Why the price of computers keep falling despite increasing demand

Why the expense of information processing systems keep gloaming despite ontogenesis gather upIntroductionNow a mean solar day, computers are the main antecedent of connectivity among people. The major cover of turn tail i.e., college subsidizations, teaching lessons, work presentations are loosely dependent on the computers. And also doing a recollective distant shoot the breeze for al most(prenominal) free, computer or information applied science has en adequated human cosmos in coming out with the amphetaminey solutions of almost everything. (http//en.wikipedia.org/wiki/Personal_computer)A ain computer (PC) be whoremaster any oecumenic-purpose computer whose size, capabilities, and headmaster gross gross revenue impairment make it useful for individuals, and which is intended to be operated straight off by an end user, with no intervening computer operator.Personal computers software applications include word processing, spreadsheets, databases, Web browsers and e-mail clients, games, and myriad person-to-person crossroadivity and special-purpose software. Modern ad hominem computers often work high- stimulate or dial-up connections to the Internet, allowing approach to the World Wide Web and a wide range of separate resources.In the free foodstuff condition the value of a crossing go away be determined by the necessity and the market render of computers. In a market, Supply and motivation is an economic model of price determination. It concludes that in a competitive market, price will function to be the bar inquireed by consumers, and the quantity supplied by producers, resulting in an economic equaliser of price and quantity.If we consider at computer market, the penury is keep on addition and also at the same time the market allow also increase. According to the police force of demand and bring out, when the demand is increase, the price goes up the free market. But in this particular computer market, deman d is exploitation but, the price comes down gradually. That is the question of this assignment and, in this piece of work I am breathing out to discuss the best possible reasons to that behavior. http//www.channelweb.co.uk/crn/ news program/2258012/uk-business-pc-market-declineIn this assignment it will be discussed and analyzed the following topics. comment for why the price of ad hominem computers has continued to fall even in the face of agitate magnitude demand.ConclusionBackground Computer groceryThe UK personal computer market in 2008 was worth 12.81bn at end-user prices, an increase of 4.2% everywhere 2007 and its highest level of yield since 2000. However, it led to a fall of 8.2% in sales to 11.77bn during the recession in 2009.During the period from 2005 to 2008 personal computers (PCs) reported a high annual growth, whereas peripherals and add-ons declined in total value sales. hence it was led to a negative growth of 3.3% over the period.In the consumer market , the better performance of PCs over the period, particularly, is attributed to sales of portables and particularly net books in the past year. Mobile computation is continuing to drive net book sales. Desktop computers have give out less attractive and are in decline with more than portables at one time being sold than desktops.Manu situationures are expecting a rebound in sales in 2010 and full recovery by 2011 with positive.The principal analyst Ranjit Atwal at Gartner says The UK market for computers showed growth in Q4 for the first time this year. According to him, 70 per penny of the total PC market in the UK has also blend in heavily dependent on runny PCs.The percentage of the UK market carry onAcer held on to the top spot in the UK with 19.1 per cent market share, HP held the arcminute with 18.9 per cent. Dell was the third with 16.5 per cent, followed by Toshiba and Samsung with 10.4 per cent and 6.5 per cent respectively.He added that the total UK market in equi pment casualty of shipments in Q4 was 3.8 million units. even off in the western Europe Acer held 23.1 per cent of the market. HP was second again with 21.3 per cent, Dell was third with 9.9 per cent and Asus and Toshiba took fourth and fifth lay out with eight per cent and 6.2 per cent market share respectively.There is a significant growth in vendors such as Apple, Samsung, Lenovo and Sony also put significant pressure on the top five vendors in Western Europe. Research has found that the UK computer market continued to struggle in 2009s closing quarter as western European counterparts return to growth. grocery store watcher IDC preliminary figures reveal that UK personal computer shipments in Q4 evil 1.7 per cent annually to 3.8 million. Notebook shipments were up 2.3 percent year on year to 2.9 million, while the desktop market slumped 12.8 per cent, with 878,000 units shipped.The emerging markets were collapsed when the crisis came, but straightway they are back to doubl e digit growth.Likewise we observed that the market for the computers is expanding day by day in millions, but the monetary value of the computers are coming down gradually which is contrarily to the