Falling production costs and growing competition from a stronger server market will keep prices falling
Los Angeles, CA (PRWEB) September 07, 2014
The mainframe computer market exhibits a buyer power score of 3.9 out of 5, representing moderately high buyer power. According to IBISWorld procurement analyst Dale Schmidt, “the market's structure heavily favors suppliers, but current price trends, increasing competition from substitutes and prevailing risk characteristics give buyers significant leverage.” IBM operates a near-monopoly in the mainframe market, holding more than 90.0% market share. The remaining market is so small that only two other suppliers split it, Hewlett-Packard and Unisys. The low availability of suppliers drastically reduces buyer power, with IBM historically dictating market conditions. Computer servers have grown increasingly sophisticated over the past three years, though, making them a strong alternative for mainframe computers and, thus, increasing buyer power in the mainframe computer market. Server sophistication will continue to increase over the next three years, posing greater competition to mainframe computer suppliers.
Increased competition, combined with steadily declining input costs for mainframe manufacturers, has given suppliers the motive and ability to lower prices, helping drive down the price of mainframe computers over the past three years. “Buyers will continue to benefit from steadily falling prices over the next three years as these trends persist,” says Schmidt. Demand for mainframe computers is anticipated to rise, however, as increasing corporate profit encourages companies to spend on hardware and equipment, keeping prices from declining at a faster rate than the past three years.
Buyers also benefit from the financial stability of suppliers. The cost of developing a mainframe computer is prohibitive, so each of the three suppliers is a large IT company with global reach. These companies span many geographic and business markets, which provides stable demand and supply chains. Although mainframes are a large purchase, buyers are encouraged to purchase an operating system license at the same time and with higher priority. Because software costs over the lifespan of a system vastly overshadow a mainframe's purchase price, software represents the more critical purchasing decision.
For more information, visit IBISWorld’s Mainframe Computers procurement category market research report page.
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IBISWorld Procurement Report Key Topics
This report is intended to assist buyers of mainframe computers. Mainframe computers are extremely powerful computer systems used for a variety of functions such as bulk data processing, statistics, enterprise resource planning and financial transactions. As opposed to computer servers, mainframe computers tend to focus on reliability and stability rather than raw processing speed. This report focuses on the hardware used by mainframe computers.
Recent Price Trend
Product Life Cycle
Total Cost of Ownership
Supply Chain & Vendors
Supply Chain Dynamics
Supply Chain Risk
Market Share Concentration
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.