Horace Dediu, Asymco

Are the ecosystem wars won on the factory floor? The evolution of value chains in a computing market measured in the billions of units per year.

March 7, 2013 | 3:00pm - 4:30pm | Cotting Conference Room | Open to public


Strategy Unit

Technology & Operations Management Unit


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Abstract: 2013 will see two billion phones shipped into a market of over 6 billion points of network connectivity for over 4 billion consumers. In addition to phones there will be a few hundred million tablets and mobile computers shipped. It's very likely that the majority of these devices will be "smart", meaning designed to be a part of an ecosystem of software, content and services. Contrary to the common assumption that larger markets sustain more competitors, this immense and rapidly growing market is profitable for only two device vendors. Efficient supply and distribution networks allow products to be delivered in vast volumes within a short window of competitive advantage. However, scale benefits those who can operate at scale and punishes those who can't. Close observation of the investments of these "superpower" competitors shows an extraordinary level of capital purchases of manufacturing equipment, regardless of their nominal position in the value chain. These capital expenses have been growing in proportion to in the frequency of product launches. I present data showing a correlation between manufacturing equipment CapEx and ecosystem success and put forward a hypothesis that this relationship is causal. I also discuss the implications for ecosystems owners with regard to the processes, resources and priorities necessary to succeed in this evolved value chain.​