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Platform Leadership


'We are tied to innovations by others to make our. innovation valuable. ... The Rush Hour of Buses: ISA / MCA / EISA / VESA / PCI... In 1980, MCA bus by IBM ... – PowerPoint PPT presentation

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Title: Platform Leadership

Platform Leadership
  • T-109.5410 Technology Management
  • 15.11.2005
  • Eino Kivisaari
  • Researcher, M.Sc.
  • TML / SimLab / Technology Management

  • We are tied to innovations by others to make our
  • innovation valuable. If we do an innovation in
  • processor, and Microsoft or independent software
  • parties dont do a corresponding innovation, our
  • innovation will be worthless. So, it really is a
  • desperate situation for us.
  • David B. Johnson, Intel Architecture Lab

Product Platform Strategy
  • Platform is an architecture of the common
    elements implemented across a range of products
  • Defining technology Key element(s) of the
  • Dictates life cycle, capabilities, limitations
  • Is based on companys core competence
  • Difficult to copy by competitors
  • The choice of defining technology is perhaps the
    most critical strategic decision that a hi-tech
    company makes
  • What if platform elements are provided by
    different companies?

Platforms, Segments, Products
Unique product elements and common platform
elements of a product line
Segment A
Segment B
Segment C
Element A
Common Platform Elements
Element B
Element C
(McGrath 2001)
Benefits of Platform Strategy
  • Enables rapid and consistent product development
  • Encourages a long-term view on product strategy
  • Operational efficiencies
  • Reduced manufacturing costs
  • Reduced design costs
  • Easier Marketing and Support
  • Are these valid also when elements are provided
    by different (competing collaborating)


Annabelle Gawer and Michael A.
CusumanoPlatform Leadership How Intel,
Microsoft and Cisco Drive Industry Innovation
Harvard Business School Press 2002 Available
at HUT library 20-30 in various webstores
Platform Leadership
  • Core Products vs. Complements
  • Cars / Tires
  • Computers / Software etc...
  • Modularity of Complex Products
  • More modularity in developed industries
  • This is the direction where mankind is going
  • Balance of Power?
  • Who conducts the orchestra?

Platformed High-Tech World
  • Increasing interdependency of products and
  • Ability to innovate by more actors than ever
  • ? Platform leaders must solve three problems
  • Maintenance of the integrity of the platform
  • With regard to future technological innovation
    and the independent product strategies of other
  • Platform evolution
  • How to permit platforms evolve technologically
    while maintaining compatibility with older
  • Gaining and sustaining platform leadership

Four Levers of Platform Leadership
  • The authors analyzed a variety of organizations
    (Intel, Microsoft, Cisco, for example) and
    discovered four distinct but related levers of
    platform leadership
  • These four levers can help managers in both
    strategic formulation and implementation

Lever One Scope
  • Deciding the scope of the company is the most
    important decision Which complements to make
    in-house and what to leave to outsiders?
  • Companies that desire to become platform leaders
    need to determine how dependent they are on
  • Platform producers should avoid developing their
    own complements if they lack financial or
    technical capacity to compete in the relevant
  • However, as a rule of thumb, platform producers
    should have in-house capability, not only for
    complement production, but to serve as healthy
    competition for outsiders

Lever Two Product Technology
  • Degrees of modularity and openness
  • Product architecture can have a large impact on
    the structure of an industry and the types of
    follow-on innovation
  • Product architecture determines who does what
    kind of innovation and how much investment in
    complementary products will occur outside the
    platform-leader organization
  • Leading companies guard their core technology but
    utilize tools such as modular architectures and
    disclosure of interfaces to ensure the supply of
    complementary products

Lever Three External Relationships
  • Collaborative vs. competitive
  • For long-term effectiveness, platform leaders
    must follow two goals simultaneously
  • Search for consensus with complementors about
    technical standards and how they interface with
  • Show the way by providing new complements
    (produced in-house), if this is seen to be
  • Consensus needs to be forged by one company
    driving the process
  • Platform leaders should be industry enablers.
    They should help others innovate in better ways
    around the platform.
  • Platform leaders should not unnecessarily step
    out of their product boundaries into that of
    their complementors
  • Leaders can reduce external tensions with a
    humble approach and by acting on behalf of the
    entire industry

Level Four Internal Organization
  • Coping with internal external conflicts
  • Platform producer must generate an internal
    organization that enables it to manage
    complementor relationships with ease
  • Therein lies the challenge, as sometimes groups
    within a firm compete with complementors
  • It is crucial to communicate the multiple goals
    to the whole firm and generate a process that
    helps resolve conflicts
  • Separation of competing groups ? outsider
    companies become more willing to entrust
    personnel with information
  • Platform leaders can appear neutral if they
    establish different groups maintaining different

Case Intel
  • Basic problem People dont buy processors, but
  • Well... some people do ?
  • Multibillion-dollar investments in processor
  • How to make sure that demand for the
    processors stays grows?

