Article | Management Science | April 2007

Wintel: Cooperation and Conflict

by Ramon Casadesus-Masanell and David B. Yoffie

Abstract

We study competitive interactions between Intel and Microsoft, two producers of complementary products. In a system of complements, like the PC, the value of the final product depends on how well the different components work together. This, in turn, depends on the firms' investment in complementary R&D. We ask whether Intel and Microsoft will want to cooperate and make the final product as valuable as possible. Contrary to the popular view that two tight complements will generally have well aligned incentives, we demonstrate that natural conflicts emerge over pricing, the timing of new product releases, and who captures the greatest value at different phases of product generations.

Keywords: Conflict and Resolution; Competition; Cooperation; Value; Performance Effectiveness; Research and Development; Motivation and Incentives; Investment; Price; Product Launch; Product;

Citation:

Casadesus-Masanell, Ramon, and David B. Yoffie. "Wintel: Cooperation and Conflict." Management Science 53, no. 4 (April 2007): pp. 584–598.