Competition in the Real World

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Competition

in the Real World

May 1st, 2009

ECO-202


When shopping for netbooks or laptops, consumers test out their options from familiar companies such as Dell, HP, Apple, Microsoft, and Compaq etc. But soon new options will become available to the buyers. As they hunt for the perfect PC for them, they will now see familiar names but from another market. Wireless Carriers, like AT&T, Verizon, and T-Mobile, are joining the PC market. One of the first examples of their brainstorming idea became apparent on April 1st, when AT&T started selling laptop computers for a small amount of 50 dollars, to people who signed up for a 2-year agreement to get at-home and mobile broadband services. Although they only made this deal available to consumers in Philadelphia and Atlanta, they were very satisfied with the results and plan to make this available nationwide. In addition to AT&T, T-mobile has already merged into the PC market in Western Europe. Since last fall they have began selling netbooks; and wireless companies there already account for 25% of all small laptops sold there.

        AT&T was not the first to join the monopolistic PC market in the U.S; T-mobile made netbooks available this past September in the U.S and Verizon plans to provide small, economically priced laptops later this quarter. As wireless companies enter the market, it benefits both the companies and the consumers. It benefits the wireless market because they can persuade consumers to buy monthly wireless Internet access service plans. In turn, the consumers save money on upfront costs for the computer and monthly charges may be less expensive compared to the existing Internet providers. The demand for smartphones and the high costs of Internet sparked the idea. Although they are paying 200 dollars or more of the netbook’s price tag, they are gaining the economic profit that comes with the new contracts and members that sign up for wireless data service plans.

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        The public may perceive that the existing PC makers have no chance and their profits will only get worst. However, the choice of the wireless companies to enter their market introduces the idea of them working together. For example, it now becomes easier for them to create and produce other electronics, such as smartphones and MIDS, and sell them through the wireless carriers. In a way, PC makers will then enter the wireless market as well. Due to the quicker and increase of netbook sales, the “PC industry overall gets pulled into this downward spiral of lower average selling prices ...

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