Identification of Company Needs

• The Nordic region recognizes an increasing need to digitalise their business models, advertisements, and overall organizational operations. Therefore, business and IT professionals have needed to update their perceptions of needs when making purchasing decisions regarding computer processors.

• Established organizations originating in the Nordic region are experiencing business disruption due to lagging in their innovation in a digital world.

• Keeping up with competitors means Nordic businesses need to embrace technology such as artificial intelligence (AI), voice recognition, and blockchain-based platforms. Purchasing a computer processor for a Nordic business should consider these changing technology needs when deciding the options needed in the processor.

Research Options

• Buying a computer processor for a business requires several considerations, many of which are consistent across countries.
• The business or IT professional needs to determine what the company needs from the processor. Companies must decide if they need a multi-core or quad-core processor, based on the company's needs. The business or IT professionals must research current and predicted technology needs to make an informed decision.
• Multi-core processors keep overall processes smooth when the business needs multiple applications need to run simultaneously.
•  Quad-core processors are ideal for more intensive needs, such as businesses utilizing large database management or graphic-intensive applications.
• Nordic countries recognize the need to use more advanced technology, meaning quad-core processors are likely beneficial.
• Dell's website offers additional guides and information articles, geared toward individual countries such as Norway, to assist business purchasers in choosing the processor options that best meet the business' needs. Business and IT professionals may benefit from this resource to help inform purchasing decisions.

Purchasing Options

• Several companies offer computer processor options in Nordic countries. Some of these companies include B&H Photo Video, NewEgg, and Elkjøp. A globally well-known retailer offering computer processors in the Nordic region is Dell.
•  B&H sells new and used computer processors with multiple options and capabilities.
•  NewEgg primarily is a global, virtual store offering multiple processor brands and styles from a central location.
•  Elkjøp has a more limited selection of processors, as this company appears to focus more on selling laptops, mobile technology, and gaming technology.
•  Dell has a wide selection of processors, for business and personal use, in addition to resources on making effective purchasing choices.

Purchase Decisions

• Many Nordic industries use a flat management structure. This means a variety of professionals in the business and IT department may have a part in purchasing decisions, rather than a particular managerial position.

• The Nordic region tends to experience a shortage of engineers and IT professionals. Therefore, this region often imports IT talent from other countries. When purchasers are imported talent, the purchasing decisions may be affected by cultural differences.

Purchase Decision Timelines

• Specific information on lead time to purchase computer processors in the Nordic region was not located.
• A general recommendation is for businesses to replace their computers, including the processors, every five years. Business and IT professionals should keep this in mind when determining when to budget for computer processor purchases.

Additional Insights

• The population in the Nordics region tends to be well-educated, due to the free education availability. When presenting Nordic business and IT professionals with technology options, such as components and systems, this factor should be a consideration.
• The Nordic region is beginning to see areas in which business technology is lacking, which is affecting even the most established businesses. Providing resources to assist Nordic businesses in catching up with current digital trends likely would appeal to purchasers.

