What happens when a supply/demand falls apart?

Question

Eg.
Computers are now very cheap because there are so many suppliers.
But, considering that, for most peoples needs, computers for the last 2/3 years have already provide everything they need and are very reliable....
Will many suppliers pull-out / go bankrupt and prices therefore soar!
Surely products like Vista won't fool the market into spending money to buy products that they don't need?
Or is marketing now so powerful that people are 'told' what to buy. Information please.

Answer 1

Sort of...

You have to understand a little more about markets.

So I don't write a book here, just look at markets as young or mature markets. After deregulation, you saw the same thing happen with airline industry, and the same thing happen with the automobile industry back in the 20's through the 40's.

In the beginning of an industry (market) there is typically called a manufacturing orientation to production, as opposed to a consumer orientated production. In the early days, you could buy a Model "T" in any color you wanted, as long as it was black. It took many years before you had assorted colors to choose from and different option packages to choose from. Also, if you look at automobiles in terms of per unit cost, they are cheaper now than they were in 1908!

The same thing has happened to the computer industry. It's not so much that there are so many suppliers. Acer (IBM), Radio Shack, NEC, and Motorola are not making computers anymore but HP and Emachines are.

It's more of a situation where the home computer industry is going through the process where it's moving from a young to a mature industry.

Now with this, you are proposing that it's the "light" user, the business user, or as you say "...most users..." are the ones moving the market, and this is not true.

The group that is moving the market, and actually purchases most of the new computers are the over clockers and the gamers, and you don't mention this group in the market. And this group is causing the problems in the market.

Just as there was a time when Dodge, Plymough, Ford, Lincoln, Tucker, Oldsmobiles, Chevrolet, Buick, Cadillac, and Cord, were all seperate companies in the automotive industry, we are beginning to see the same changes in the computer industry.

Gateway merged with Emachines, Sun Microsystems is setting up working agreements with Intel, and Apple is figurativey. almost completely out of the computer business completely. I say this because if you look at the percent of their sales in computers in 1984 compared to what they are in 2006, they are almost out of the industry.

In 1984, computer sales was 100% and in 2006, computer sales only comprised sales for the company less then 30%.

If you look at the history of different industries, this is part of the maturation process, and it's normal. Some of the companies that were there in the beginning that couldn't keep up with the changes in the industry drop off. Newer companies come in with newer ideas and less expensive products, and other companies mergie, or buy smaller companies to make themselves stronger in the market.

You will see more of this in the computer industry, and it doesn't mean that prices will soar. It didn't happen in the airline industry, and it didn't happen in the auto industry.

Finally, you mention Vista. Vista is an OS (Operating System). This relates more to the level of sophistication of the buyer. The greatest spike in new computer sales with the introduction of a new operating system (on a per capita basis) occured when microsoft went from 3.1 to Windows '95. Then as people firgured out that they didn't need to purchase a new computer everytime Microsoft came out with a new OS, they didn't come out in droves to purchase a new computer.

Now, the introduction of a new Operating System has only a nominal influence on new system sales. When and introduction is announced, there are those that will wait until the new OS has been put in the market, then buy, But if you look at the sales numbers over time, they balance out.

What has caused the most problems for computer makers that I alluded to earlier, which you never mention at all, has to do with the gamers and over clockers building their own systems.

This is also part of an industy moving from a young to a mature industry. As well as changes that occur on the part of the manufacturers, there are changes on the part of the buyers approaches.

Just as people perceived Foreign automobiles to be superior, the hard core computer users decided that building their own systems was better.

How do you think companies like Lian-Li or Asus remain viable?

Answer 2

I know it's tough when friendships drift apart- believe me, I've had that happen more times than I can count. All I can say is hang in there, keep an open mind, and be yourself. When I was in elementary and middle school, there were some friends that I ended up parting ways with; however, now that I'm a sophomore, some of us are becoming friends again. As for girls who pick their boyfriends over their friends; when they break up, who's going to be there when they need somebody? Join activities to meet new people - theater is fun, and people are friendly- and you'll be making friends in no time. Good luck! It's hard being a teenager but you'll be just fine. =]

Answer 3

Look at TV sets over the last 20 years. I bought my first 13 inch color tv for $300 in the 70's. then they became common and the sizes went up. my last two were a 27 inch for $800 and then a 32 for 1800 about 8 years ago. now i bought a 50 inch plasma for 1999.
Percieved value. Do I really need a 50??? NO. But since I can afford one I will get one when mine starts to wear. Does it do more than the last one? yes, nicer picture etc.
My computer also does more things faster than my old one and I can also afford it.
Buggy whips are when demand stops.

Answer 4

If demand goes away than supply goes up and if the companies lose money they will eventually close. Most likley with computers, companies will find a happy average that they can move and will set there production to reflect it. Maybe some small guys will close up shop and big guys will layoff workers but that would'nt happen anytime soon.