The document discusses Compaq's dilemma in introducing a new low-cost notebook series. It considers using the cheaper AMD or Cyrix processors instead of the more expensive but higher market share Intel processor. A comparative study of the processors shows AMD and Cyrix being cheaper but with lower market share and supply issues. Porter's Five Forces analysis and a customer research analysis are presented. It is recommended that Compaq launches both an AMD notebook and Intel notebook to target both price-sensitive and quality-sensitive customers.

1. Submitted by,
Pritam Das- 12DM006
Sunil Acharya- 12DM009
Priyanka Bhattacharya- 12DM011
Jyoti K Mohapatra- 12DM023
Akash Prusty- 12DM093

2. Case Introduction
Compaq has increased its market share from 3% to 46%. It
has decreased the market share of Toshiba from 60% to 40%
Compaq was using Intel as the processor till date.
Introduction of new notebook series with reduce price.
Intel is the leading processor of the market and hence a costly
one.
Compaq’s dilemma of introducing low cost note book series
with processor AMD and Cyrix.

3. Comparative study of Note books with Intel with AMD
and Cyrix
AMD &
INTEL
CYRIX
Costlier Cheaper
Market Share-
Market 3.4% for AMD
Share- 84% and 1.6% of
Cyrix
No supply Supply
Problem Issue

4. Porter’s Five Force analysis
Suppliers: Intel in comparison to AMD and Cyrix is superior in
market share and also the acceptance is much among the buyers.
Buyers: Due to the increase in the market competition and hence
reduction of the price the main advantage is enjoyed by the buyers.
New competition: As the industry have no alternative hence the
threat of New Competitors.
Threat of Substitute: Introduction of new low cost system with
more efficiency by existing players cannot be avoided.
Rivalry: As the market have no alternative hence the rivalry in the
form of huge competition always exist.

5. Analysis of the research
Two-Third customers are willing to move with alternative processor.
Customer spending less than $2,500 are having affinity towards AMD
processor and those paying $2,500 and more prefers Intel.
Main reason for switching brand is gaining Price discounts and
Performance benefit
If Compaq introduce alternative processor the combination of low price
and brand recognition could preserve its market share or even can enhance
it.
Consumer wants to see the system in the market before making any
decision of buying the same.
If Intel change strategy and provide a low price deals customer have a
chance to move to lack the interest.

6. Comparative study for both the processor
Compaq with AMD
Lesser cost
Needs to establish the brand first.
Buyers does not give emphasis to the quality of processor
but wants discounts.
Compaq with Intel
Existing brand.
Costlier.
No reason to switch brand.

7. GROUP DECISION
As two types of customer exist in the market- price
sensitive and quality sensitive, two different types of
notebooks should be launched.
One with the AMD processor and other with the Intel
processor.

8. RESULT
Compaq’s launch will hit the price sensitive customer and
hence the customer will buy such notebooks.
Also the customer who wants to judge the notebook on
the basis of the market presence of the product can
evaluate and hence changing to Compaq’s customer with
the AMD processor.
The quality sensitive one can always buy the preferred
one with Intel and hence Compaq can retain the existing
the customer with adding new customer as well.