Research Strategy

Key Findings

• Research from Bain & Company, in collaboration with the World Economic Forum, found that China's technology consumption in the next 10 years will be defined by consumers who are richer and middle-class, digitally adept, and understand the importance of developing, personalizing, and sharing data.
• Chinese computer buyers will be looking for products that are personalized, frequently transformative, sustainable, and socially responsible.
•  Approximately 22% of China's population is expected to be over 60 years of age within the next decade. These elderly consumers tend to look for products that are affordable and easy to use.
• On the other hand, roughly 35% of China's population, which includes people born in the 1990s or 2000s, will have grown wealthier, become dependent and entrenched in rapidly improving technology and digitization. These younger consumers will instead value higher quality, variety, and convenience, and be less price-conscious than their elderly counterparts. These consumers are also growing less brand-conscious, instead seeking product-specific values like quality, functionality, design, and environmental friendliness.
• Physical stores are expected to digitize and decrease, while e-commerce and online sales are expected to increase. Singles' Day- China's one-day e-commerce sale- is now the largest global e-shopping day, selling more than the U.S.'s Black Friday and Cyber Monday combined. Event-driven promotions such as Singles' Day are crucial for computer sales, with 57% of Chinese consumers preferring to purchase low-frequency, large ticket sales (such as computers) with a discount.
• To be successful, retailers will have to increase their online engagement with the consumer and offer cashless transactions. As of 2017, over 50% of consumers in China use cash for less than 20% of their monthly spending- a number that is expected to increase even more over the next 10 years.
• Chinese consumers largely buy online. Of China's 855M digital consumer base, nearly 57% see online advertisements and subsequently buy online, while 39% see advertisements or promotions offline and also opt to buy online.
• Another 42% of Chinese consumers try the product offline, in stores, but still, choose to buy online. Less than 30% purchase offline and even these consumers will check product information online first.
• The majority of younger Chinese consumers learn about new products and brands online. Social media and e-commerce recommendations are the two largest streams, accounting for 55% and 51% of new product/brand information, respectively.
• When researching the product online, Chinese consumers are most often seeking information regarding the product details, pricing, comments and reviews, popularity, and a convenient purchase method.

Research Strategy

Research

• On the Germany subreddit on Reddit, there have been posts from people who ask about the best websites to purchase computer components.
• A post on Reddit was made by an individual who noted the price of AMD costs on Amazon Germany. Comments compared the Amazon Germany CPU prices to US prices and deals that others obtained from other German retailers. Many comments were also challenging Amazon Germany as a source of trusted information, citing the user base of Amazon as "less tech savvy people". This gives indication that German consumers of computer processors are avid in comparing prices and where information about computer processors is obtained.
• Another post features an individual with 350 euros to spare and wants to invest in a CPU and board for both work and play. People responded with their suggestions on CPUs, looking at benchmarks and processing power. They usually have experience with using particular CPUs and give their advice based on their usage.
• A post by another consumer details a wish to build a new computer for data heavy applications. The individual wanted a more powerful machine to speed up the workflow. The CPU that they are considering was chosen based on their need to run multi-core applications and balances low power consumption and computing power.
• One German IT professional was looking for a more powerful machine to run 15-20 Linux virtual machines and wanted advice on a CPU to purchase. Many individuals gave suggestions on the specifications the CPU should have, as well as how to make it compatible with virtual machines. A look at the profiles of the people who gave advice reveals that they are IT professionals as well.
• Another individual with a small business in Germany wanted advice on server and storage capabilities, including advice on CPUs. The comments are from IT professionals and gamers.

Sales & E-Commerce

• Most of the purchasing of computer parts in Germany is done online. Amazon Germany was mentioned most as the place to purchase computer parts. This decreases the importance of a sales person. Amazon.com in general is by far Germany's top online shopping destination.
• A post asking about the best stores or markets to buy PC parts had suggestions that were almost all online stores. One individual suggested local computer stores in Germany and mentioned that it may be possible to find like-minded people at physical stores who are also into upgrading computers.
• There is also a Reddit subforum called r/bapcsalesgermany that is dedicated to computer part sales in Germany. In this subreddit, consumers track prices of different parts, including CPUs, and post when the prices drop.
• Although indirectly, individuals have conversations with others in the post comments. This influences their outlook on what to purchase, based on how credible they find the information.
• Consumers also look at data. Followers of companies consistently post data on CPU sales weekly, especially for Mindfactory, one of the biggest technological retailers in Germany. In the comments, consumers discuss CPU design, revenue increases, and performance reports. This, again, influences outlooks.

Lead Time to Purchase

•  Price tracking on Reddit reveals that most tracking in Germany is done on the Amazon Germany, Mindfactory, and Alternate websites.
• The Amazon Germany shipping methods page offers delivery day guarantee with premium shipping, morning express, same day, and 1-day. This allows consumers to pick their delivery date. For standard shipping, the delivery dates are usually within a week.
• Mindfactory only delivers within Germany. The website says that if all items are in stock in the warehouse, delivery would take place within 1-3 working days.
• Alternate offers standard shipping as well as express shipping, where delivery takes place on the next working day.