Case Intel History
  • In 1979 IBM decided to develop a new PC to
    compete with Apple
  • Intel 8088 Processor
  • Microsoft DOS (Disk Operating System)
  • Soon after, PC-Compatibles emerged
  • No exclusive contracts were made
  • IBM allowed this, which speeded up production,
    commerialization and adoption of PCs worldwide
  • PC-AT in 1984
  • ? demand exploded for IBM PC-AT and clones

PC Industry Evolution
  • Decline in vertical integration
  • IBM, DEC, Univac, Wang started to lose leadership
  • Specialists started to take over
  • Microsoft, Intel, Motorola

Case Intel
  • Intels big entry thanks to IBM, but
  • PC-AT architecture started to feel like a tight
  • Intels processors developed at a fast pace
  • Biggest problem
  • ISA data bus (Industry Standard Architecure)
  • Very slow internal data bus for graphics, storage

The Rush Hour of BusesISA / MCA / EISA / VESA /
  • In 1980, MCA bus by IBM (MicroChannel
  • Compaq EISA (Extended ISA)
  • No real performance improvements, industry stayed
    with ISA for years

Lack of Platform Leadership
  • Intel was disturbed by the lack of leadership
  • No one was able to advance the overall platform
  • Unclarity of mandate how should do it?
  • Standards Committees (a VESA graphics bus was
    actually developed)
  • Old Leaders
  • or Intel?
  • The PC platform was not moving fast enough for

Intel Architecture Lab (IAL)
  • Created in 1991
  • Architects for the open computer industry
  • 550 engineers in 2001 (none of which work on
    designing new microprocessors)
  • The mission of Intel Architecture Lab
    To grow the overall market

PCI Initiative
  • The PCI bus, IALs first project in 1991
  • Transformation of the internal architecture of
    the PC
  • Goals Speed, Modularity, Openness, Space for
  • Advancing the whole PC industry
  • What could a PC become, if the best was made out
    of it?

Intel takes lead with PCI
  • A big conceptual step for Intel
  • from providing processors
  • to architecting the whole platform
  • Indecision within Intel
  • Big investment
  • Mandate was unclear, a too presumptuous move?
  • Success factors
  • PCI was free and open to everyone
  • IBMs failure with MCA, an attempt towards
  • Winning over other firms, rallying collaborators
  • Thinking ahead avoiding lock-in to certain
    processor generations

PCI Chipsets
  • Chip sets had to be redesigned with every new
    processor ? expensive slow for OEMs
  • To convince everybody, Intel put its own skin in
    the game
  • Mass production of PCI chipsets
  • Big players went along because they wanted to
    take advantage of latest Intel chips quickly
  • Intel starts making motherboards
  • Big OEMs problem How to differentiate?

  • To a large extent, PCI set the tone for other
    initiatives Intel realized through this
    experience that, when we set out to do so, we
    can move the industry in some useful direction.
  • Dave Carson, Intel Architecture Lab

  • USB initiative began in mid-1990s
  • Serial connectors for peripherals had become a
    serious bottleneck
  • Intel had the vision and the technology, and this
    time also the courage from the start
  • Goal making the best out of PC computers
  • and growing the demand for Intel processors,
    of course

Intels USB Strategy
  • To avoid confusion in the market
  • Add-on cards
  • Ethernet-connectivity
  • Parallel port
  • Different kinds of software
  • Intel wanted a better way to hook to a PC
  • Hardware specification for USB
  • Software specification
  • Operating system support
  • Open interface, everybody competing, let the best
    innovation win