theory of the Demand and Supply. consequently we are required to examine in deapth that, what are the triggers for such feature in authentic terms.http//www.mynewsdesk.com/uk/view/pressrelease/research-and-markets-computer-Explanation for why the price of personal computers has continued to fall even in the face of change magnitude demand.In this particular computer market, we understand that the price of personal computers has continued to fall even in the face of increasingly high demand, which is contrary to the law of demand and add. That happens mainly because of the competition and increasing efficiency few more former(a) reasons.In this case, Price remains constant or trim down and wobble in any other determinants causes demand or supply to rise. That results eludings in the demand of supply trim downs to the redress or to left depending on the circumstances. Any other factors can be,Demand side The price of the other product. ie. Substitutes and complements.IncomePopulationPreferencesFuture price expectationsSupply side The price of other product, ie. Price of substitutes and complementsThe price of factors of production used to produce the computer. (land, labor, capital)Advancements of technologies.No of producers or size of the market.Future expectations.Now we will look at the demand side of the computer market.In the computer market at that place is a huge growth in demand day by day mostly collectable to the following reasons..Price of the other productSubstitutes In todays world, in that respect are no closer substitutes to the computer. People are employ high tech mobile phones to do most of their computer colligate work for example sending and receiving e mails. Still it is not a closer substitute. Therefore the demand is increase and the demand trim down is fractureed to the refine, increasing the price. Please see the plat below.Complements price of the complements also becoming frown when compared to the past few decades. In general, a companys strategic interest is going to be to get the price of their complements as low as possible. The final sustainableprice would be the commodity price the price that arises when you have a bunch of competitors offering indistinguishable exhaustivelys. So The smart companies canvas to reduce its complements price in order to capture the market.Ex. When IBM designed the PC architecture, they used off-the-shelf parts instead of custom parts, and they carefully documented the interfaces between the parts in the IBM-PC Technical Reference Manual. As long as you match the interface, you can be used in PCs. in spite of appearance a short time declamatory recite of companies started up offering retentiveness cards, hard drives, graphics cards, printers, etc. Cheap add-ins meant more demand for PCs. Please refer the diagram below.Increment in real incomeThe Income of the consumers has been increased. The result that income has on the amount of a product that consumers are willing and able to buy depends on the type of good were talking about. For most goods, in that respect is a positive (direct) relationship between a consumers income and the amount of the good that one is willing and able to buy. Being considering the computer is a recipe good, when income rises the demand for the computers will increase.The higher(prenominal) the level of aggregate and/or personal income, the higher the demand for a typical commodity as a general. Where the income is higher more of a good or service will be chosen at a given price. Thus determinants of demand normally utilize some form of income measure, including Gross Domestic convergence (GDP).If you look at the following statistics the real income of the consumers have heen increased.Real mansion disposable income per head1 and gross domestic product per head2United res publica advocator numbers (1971=100)Gross domestic productHousehold Income1971100.0100.01972103.7108.31973111.1115.11974109.7114.11975109.0115.01976111.8114.31977114.5111.71978118.2119.81979121.4126.71980118.8128.81981117.3128.41982119.7128.31983124.1131.01984127.4135.91985132.0140.71986137.3146.71987143.5149.21988150.7157.51989154.2165.11990155.4172.61991153.2176.01992153.4180.81993156.8186.21994163.6188.81995168.5193.71996173.4199.71997179.1208.11998185.6212.41999192.0218.52000199.5227.72001204.5237.82002208.7242.62003214.6249.92004220.5251.92005225.1258.92006231.5262.72007238.5262.91 familiarized to real terms using the expenditure deflator for the household sector. See Appendix, image 5 Household income data sources.2 Adjusted to real terms using the GDP deflator.Source Office for National Statistics Government Actuarys part global Register Office for Scotland Northern Ireland Statistics and Research AgencyTherefore, the demand curve for computers has definitely shifted to the right(a) from D1 to D2 reduce to increment in real incomes. Therefore, there has been a rise in their preferences. Please refer the diagram below.http//www.econport.org/content/handbook/Demand/Factors.htmleal3.3 Consumer Taste, Fashion, Trend and PreferencesIt is a real fact that all markets are shaped by collective and individual tastes appearance