Conclusions

• Reddit features posts from many German consumers who want advice on upgrading or refurbishing their PCs. They seek advice on what CPU to purchase.
• A few of the needs for a new computer processor are described as wanting a more powerful processor to handle more tasks, to boost performance on a budget, and to have a balance between computing power and power consumption. There are many questions about whether a
• Key research areas for German IT and business professionals are specific to their uses. Some people handle large data sets, while others need to support a server for a business.
• The relationship the consumer has with the sales person is not important. Most of the purchasing is done online from websites such as Amazon Germany and NewEgg Germany. Barely any human interaction is required during the purchasing process.
• Lead time to purchases to areas within Germany are on par with domestic shipping in the US.

Research Strategy

Leads

• A lead is a company's potential customer, and it is from this that a company derives its customers. The first thing business and IT professionals in the UK do before purchasing computer processors is to independently consider the type of computer jobs they have and determine the appropriate processors for them. They do this by either studying the information provided on dealers' websites or by consulting with independent technology experts.
•  Tom's Hardware is a world-renowned computer technology publication company, and in the UK, their publications are available here.
• Tom's Hardware provides technical guidance to enable consumers to acquire the right computer processors at appropriate prices. The advice it offers concerning computer processors is that buyers should only purchase after confirming that the computer processor is compatible with their motherboard.
• It also notifies buyers that computer processors' clock speed and core counts are the two most important performance determinants. With this information, buyers can choose the ideal companies to conduct a purchase.

Converts

• Converts are leads who become buyers, and conversion is determined by the quality of engagement leads experience with computer processor dealers' salespeople or customer service staff. Scan Computers is among the leading dealers in computer technology in the UK, and their customers include businesses and institutes of higher education.
• Scan Computers has a customer rating of about 4.7, according to a survey conducted by Trustpilots in 2018, and they say this rating is based on the company's implementation of the ISO 9001:2015 quality system. They are a typical case study on how computer processor companies in the UK can attract and convert business and IT professionals. The company reports that their staff has a detailed understanding of each technology the company offers, are customer-focused, and always improving on their customer relationship management approaches.
•  Accessibility and visibility in the marketplace plays a key role in converting leads to customers. Scan Computers achieves this by sharing their contacts and services through several channels to enable them to reach a wide range of leads and customers, including professionals and business people.

Loyal Customer

•  Loyal customers are the converts that become committed to a company's offerings, and this is indicated by determining a trend regarding their purchase frequency and purchase volume. Such loyalty can only be attained by having a team with strong customer service skills, offering quality technology at competitive prices, and having excellent before and after purchase services.
•  Novatech is among the top computer technology dealers in the UK, and its customers include IT professionals and business people. An analysis by Trustpilot shows that about 13,000 of their customers rate their services as excellent, while most of them indicate that they have been purchasing technology from Novatech for years.
•  To achieve this level of customer loyalty, Novatech has implemented diverse strategies, including partnering with Intel Corporation, which is among the leading computer processors makers globally. The company has a steady supply of high-quality computer technology stock.
• It is ISO 9001 and 14001 certified, and it offers instant support services to its customers through various channels. A Deloitte-UK 2018 report states that digital consumers in the UK purchase from companies that have quick before and after purchase services and that offer high-quality technology.

Research Strategy

Computer Processor Customer Journey

• The typical customer journey for business and IT professionals in the United States in regard to selecting a new or replacement computer processor for their business computers is more or less similar to the traditional consumer buying process.
• The traditional consumer buying process entails 6 key steps i.e. problem recognition, information search, evaluation of alternatives, purchase decision, purchase, and post-purchase evaluation.  
• In the United States, the average lifespan/replacement cycle of consumer desktop PCs was an average of 5.18 years in 2019 and 5.17 years in 2020.

