Consumer Demand Analysis and Forecast for Dell

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Demand forPersonal Computers in the U.S.

Executive Team 7Colin Byxbee, Amber Templeton, Rachit Jauhari, Ethan Yamasaki, James Millhiser2

Allow slide to remain for a bit until audience can review and get names2

IntroductionIndustry TrendsData CollectionAnalysisForecastQ & A

Presentation Agenda

Colin Byxbee3

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IntroductionIndustry TrendsData CollectionAnalysisForecastQ & A

Presentation Agenda

Amber Templeton4

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IntroductionIndustry TrendsData CollectionAnalysisForecastQ & A

Presentation Agenda

Rachit Jauhari5

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IntroductionIndustry TrendsData CollectionAnalysisForecastQ & A

Presentation Agenda

Ethan Yamasaki 6

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IntroductionIndustry TrendsData CollectionAnalysisForecastQ & A

Presentation Agenda

James Millhiser7

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IntroductionIndustry TrendsData CollectionAnalysisForecastQ & A

Presentation Agenda

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IntroductionIndustry TrendsData CollectionAnalysisForecastQ & A

Presentation Agenda

Amber Templeton9

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Industry Trends

Image Source: http://www.techhive.com/article/2042351/us-states-attorneys-general-to-take-aim-at-internet-safe-harbor-law.html 10

-Thank you, Colin-I will now discuss with you the trends in the PC market and where we were, where we are now, and where we are headed10

Demand in Market

Image 1 Source: http://www.amazon.com/Dell-Inspiron-i15RV-6143BLK-Touchscreen-Textured/dp/B00D9KP70G Image 2 Source: http://www.thewritingnut.com/writing-tools/setting-shop-part-4-writers-computer/ Image 3 Source: http://i-deals.in/2014/03/27/flipkart-rs-3000-smartphone-attractive-discounts-dell-venue-tablets/

1990s: Internet and media applicationsEarly 2000s: Laptop computersLate 2000s: Smartphones and Tablets11

- In the 1990s, the Internet and new multimedia applications were the driving forces for the industry-At this time, competition among PC makers was rather high in order to keep up with demand, which drove PC prices downward as they began to saturate the market-In the early 2000s, the demand for laptop computers began to drive the computer market-In the late 2000s, other devices, such as smartphones and tablets, gained popularity and offered competition in the PC market-They offer similar features as PCs, such as the Internet and applications, however, they are smaller, which makes them more portable, and many times, more interactive than PCs-This provokes the notion that smartphones and tablets could be considered to be replacements for PCs, as many tablets have keyboard hook-ups, and for some individuals, the Internet capability on a smartphone may be sufficient to fulfill their computing needs-This is something our company should take into account and this will be discussed further by my colleagues later in our presentation11

Dell in the Market

2009: Dell in smartphone market2010: Dell in tablet marketImage 1 Source: http://blogdetecnologiamoderna.com/moviles/dell-lanza-en-mexico-smartphone-mini-3ix/ Image 2 Source: http://microsoft-news.com/dell-venue-8-pro-tablet-starting-299-now-available-for-order/ 12

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Outside Noise

Dell revenues slump as tablets and smartphones eat into market.PC maker's quarterly reports show profits falling 48% year on yearQuote Source: http://www.theguardian.com/technology/2012/nov/16/dell-revenues-slump-pc-tablet-smartphone Dell is looking like the sick man of the PC business

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Dell in the Market: Outcomes

2012: Dell exits smartphone market

Image 1 Source: http://blogdetecnologiamoderna.com/moviles/dell-lanza-en-mexico-smartphone-mini-3ix/ Image 2 Source: http://www.dell.com/learn/us/en/19/campaigns/laptops-tablets-coming-soon

Coming Soon: The Dell Venue 8 7000 Series Android Tablet14

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U.S. Computer Usage

Source: Computer Industry Almanac Inc.15

-This graph represents the number of computers that have been in use in the United States over a 20-year timeframe.-As you can see, computer usage in the United States has steadily increased, and it is projected to continue to increase in 2015.-This is good news for our industry because while there may be an influx of competing technologies, demand for computer usage should continue to rise overall15

