At. Comp

2. Situation analysis

* External Analysis

Since the basic server market had 36% compound annual growth rate through 2003, significantly higher than around 3% of high performance market, Atlantic Computer decided to penetrate the basic server market with its "Atlantic Bundle". But Atlantic Computer had no competitive market share in the basic market and had to fight against a strong competitor Ontario Computer which only focused on the basic server market with 50% revenue market share. In addition, for the business model of Ontario Computer that possessed “the most flexible and innovative supply chain strategy” was based on operational excellence, the company had been able to drive out many non-value-added costs and compete largely on price. For example, its major sales were generated online, saving lots of selling expenses.

However, Atlantic Computer had already been a strong player with 20% of the revenue market share in high performance market, the largest market in servers industry and had also been the largest player in the overall server industry for 30 years, thus Atlantic Computer was able to support its competition in the new basic market with its financial advantages, technical advantages and any relevant successful experience derived from the high performance market. What’s more, Atlantic Computer didn’t need to be worried that its basic servers would compete with its high performance servers, because customers didn’t view these two kinds of servers as substitutes. Atlantic Computer had also targeted the web-server and file-sharing application segments benefited most from the tool. Beyond that, “The Small and Medium-Size Enterprise Systems Solutions Trade Show” was coming, so Atlantic Computer could take advantage of the show to collect immediate feedback, allowing Cadena to eventually develop a sales script and other marketing collateral. Additionally, value-in-use pricing prevailed in the United States and Europe and this pricing could increase...