Problem Recognition

• The first step in the computer processor customer journey is problem recognition i.e. when a business/IT professional recognizes that they need to upgrade their existing computer processor.
• As previously mentioned, in the United States, consumers typically replace their PCs after an average of 5 years. Assuming that consumers can opt for replacing their computer processors over replacing their PCs, then the average replacement of computer processors in the U.S. also takes around 5 years.

Information Search/Research

• The next step of the computer processor customer journey after the problem recognition step is the information search/research step.
• During this step, business and IT professionals search for information that will facilitate their purchasing decision.
• There are numerous reputable technology blogs that contain information that can be used by professionals to choose their perfect computer processor. These resources include Techradar, Tom's Hardware, and PC Mag.
• These resources contain information on the latest CPUs that such professionals can make use of when purchasing a new processor. Information on pricing, CPU-specific pros and cons, and alternatives is usually plenty in these tech blogs.

Evaluation of Alternatives

• Another critical step in the computer processor customer journey is the evaluation of alternatives. This step is important because it provides consumers with the necessary information that they can use to evaluate the different types of computer processors in the market and compare other the available options to ensure their purchasing decision is the right one.
• In the computer processor space, top players include Intel, AMD, NVIDIA, Qualcomm, and Hewlett-Packard.
• Examples of the best CPUs of 2020 include Intel® Core™ i7 Processors, Intel® Core™ i5 Processors, Intel® Core™ i3 Processors, AMD Ryzen Threadripper Processors, and AMD Athlon™ Processors. 

Purchase Decision

• During the purchase decision step of the computer processor customer journey, business and IT professionals use the information they've gathered during the other steps to make a purchasing decision.
• A variety of factors are considered during this step. These factors include pricing, processor generation, clock speed, power consumption, number of cores, and processor benchmarks. 
• Professionals use credible benchmark resources to evaluate the performance of their target processors and compare them to the alternatives they are considering. Examples of credible benchmark resources include PassMark, CPU World, AnandTech, and CPUBoss.

Purchase

• All the other processes of the customer journey culminate to the purchasing step.
• Here, business and IT professionals use all the information gathered in the previous steps to identify a computer processor and make the purchase.
• The two most popular computer processors that have the capacity to support the professional work of business and IT professionals are Intel and AMD. 
• Examples of popular computer processor resellers include Newegg, Best Buy, and Amazon.

Key Findings

• Intel Corporation has been a dominant market leader in the microprocessor space for a long time. Due to the company's significant financial resources, it aggressively markets its products and targets AMD's customers and channel partners using special incentives. These activities have affected AMD's average selling price for several of its products and will likely affect the company's margins and profitability.
• AMD depends on a few clients for its revenue. If one of AMD's key clients decides to use a competitor or significantly reduces the demand for products, the business would be adversely affected.
• Uncertain global economic conditions have previously and are likely to negatively impact AMD's business in the future. A case in point is the slowdown in China's economy, a key market for notebooks and desktop PCs. Economic uncertainty could adversely impact consumer confidence resulting in reduced spending.
• AMD operates in a highly competitive market, which requires the company to constantly develop new products. However, competition is expected to increase due to technological advancements and new product innovations. AMD also faces the challenge of aggressive pricing from its competitors.
• AMD's global operations are subject to legal, economic, natural, and political risks, which could have a negative impact on the company. The company's key manufacturing facilities are located in Taiwan, Malaysia, and China, all which are subject to different political and socioeconomic conditions.

