Support from key sources:

- This industry is made up of a total of 50 businesses, indicating there are many sellers.With a high number of competitive sellers, there will be increased competition, meaning that it will be harder to raise the prices of laptops. (monopolistic competition) 

- However, 3 of which (Lenovo, HP and Dell) have much greater market share than the others. They account for about 62.5% of the market shares (2020), heavily controlling the increase and decrease of laptop prices. (Oligopoly)

- All laptops vary in appearance but internally, they serve the same purpose and do the same basic functions. Hence, raising the barrier for entry as it's more about finding unique or creative products and services to remain competitive within the industry. Like how Razer was only able to enter the industry and earn a record-high revenue of US$752 million by designing and producing specifically for the gaming industry. (Oligopoly)

-  Existence of several substitutes in the market such as smartphones, tablets and desktops plays a significant role in determining how laptops are priced. They perform similarly to a laptop. For example, tablets are a mobile alternative to laptops as they are cheaper and lighter and can generally perform the same tasks. Hence, with close substitutes, consumers would be able to switch to a cheaper alternative. (monopolistic competition)

Support from key sources:

- Total PC shipments increased by 11% from 267.6 million in 2019 to 297.0 million in 2020 (laptops accounted for 79% of this number).

- 2020 represents the highest full-year growth since 2010 at 11%, a huge reason being the COVID-19 pandemic which led to more laptop buyers due to global lockdowns and Work-From-Home (working professionals) / Remote Learning (students) arrangements, which required many people to have an electronic device such as a laptop, thus driving up the demand for laptops.

To find out more:
- What percentage of laptop buyers are corporates, and what percentage are consumers?
- How are laptop companies adjusting their laptop pricing strategies in conjunction with the increase in demand?

Support from key sources:

-The world is seeing a shortage of computer chips starting from 2020.

-The world's biggest chip manufacturer, TSMC, announced in Mid 2021 that it is increasing its prices of its advanced computer chips by about 10% and less advanced chips by about 20%

- Since laptops require computer chips to manufacture, and the cost of computer chips increased, this means the cost to manufacture a laptop also increased. Thus, a drop in laptop supply has been observed. 

-Because of the global chip scarcity, some laptops are becoming up to $50 more expensive for customers. E.g. In June, the price of an ASUSTek Computer video gaming laptop, which is one of Amazon's best-selling items, increased from $900 to $950.

-HP, the world's second biggest laptop producer are increasing its laptop prices by 8%. E.g. HP Chromebook jumped from $220 to $250 in June 2021

-The supply determinant in play here is Factor/ Resource Price. 

To find out more:

-How much did the supply of computer chips and laptops drop?

-Which other industries are urgently in need of computer chips?

It measures the effect on change in price on the quantity of goods demanded

-The formula is % change in quantity demanded of good A / % change in price in good B. The higher the value of the number, the more sensitive the customer is to the price changes. If it is less than 1 it is inelastic, if more than 1 it is elastic.

-Based on our research, the price of an ASUSTek Computer video gaming laptop, increased from $900 to $950. This represents a  5.56% change in price. 11% is the change in quantity demanded based on our research that says PC shipments increased by 11%. The price elasticity of the laptop is 11%/9.71%= 1.13%. Since 1.13% is more than 1, the laptop is deemed elastic.

The determinants of price elasticity of demand is:

1)Availability of  substitutes

-If consumers can find products that are similar to what they want they can substitute it and the price elasticity of demand will be elastic. If they can't find it, the price elasticity of demand will be inelastic. 

However this is based on personal preference. Based on our research,  some people can use netbooks, tablets or smartphones as a substitute for a laptop. However there are some who think that there are no substitutes for a laptop as there are functions that a laptop only has, thus it is inelastic or elastic based on availability of substitutes. Unless in the future there is a technology that functions the same as a laptop, the laptop will become elastic.

 

2)Type of nature of product 

-It is difficult to determine whether a laptop is a necessity or a luxury. If you talk about 30 years ago for most, laptops were a luxury. But since technology is evolving so fast, you pretty much need to use a laptop for almost everything from working to paying taxes, thus it is  a necessity. A laptop also helps people accomplish tasks faster. Since it is a necessity, the price elasticity of demand will be elastic. 

3)Income

-If the computer is cheap to someone based on their income the elasticity is lower whereas if it is expensive to someone as it represents a large percentage of their income, the elasticity will be higher.

4)Time

The price of a laptop is elastic over a larger period as if the price of laptop increases it will take the customer time to find an alternative to switch too. However in the long term, the price elasticity of demand will be higher as customers will get adjusted by the change in price. When computers price increase, consumers will find a cheaper and similar alternative to substitute it.

An area of improvement is that I wish that we can write an agenda before the meeting so that we can carry out the discussion more efficiently. 

An interesting fact is that there are 50 businesses in the laptop industry. This is surprising as I only know the few popular brands in the market and did not expect there to be so many more.