The computer industry

This book is a case study in industrial economics, using the computing industry as a base at a time when it was undergoing drastic changes. The objective was to identify and analyze those major forces and mechanisms which account for the evolution of an industry. The approach is to recognize the diversity of enterprises and to explore the interplay between products, production processes and the characteristics of enterprises, including their organization and management systems, which business experience indeed shows can be decisive competitive advantages or disadvantages. One might expect the analysis of competitive processes to be readily available in the economic literature, but most economists treat firms as black boxes, ignoring their differences. Beyond providing the basic concepts and mechanisms, mainstream economics are of little help here, since their fundamental paradigms of competition and equilibrium all but ignore the real-world notions of enterprise, differentiation and competition. To understand the internal working of enterprises, one has to turn to the so-called "management" literature, which unfortunately most often stops at the border of the enterprise and seldom tackles the interplay between internal choices and the workings of the market. The separation of those two disciplines is an essential weakness when considering the subject of this book. Economic theory uses too schematic a view of the firm, and organizational theory has too little concern for the market environment. This book attempts to combine those two strands of thought into one theory of industrial structure. Its subject, one particular industry, is limited enough for theory to be always confronted with the experience of the business professional. At the same time, that subject is comprehensive enough to allow moving beyond a pure monograph and to support the beginnings of new conceptual developments. The same approach and concepts could prove useful in the analysis of other complex industries, and perhaps form a starting point for more general contributions to research into industry structures. This book was originally written in French and published in 1996, based on research done in 1994/1995 and on the statistics available at that time. The author translated it into English, but the French publisher could not find an English-language counterpart. The French version is now out of print and the publisher has renounced the rights. New publishing techniques, including print on demand, now allow an independent publisher to make a book available in printed form with a minimal investment. The world has changed since the book was written, most notably computers and the computing industry. There have been giant advances in microelectronics and in their applications to all walks of life. Many firms and products have disappeared, and many new have emerged. Many catch-phrases are now obsolete; new ones are now popular. Also, the easily accessible industry statistics that I used have been discontinued. Updating the book to 2013 would involve a complete rewrite and extensive additional research. But I happen to believe that the approach and concepts put forward in 1996 are still worth publishing in their original state. Concerning the analytical approach and the conclusions, I leave it to the reader to evaluate which are obsolete and which are still valid today. Concerning the predictions that I ventured at the time on the basis of that analysis, it turns out that they did materialize to a large extent. At any rate, the factual part, i. e. the history and the industry statistics in the period 1950-1995, may still be of interest as far as it goes. Be that as it may, I urge the reader to constantly keep in mind that the book was written in 1995, using data available at that time, relying on the technologies of the time and on whatever literature I was able to lay my hands on. In the context of this book, "today" must always be understood as "in 1995".