Research Strategy

Stringent Environmental Laws in Greater China

• According to AMD's annual report for 2018, one of the key challenges the company faces in China is stringent environmental laws and regulations that result in additional costs and liabilities. 
• AMD is subject to complex environmental laws that change frequently and are becoming more strict with time.
• In the recent past, China has put in place laws that impose restrictions on the use of lead and other materials in manufacturing electronic products. These laws have a ripple effect on the manufacture of semi-conductor devices and their packaging.
• According to AMD, "there is a risk that the cost, quality and manufacturing yields of products that are subject to these restrictions may be less favorable compared to products that are not subject to such restrictions, or that the transition to compliant products may not meet customer roadmaps, or produce sudden changes in demand, which may result in excess inventory."
• China is either developing or has finalized public procurement regulations for computers and servers on the basis of energy star specifications and additional energy consumption limits. There is the possibility that some of AMD's products may be excluded from the Chinese market.
• China, among other jurisdictions, is developing new policies on conflict minerals that may have the effect of increasing AMD's compliance program cost. Owing to the company's complex supply chain, it may face some reputational challenges in the event that it's not able to verify the source of the subject minerals.
• Due to these new policies, AMD is also at risk of failing to fully satisfy customers who want "conflict-free" certified products and they may end up choosing products from AMD's competitors.

AMD's Operations in Greater China Are Subject to Political, Legal, and Economic Risks

• AMD maintains operations globally, and nearly all of its product assembly and final testing are done in manufacturing facilities located mainly in Greater China. The legal, political, and economic risks in the Greater China region will have a significant material effect on the operation of the company.
• The United States is changing domestic and foreign economic policies and has announced tariffs on products that are imported into the US from China, and AMD is "taking steps to mitigate the impact of these tariffs on our business and AMD processor-based products."
• According to AMD, in case these risks occur, they "could result in an increase in the cost of components, production delays, general business interruptions, delays from difficulties in obtaining export licenses for certain technology, tariffs and other barriers and restrictions, longer payment cycles, increased taxes, restrictions on the repatriation of funds and the burdens of complying with a variety of foreign laws, any of which could ultimately have a material adverse effect on our business."
• The recent slowdown in the Chinese economy is also detrimental to AMD as China is one of the biggest markets for desktop and notebook PCs.
• Economic uncertainty may force AMD's customers to postpone purchases and negatively impact their purchasing confidence.

 AMD’s Current Market Performance

• AMD’s current market outlook is strong, and they expect to see 28 – 30% growth in the year 2020 “driven by strength across all businesses” within their company.
• One of the big initiatives in 2019 for AMD was the “latest expansion of France’s GENCI Joliot-Curie supercomputer.” This amazing machine’s computing power “will be more than doubled in 2020 to reach 22 petaflops of peak performance,” making it the “third most powerful research supercomputer in Europe and no. 1 in France.” Unless this project fails in some way due to the AMD parts, then this will help continue to boost AMD’s standing in the marketplace, and should not present any challenges.

Slowing Demand of Semiconductors

• Largely because of the trade issues between the United States and China, the global market for semiconductors is expected to “tumble 9.6 percent year-on-year to $429 billion in 2019, down from $475 billion in 2018.” It is unclear whether this will or will not affect the European market (or France’s market specifically) for processors (or other AMD products), though it’s definitely something to watch.

European Processor Initiative

• The European Processor Initiative (EPI) is a “framework partnership agreement in European low-power microprocessor technologies,” put into place by the EPI Consortium with the European Commission. The goal of the program “is to design and implement a roadmap for a new family of low-power European processors for extreme scale computing, high-performance Big-Data and a range of emerging applications.” This might represent some challenges for AMD in their chip and processor sectors, though it is unclear how (or to what extent) this might affect the company or its French market specifically.

Research Strategy

Useful Findings: Statistics To Prove That AMD Is Not Facing Challenges In Germany

•  AMD is a leading giant in the German market since it recovered from its lack of innovative products many years ago. Since the release of its recent technology, AMD has seen a positive market surge in many countries, especially in Germany.
• The price-to-earnings ratio(PE ratio) for AMD is 209.3. At the same time, that of Intel is 13.16, and AMD processors are outselling Intel's processors by a ratio of 5 is to 1 in Germany's Mindfactory stores.
• The AMD dominance with 82% market share of the major German retailer is proof that Intel is losing big time, and Intel is the company facing market challenges in Germany and not AMD.
• When it comes to total revenue, AMD processors had 77% of all processors sold while Intel had a 23% contribution. The surge in sales by AMD processors is due to a lower average selling price than Intel. AMD sold over 25,000 processors while Intel sold approximately 5,000 processors.
• The only seeming challenge AMD had been a lack of launching innovative products, but with the launch of Ryzen 3000, the company has been at the forefront of competition, forcing its rival Intel to drop prices.
• In the past year, the German market has seen Intel shares fell to an all-time low due to AMD dominance. AMD had a problem with the 2nd Gen Ryzen chips because it lacked in gaming performance, but with the launch of the 3rd Gen Ryzen series, the prices of AMD CPUs have risen to 214 Euros.

