The PC industry is driven by rapid technological improvements in components, particularly microprocessors, other semiconductors, and storage devices. The improved performance of hardware has been matched historically by increased complexity of software, creating demand for the latest hardware. This means that time is a critical competitive factor in the industry in two ways:
First, excess inventory loses value (at an estimated 10% per month;) and costs money; Second, products incorporating the most advanced technologies are in high demand and carry a price premium. As a result, companies that minimize inventory and bring new products to market faster can reduce costs, increase market share, and maintain higher margins.
Two factors come into play in determining the ability of PC companies to manage inventory and introduce new products. First is the standardized, modular nature of the PC.