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| Product styling: The new competitive differentiator in electronicsIn the electronics industry, products are similar in general, and every innovation in features or functions can be copied quickly. Moreover, model supply chains are tightly linked and highly competitive. These factors have raised the stakes and eroded profit margins for electronics companies. |
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IBM Institute for Business Value study Last updated: 11 Feb 2004
| Summary | |
| In the electronics industry, technology is largely at parity -- offerings from electronics companies are similar in general, and every innovation in features or functions that is introduced can be copied quickly. In addition, model supply chains have become tightly linked and highly competitive. These factors have raised the stakes and eroded profit margins for electronics companies. How, then, can electronics companies gain a competitive edge in today's marketplace? One of the top differentiating competitive factors that is emerging for electronics products is product styling. |
| Analysis | |
The electronics industry has been transformed due largely to the personal computer segment. For decades, the electronics industry's primary objective for personal computer products was to offer the most power and functionality for the lowest possible price. This focus resulted in tremendous innovation and a proliferation of products at prices that virtually everyone could afford. It also began to erode profit margins for electronics companies. Led by the personal computer segment, the electronics industry built a model supply chain that is tightly linked and highly competitive. Vertically integrated companies became outmoded, replaced by companies that specialized in standardized components and software and did business with each another. Though swift at capturing and extending cost reductions and efficiencies, this evolved supply chain model led to product commoditization and standardization. Any innovation that a company produced could be copied quickly and usually at a lower cost. Therefore, competitive advantage was fleeting. Rapid technology change and short product lifecycles contributed to the further erosion of profit margins. To read the complete study, download the PDF file at the top of this page. |
About the authors Paul Brody
Paul Brody is an associate partner with IBM Business Consulting Services and a member of the Product Life Cycle Management and Supply Chain Management practices.
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Dr. Hagen Wenzek
Dr. Hagen Wenzek is an associate partner and leads the Global Electronics Industry team for the IBM Institute for Business Value.
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Tom Osterday
Tom Osterday is the IBM Global PLM Solutions executive for the Electronics Industry.
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