High competition allows computer server providers to pass on these costs savings in the form of lower prices to buyers
Los Angeles, CA (PRWEB) January 30, 2014
Computer servers have a buyer power score of 3.9 out of 5, which reflects favorable price trends and limited market risks for the buyer. In general, the buyer power score is lowered by an unfavorable market structure. Computer server prices are largely dictated by prices of computer chips and processors, both critical components for computer servers. Fortunately, “prices for computer chips have fallen almost every year since their invention,” says IBISWorld research analyst Andrew Yang. “With lowered input costs, computer server providers are able to deliver lower prices to buyers.” The past 10 years have been characterized by sharp declines in computer server prices, a trend that is expected to continue in the three years to 2016. With steadily decreasing prices, buyers do not have to worry about locking in suppliers to avoid price hikes and can delay their purchases to secure better pricing.
Market risks are fairly low for buyers. Most server providers are large diversified companies that sell a variety of goods, including personal computer (PC) hardware, software and services. “While profit margins vary significantly among suppliers, bankruptcy risks are low all around,” Yang says, “ensuring that buyers have access to stable suppliers.” Supply chain risks are moderate mainly because computer server providers are dependent on one company for their computer chips and microprocessors. This upstream concentration leaves server providers vulnerable to supply chain risks and price shocks.
Buyer power is lowered by high market concentration and product specialization, which limit the number of suppliers that buyers can access for computer servers. Additionally, there are high barriers to entry for new computer server providers because starting a business in the market requires significant technological expertise and high capital investments. Despite this nature, market share concentration is expected to decrease as foreign companies increasingly enter the market, benefiting the buyer. In addition, cloud computing is becoming an increasingly powerful substitute for purchasing computing services, and as this technology improves, buyers will be better able to negotiate pricing with suppliers. For more information, visit IBISWorld’s Computer Servers procurement category market research report page.
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IBISWorld Procurement Report Key Topics
This report is intended to assist buyers of computer servers, which are systems designed to respond to and handle requests from other computers across a network or over the internet. Servers are designed to handle multiple tasks from multiple users and are essential for most medium-size to large businesses. Examples of servers include file servers, print servers, database servers and web servers. This product group excludes desktops, laptops and software. Cloud-computing services are also excluded.
Recent Price Trend
Product Life Cycle
Total Cost of Ownership
Supply Chain & Vendors
Supply Chain Dynamics
Supply Chain Risk
Market Share Concentration
Vendor Financial Benchmarks
Buying Lead Time
Key RFP Elements
Buyer Power Factors
About IBISWorld Inc.
IBISWorld is one of the world's leading publishers of business intelligence, specializing in Industry research and Procurement research. Since 1971, IBISWorld has provided thoroughly researched, accurate and current business information. With an extensive online portfolio, valued for its depth and scope, IBISWorld’s procurement research reports equip clients with the insight necessary to make better purchasing decisions, faster. Headquartered in Los Angeles, IBISWorld Procurement serves a range of business, professional service and government organizations through more than 10 locations worldwide. For more information, visit http://www.ibisworld.com or call 1-800-330-3772.