Dell PC Sales 1997- 2014

PC Sales (in thousands)Source: U.S. Bureau of Labor Statistics

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-This graph displays Dells overall PC sales in comparison to the total U.S. PC sales from 1997 to 2014-As you can see, between the years of 2000 and 2001, overall PC sales in the U.S. declined-However, during this timeframe, Dell continued to increase its market share and make a profit-Although the market was saturated at this time, we were able to excel in large part due to our efficient production and distribution system and the rise in Internet usage and online shopping-As you know, our company was revolutionary to the computer industry when we entered the market due to the fact our PCs were made-to-order-Therefore, an increase in Internet usage and online shopping was beneficial for our company

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Made-to-Order PCs

Image Source: http://whitestoneresults.com/pay-per-click-setup-and-management/ 17

-Dell was revolutionary to the computer industry because its PCs were the first to be made-to-order; they were developed after receiving the customers orders, instead of being built according to forecasted demand. -Additionally, Dells PCs were shipped directly from Dell to the consumer, eliminating distributors entirely. -This direct sales approach was extremely beneficial, as it allowed us to differentiate ourselves with its competitors and allow for greater flexibility in pricing. -Furthermore, we had fewer returns from customers because customers were able to order precisely what they wanted

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Dell vs. HP PC Sales 1997- 2014

PC Sales (in thousands)Source: U.S. Bureau of Labor Statistics

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-This graph displays Dells PC sales in comparison to HPs PC sales for the same timeframe: 1997 to 2014 in order to provide a reference with one of our main competitors-As you can see, in comparison to HP, our growth was much greater until around 2009, when HP surpassed our sales and has continued this trend through present time-With increased competition, Dell no longer provides the lowest cost for PCs-Demand for high-end PCs is now increasing, so our company may want to focus on this segment of the market in our future18

Our Strategy

Image Source: http://www.underconsideration.com/brandnew/archives/a_dell-icate_redesign.php#.VIc7X7l0yM8 19

-We need to continue to be the innovative brand we have been since our inception in order to drive demand and surpass our competitors once again-Now, I will turn our presentation over to my colleague Rachit, who will explain our market research.

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IntroductionIndustry TrendsData CollectionAnalysisForecastQ & A

Presentation Agenda

Rachit Jauhari20

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Market Research

Scan the Market Survey Broad Research

68 Quantifiable Variables

17 Variables used in Regression

Final Equation

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@ Dell Inc - Rachit Jauhari

Market Research

Scan the Market Survey Broad Research

68 Quantifiable Variables

17 Variables used in Regression

Final Equation

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Market Research

Scan the Market Survey Broad Research

68 Quantifiable Variables

17 Variables used in Regression

Final Equation

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Market Research

Scan the Market Survey Broad Research

68 Quantifiable Variables

17 Variables used in Regression

Final Equation

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Market Research

Scan the Market Survey Broad Research

68 Quantifiable Variables

17 Variables used in Regression

Final Equation

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Market Research

Potential VariablesMacro Economic Factors Unemployment Rate US Population % Change in GDPMicro Economic Factor Real PC PriceCompany Factor Advertisement Cost Customer Satisfaction Index (CSI)Trending Factor Smartphones SalesSeasonality Factor Quarterly Sales

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Market Research

Scan the Market Survey Broad Research

68 Quantifiable Variables

17 Variables used in Regression

Final Equation

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IntroductionIndustry TrendsData CollectionAnalysisForecastQ & A

Presentation Agenda

Ethan Yamasaki 28

Analysis

Dell Demand = 13.03 A 189.9 SS + 331 GDP 1.813 RP + 2472

Key:D = Dell PC Demand (000s)A = Dell Advertisement ($MM) SS = Smartphone Sales ($Bn) RP = Real PC Price ($) GDP = Change in GDP (%)Dell PC Demand Equation29

Analysis

Dell Demand = 13.03 A 189.9 SS + 331 GDP 1.813 RP + 2472Key:A = Dell Advertisement ($MM)

Example: If we increase advertising by $1 million, Dell Sales will increase by 13,030 units sold Dell PC Demand Equation

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Analysis

Dell Demand = 13.03 A 189.9 SS + 331 GDP 1.813 RP + 2472Key:SS = Smartphone Sales ($B)

Example: If Smartphone sales are increase by $1 billion, Dell demand falls 189,900 units.Dell PC Demand Equation31

Analysis

Dell Demand = 13.03 A 189.9 SS + 331 GDP 1.813 RP + 2472Key:GDP = Change in GDP (%)

Example: For every 1% annual GDP increase, Dell PC units sold will increase by 331,000.Dell PC Demand Equation32