product in the market. There are just in initial stage and
cannot be important competitors for the current market.

HP utilizes two primary methods of fulfilling demand for products: 1.building products to order
and 2.configuring products to order. The Company employs building products to order
capabilities to maximize manufacturing efficiencies by producing high volumes of basic product
configurations. Configuring products to order permits configuration of units to the particular
hardware and software customization requirements of certain customers. Our inventory
management and distribution practices in both building products to order and configuring
products to order seek to minimize inventory holding periods by taking delivery of the inventory
and manufacturing immediately prior to the sale or distribution of products to our customers.

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