trend, and preferences. These patterns are partly implanted by information and knowledge of products and run and partly shaped by culture, including the influence of advertising. Because of these differences in taste and preferences, divers(prenominal) societies use forest products differently.As the mini- notebooks provide better functionality at the start price points now a days they are becoming more appealing. Mini notebooks are highly demanded and it has become fashion and trend due to consumer preference.If you refer the diagram below, when the deman d is increased, the demand curve is shifted to the right increasing the price.PopulationAccording to the following table, the population of UK has been increased and as a result the aggregate demand for computers have been increased.Table 1.1Population1of the United KingdomMillions19711981199120012007201120212031United Kingdom55.956.457.459.161.062.867.271.1England46.446.847.949.551.152.756.860.4Wales2.72.82.92.93.03.03.23.3Scotland5.25.25.15.15.15.25.35.4Northern Ireland1.51.51.61.71.81.81.92.01 Mid-year estimates for 1971 to 2007 2006-based projections for 2011 to 2031. See Appendix, Part 1 Population estimates and projections.Source Office for National Statistics Government Actuarys Department General Register Office for Scotland Northern Ireland Statistics and Research AgencyWhen the population is increased the demand is increased, the demand is increasing and demand curve shifts to right increasing the price of the computer from P1 to P2. Please refer the diagram.Now we will lo ok at the Supply side of the computers.Reduction of prices of factors in production work follow is a main criterion in deciding the product price. If input cost decline, firms respond by increasing output. As a result marginal costs are dramatically reduce and because supply is increased. Therefore there has been a huge fall in price and quantities traded have been risen dramatically.In the long run, when an manufacture expands the cost of industry also belittles. As the industry produces more output, the minimum reasonable cost of production for each firm decreases with the decrease in costs. (Economies of plateful) The decrease in costs may reflect note input costs which reduce the minimum point of the average total cost curve as the industry grows. As the industry expands and if there are economies of scale in the production of an important input costs may decline.A decrease in input costs shifts the supply curve to the right from S1 toS2 increasing the Equilibrium quanti ty from Q1 to Q2. The price will be change magnitude from P1 to P2. Please refer the above diagram.http//www.flatworldknowledge.com/pub/1.0/introduction-economic-analysis/29486Advancement in engine roomBecause of the technological advancement, the computers can be produced at a lower cost when compared to the decades ago. As technology has improved, he price of the computers have declined radically large(p) their cost of production. Specially advances in communications technology.http//www.web-books.com/eLibrary/ON/B0/B63/021MB63.htmlLet us look at another indicator of the phenomenal change in computers. According to Bureau of Labour Statistics, central processing unit (CPU) speed rose 1,263%, system memory increased 1,500%, hard drive substance soared by 3,700%, and monitor size went up 13%Between 1993 and 1998.Therefore the supply curve shift to right from S1 to S2 by reducing the price from P1 to P2.http//www.web-books.com/eLibrary/ON/B0/B63/021MB63.htmlThe competitive advant age of high-tech laptops and NotebooksNotebook PC /Laptops various types of notebooks and laptops with different configuration and specifications are manufactured by different companies. The most recognized companies in dealing with laptops are Sony, Vaio, Toshiba, Dell, Fujitsu, Lenovo ect. Priced are depended on configurations. Laptops with general features and lesser configuration are available at cheaper rates and notebooks with higher configuration and special(a) specifications are bit expensive. The processor may be Intel Dual Core and it may be enabled with widows or vista insurance premium operating system.From one notebook PC to the other the data speed and the bone capacity varies depending on the configuration. The memory may range from 1GB to 4GB or higher memory. Some laptops are enabled with TV tuner and built-in cameras for extra usage. The capacity of the hard drive varies, starting from 64GB to 500GB. When compared to the desktops, the hard disk and RAM have smal ler sizes. There is a better advantage as the laptops Central Processing Unit is produced less heat and also make unnecessary power. They may be of Intel Core, Core 2 Duo, Premium M, VIA Technologies etc.http//www.articlesbase.com/laptopsfollowing are the most attractive features in the Note books and laptops.LCD pompousnessKey board and a touchpad, equivalent of mouseDisplay primarily ranges from 13 inches to 17 inchesWeighs between 1.4 to 5.4 kilogramsThickness ranges between 18-38 mmComes in folding designRechargeable batterRemovable memory quickness which ensures large memory of dataAvailability of many ports for USB connectivitysExpandable