Building Momentum Speed
  • Consortiums
  • Rabbits (USB Logitech, Microsoft)
  • SIG (Special Interest Group)
  • PCI, 5 members Intel, DEC, Compaq, IBM, NCR
  • USB, 7 members Intel, DEC, Compaq, Microsoft,
    IBM, Nortel, and NEC
  • Only a few participants ? fast decisions

Intel IPR Strategy
  • PCI, AGP, USB No fees whatsoever
  • However, Intel required that anyone who used
    their IP had to make their related IP open as well

Intel PlugFests
  • Compliancy Workshops
  • 100-200 companies attended
  • Vendors could test interoperability of their
    products (in a conference hotel somewhere in the
  • Helped in creating good PR for the platform
  • Goodwill Agreement participants should not use
    information gathered in PlugFests against their

Enabling Tools
  • Software Development Kits (SDK)
  • Device Development Kits (DDK)
  • Software Libraries etc.
  • Benefits
  • Faster product development
  • Helped in creating momentum
  • Lowered entry barriers for complementors
  • Fostered innovation
  • Made the overall cake bigger for everyone

  • We think one of our core compentencies is that
    we are a trusted partner for almost everybody in
    the industry. We can talk to the graphics groups
    competitors openly about their products and about
    our specification, and they trust that we honor
    that. But you cant just mandate trust. You have
    to earn it.
  • Craig Kinnie, Director, Intel Architecture Lab

Conflicts, Roles, Policy
  • Intel played on many fields at the same time
  • Intels roles
  • Industry enabler (expanding the whole pie)
  • Neutral-broker (IAL promotes public interest)
  • Profit-seeking (eg. processor manufacturing)
  • competition with complementor that IAL is
  • Many roles ? Separate internal groups
  • a powerful strategy, when conflicting agendas
  • internal external debate (can be fruitful)

Alternative Strategies
  • Cisco
  • Aquire and Assimilate Complements and Substitutes

Case Cisco
  • Strategy Aquire Assimilate
    Complements and Substitutes
  • Internet Router Company
  • Defining TechnologyIOS (Internetworking
    Operating System)

Case Cisco
  • Huge growth in annual sales
  • 1991 70 million
  • 1994 1 billion
  • 2001 22 billion
  • This was not done alone
  • Internet browsers by Netscape Microsoft
  • High-performance servers by Sun
  • All applications developed for the Internet

Case Cisco
  • A platform leader with 80 market share in core
    router products
  • Technology was based on open industry standards,
    distinction came from enabling interoperable
    networking between routers and a wide variety of
    other types of networking and communications

Case Cisco
  • Cisco faced more competitors
  • 3Com, Lucent, Nortel, Siemens, Fujitsu
  • In early 2000 Cisco started losing sales to
    Juniper Networks
  • Competitors started being strong in niche markets
    with advanced products

Case Cisco
  • Cisco strategy
  • Providing complete solutions, a one-stop-shop
    for networking
  • Structured aquisition of pieces needed for the
  • Driving industry standards ? overall growth
  • Form alliances and partnerships

Cisco Product Debuts
  • 1986 Routers
  • Dial-in access servers
  • LAN Switches
  • WAN Swithces
  • Hubs, Firewalls, Caching engines
  • Cable boxes, cable head-ends
  • DSL Head-ends
  • Internet Phones
  • Home modems
  • Wireless LANs
  • IOS all these products one-stop-shop

Platform Leader Wannabes
  • Palm Handheld Computing
  • Fighting a giant (Microsoft / PocketPC)
  • NTT DoCoMo Wireless Content
  • Internationalizing a successful domestic platform
  • Linux Open Source Software
  • Relying exclusively on external development and
    open standards

  • Companies that possess keys to popular technology
    cannot afford to live in a vacuum
  • Companies that fail to innovate or have others
    innovate will quickly find them themselves
    outmoded and obsolete
  • Platform thinking forces managers to consider
    entire industry
  • Platform leaders must maintain incentives for
    third parties to produce complements
  • and help them do so
  • Platform leadership is a strategy of
  • A vision of a business ecosystem
  • Platform leadership does not happen by accident

And then for something totally different
  • Post-Graduate Studies at HUT
  • Courses, seminars, books, methodology...
  • 70 op (45 ov) courses, plus a thesis
  • T012Z Telecommunications Managementpost-gr.
    major (T124, Professor Riitta Smeds)
  • Working as Researcher
  • Research projects, Teaching, Writing,
    Conferences, Studying, Collaboration
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