SIC 3571
ELECTRONIC COMPUTERS

The industry encompasses companies primarily engaged in manufacturing electronic computers. By definition, this includes machines that:

• Store the processing program or programs and the data immediately necessary for execution of the program;
• Can be freely programmed in accordance with the requirements of the user;
• Perform arithmetical computations specified by the user; and
• Execute, without human intervention, a processing program that requires them to modify their execution by logical decision during the processing run.

Included in this industry are digital computers, analog computers, and hybrid digital/analog computers. Establishments primarily engaged in manufacturing machinery or equipment that incorporate computers or a central processing unit for the purpose of performing functions such as measuring, displaying, or controlling process variables are classified based on the manufactured end product.

NAICS Code(s)

334111 (Electronic Computer Manufacturing)

Industry Snapshot

In the early 2000s, the electronic computer industry was struggling amidst a weak economic climate that presented challenges in business and consumer markets alike. According to the U.S. Census Bureau, after a sharp increase from $56.9 billion in 1998 to $64.7 billion in 1999, electronic computer shipment values fell in 2000 ($62.9 billion). As the economy took a turn for the worse, shipment values plunged to $49.3 billion in 2001. This affected virtually every product segment within the industry, including servers and workstations. Along with values, actual unit shipments also declined, falling from 27.2 million in 2000 to 22.7 million in 2001.

A number of factors were causing consumers to delay purchases of new computers in the early 2000s. The terrorist attacks that occurred on September 11, 2001, shook already-declining levels of consumer confidence. By late 2002, rising unemployment and a possible war with Iraq served to further exacerbate the average consumer's outlook. Thus, many were content to get by with existing personal computer (PC) technology in the short-term, saving discretionary tech purchases for items like DVD players, MP3 players, and digital cameras.

In the corporate sector, these same conditions led to a temporary slowdown in technology spending, as companies awaited better times. According to several industry analysts, the wave of year-2000-related new equipment purchases that took place at the end of the 1990s, as well as the availability of quality used equipment from bankrupt Internet companies in the early 2000s, also had a negative impact on the corporate market for new electronic computers.

Global competition among computer makers has favored nimble, low-cost producers, and many of these are U.S. firms. In fact, according to International Data Corp. (IDC), in late 2001 the four largest U.S.-owned computer makers—Dell, Compaq, Hewlett-Packard, and IBM—controlled almost 40 percent of world PC shipments. In late 2000 Dell proved itself as a potent competitor by wresting the title of world market leader away from Compaq. By late 2002, Hewlett-Packard had acquired Compaq, creating a new industry heavyweight that challenged Dell's leadership position.

Organization and Structure

The computer industry is segmented by product category. Different kinds of computers contain differing components, varying performance and price levels, and, to a certain extent, service different functions and markets.

At the most fundamental level, electronic computers can be categorized as either analog or digital. Analog computers are electromechanical devices whose operation is based on continuously variable quantities such as lengths, weights, or voltages. Digital computers, by contrast, operate by processing discrete quantities of digits or characters and offer greater flexibility in programming. Thus, almost all computers today are digital, and analogs represent a very small portion of industry production and sales. For this discussion, the term "computer" will refer to digital devices unless noted otherwise.

General-purpose computers are traditionally categorized by size, function, and processing power. These main categories are supercomputers, mainframes, midrange systems and servers, and microcomputers (PCs and workstations). While some have advanced formal definitions of each category, in practice the boundaries between each class are vague, and for example, there may be little or no difference between a low-end server and a high-end microcomputer.

Supercomputers. Supercomputers are high-speed number crunchers that allow scientists, engineers, and government researchers to process and manipulate massive amounts of data very quickly. Their performance is typically measured in terms of billions of floating point operations per second, or gigaflops, as opposed to millions of instructions per second (MIPS) assigned to most other types of computers. The fastest supercomputers reach processing speeds in the teraflops, or trillions of floating point operations per second. These technological taskmasters are used to complete complex feats, such as forecasting weather, designing ships and automobiles, conducting nuclear research, and carrying out advanced simulations. Supercomputers under development by IBM in the early 2000s were predicted to surpass the 1,000 teraflops threshold, entering the realm of pentaflops, or quadrillion floating point operations per second.

An important distinction exists between traditional high-powered "vector," and low-powered "parallel" supercomputers. The newer parallel devices join as many as tens of thousands of cheap microprocessors to accomplish what vector systems achieve with a handful of more expensive processors. Though usually less expensive, systems that use Massively Parallel Processing (MPP) technology can perform many tasks faster than traditional vector systems. Because supercomputers are such specialized devices—and usually regulated by the U.S....

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