Research Methodology

1. Sales

• With regard to Europe overall, AMD's sales substantially trail the totals of other countries. Four countries are ahead of Europe in terms of AMD's net sales, with a total of $470 million in sales in Europe. That's noteworthy because Europe includes multiple countries, one of which is the U.K., yet still ranks below four individual countries in terms of total sales.
• The country with the fourth-highest sales for AMD is Singapore with $728 million in net sales (2018), which significantly surpassed Europe's total. To put those previous values into perspective, the country with the highest sales for AMD is China, which generated $2.516 billion in sales in 2018.
• We couldn't find any information about what, if anything, AMD is doing to address this challenge.

2. GDPR

• The General Data Protection Regulation (GDPR) is a key challenge that AMD faces in the U.K. market.
• The company emphasized in its 2018 Annual Report that the GDPR, which was enacted by the European Union, "imposes significant new requirements on how we collect, process and transfer personal data, as well as significant fines for non-compliance."
• We couldn't find any information about what, if anything, AMD is doing to address this challenge.

3. Brexit

•  Brexit is a key challenge that AMD faces in the U.K. market on the political front.

• The company said in its 2018 Annual Report that "the United Kingdom’s 2016 referendum, commonly referred to as 'Brexit,' has created economic and political uncertainty in the European Union."
• An October 2019 article from Markets Insider also linked Brexit as problematic for AMD.
• We didn't find any information about what, if anything, AMD is doing to address this challenge.

Research Strategy

Challenge #1: Brand Awareness

Description & Explanation

• The challenge is that consumers in the U.S. market associate high-performance computing devices with Intel.
• Intel gained recognition when it launched Intel Inside during the 1990s.
• The Intel Inside campaign was a "strategy of branding a semiconductor chip as a valuable feature that consumers would look for when they purchased a computer."
• The campaign changed Intel into a consumer goods company because people "identified their computer by the type of chip (a 486 or a Pentium)" it contained.
• Intel's level of recognition is a challenge for AMD because Intel has more brand equity than AMD.

AMD's Response

• AMD is addressing this challenge by using guerrilla marketing tactics to undermine the Intel brand being synonymous with high-performance.
• In 2018, AMD employed guerrilla marketing tactics by offering "40 performance-hungry enthusiasts in the U.S." the chance to trade in an Intel CPU for an AMD CPU, just after Intel launched their 40th-anniversary sweepstakes celebration for their x86 processor.
• In 2019, AMD hosted its 2nd generation Epyc processor launch and declared outright that the product performed 1.8-2 times better than Intel's Xeon processors.

Challenge #2: Relative Market Share

Description & Explanation

• The challenge is that, in the desktop CPU, mobile processor, and server processor markets, Intel has higher market shares than AMD.
• AMD's desktop CPU market share was 17.7% in 2019 while Intel's desktop CPU market share was 82.3% in 2019.
• AMD's mobile processor market share was 14.6% in 2019 while Intel's mobile processor market share was 85.4% in 2019.
• AMD's server processor market share was 3.9% in 2019 while Intel's server processor market share was 96.1% in 2019.
• Intel's higher market shares are a challenge for AMD because it makes it harder for the company to overtake Intel as the market leader in computer processors.

AMD's Response

• AMD is addressing this challenge by launching better performing, 2nd generation products to increase its CPU market shares.
• AMD is also updating the dynamic local mode (DLM) software for its chips to increase market shares.
• AMD also aims to "increase the unit sales of its higher-end CPUs by increasing its Threadripper offerings and boosting gaming performance."

Research Strategy