memory cards such as Mini PCI for a large storage of data.Portable, cheap priced, stylish, folding designBoth a laptop and notebook have more advantages as they are ultra-portable, durable and they can be used while travelling easily. We can have immediate get at and can have our work done instantly and these are incessantly up-to-date, as all files can be saved in a single location. With the help of wireless networks like Wi-Fi and cellular modems, we can entree Internet even while on the go.The above mentioned advancements in technology, the computers gets technically better and better as the months ago for the same price, and this will shift the supply curve to the right.Retrieved from http//www.articlesbase.com/laptops-articles/laptop-notebooks-are-best-substitutes-for-our-traditional-computers-745511.htmlThis can be seen in the diagram above. The quantity supplied has raised hugely, from Q1 to Q2.The equilibrium price has fallen from P1 to P2, a fairly large relative drop.3.7 Expansion of the computer market.Recently more and more computer product chains have been entered to the market and it has led size of the industry grown. When more firms enter a given industry in short, output increases even as the price remains steady. The supply curve is shifted to the right decreasing the price of the product, when i ndustry grows. Following are the main competitors in the UK market.United Kingdom PC Vendors)Company3Q09 Market Share (%)3Q08 Market Share (%)Acer24.217.4Dell Inc.18.320.9Hewlett-Packard17.519.1Toshiba6.58.6Apple Computer5.03.8Others28.630.2100.0Total100.0Note Data includes desk-based PCs and mobile PCsSource Gartner (November 2009).Please refer the diagram.The rapid increase in the number of firms, together with dramatic technological improvements, led to an increase in supply, shift the supply curve in diagram to the right from S1 to S2. Price is reduced to P1 to P2.CONCLUSIONLet us consider the factors those affected to fall in computer price in real terms which resulted both(prenominal) the demand curves and the supply curves led to right shift.Increased preferences due to advanced technology increase in population and the increment in real income, there is a huge increase in demand. And the demand curve shifted to the right from D1 to D2 in the diagram. The price was increase d from P1 to P2.Suppliers strive for a greater share of the market by having strategies to gain consumers demand on their product. This is done so by increasing the value of their product. But there has also been a huge shift to the right in the supply curve for computers than the shift in the demand curve. Please refer the diagram above in relation to supply curve.In computer market particularly there are simultaneous shifts of both demand and supply curves. Combining both shifts generates an obvious change in quantity, but a questionable change in price. If an increase in demand increases equilibrium quantity and an increase in supply increases equilibrium quantity, then an increase in both MUST increase equilibrium quantity.In relation to the price, the demand increase (right shifts) results in a higher price, and the supply increase (right shift) leads to a lower price. The price is in determinant and it depends on the relative change of both curves. In the computer market, supp ly shifts relatively more than demand, therefore the supply induced lower price outweighs the demand-induced higher price, and the price is lowerThe price change is in determinant and we have to consider the relative change in the supply and the demand curves. Therefore, the exact reason for the question in this assignment is, even though the demand is increasing, the supply is also increasing but, at a rate higher than the demand increasing rate. You can notice in the diagram above, that the supply curve is shifted to the right at a higher rate than the rate at which the demand curve is shifted to the right. Therefore the price reduces from P1 to P2.Therefore, I conclude that the rapid increase in the number of firms, together with dramatic technological improvements, led to an increase in supply. The reason for the fall in equilibrium price that is the answer to the assignment question is market supply is relatively more than the demand and it results a lower price.Reference listW eb sightshttp//www.microsoft.com/uk/business/news, 26, attest 2010, 8.15 a.m.http//en.wikipedia.org/wiki/Personal_computer, 26, run into 2010, 8.25 a.m.http//www.channelweb.co.uk/crn/news, 26, March 2010, 9.00 a.m.http//www.econport.org, 26, March 2010, 9.10 a.m.http//www.econport.org, 26, March 2010, 9.40 a.m.http//www.amosweb.com, 26, March 2010, 9.55 a.m.http//www.slideshare.net, 26, March 2010, 1.10 p.m.http//www.flatworldknowledge.com, 26, March 2010, 1.25 p.m.http//www.web-books.com, 27, March 2010, 9.20 a.m.http//www.articlesbase.com, 27, March 2010, 9.30 a.m.http//en.wikipedia.org26, 27March 2010, 11. a.m.htpp//www.microsoft.com/uk/business/news/driving-revenue/UK-PC-sales, 27March 2010, 11. a.m.http//news.bbc.co.uk/1/hi/business/4704927.stmBooksParkin, M. 2008 (8th edition)Solman, J. 2007 (2nd edition),Economics, Pages 48-65