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When Partners Become Competitors

Posted By Chris Chiappinelli, August 07, 2012 at 1:23 PM, in Category: The Adaptive Organization

A few years ago, co-opetition was a popular buzzword. The term is unattractive, semantically speaking. But in some manufacturing circles, its popularity as a business strategy is waxing again. Whereas its first emergence years ago might have signaled a new form of unity in the business world (the “co” part of the word, for cooperation), the emphasis these days is decidedly on the latter part of the word, at least in the technology arena.

Take Microsoft. The software company was the vanguard of the personal computer revolution a few decades back. Bill Gates’ brainchild served as the command center of the bulky hardware we lugged into our homes and offices, delivering a new, if imperfect, user experience to millions of people who had never before used computers. Those people bought their computers from companies such as IBM, Dell, and HP, run by software from Microsoft. That model survived intact until this year.

This summer, Microsoft announced its new Surface tablet computer, a device meant to show off the Windows 8 operating system. The twist is that Microsoft didn’t leave the hardware manufacturing to OEM partners and tablet specialists such as Samsung, Toshiba, and Acer. Instead, Microsoft contracted the manufacturing of the Surface to an undisclosed company and called the tablet its own. Just like that, Redmond moved into co-opetition with the hardware companies it once called partners. After initially downplaying the competitive significance of this move, the folks at Redmond fessed up, saying the Surface tablet might ruffle feathers among manufacturers who must decide whether they will bake Windows 8 into their own branded tablet computers. Acer’s CEO has suggested that Microsoft “think twice” about making such a move. Co-opetition can be ugly.

Microsoft isn’t the only company moving from software into hardware and complicating relationships along the way. Google did it. And consider Oracle, which in 2009 decided to become a server hardware company and bought Sun Microsystems to do so. Until that time, prominent manufacturers of servers had gone to market hand in hand with Oracle, with Oracle’s database software acting as the brains of their boxes. In one fell swoop, Oracle turned that cooperation into co-opetition, and it left some partnerships in tatters.

That’s the price of change. My question: Is co-opetition just the middle ground between cooperation and all-out competition, a sort of Hates of business relationships? Or can it result in long-lasting harmony?

What about you: Do you maintain relationships that you would describe as co-opetition, and where are those relationships headed in the long term?

Written by Chris Chiappinelli

Chris Chiappinelli is the online research manager for Manufacturing Leadership. He covers enterprise software, sustainability, economic trends, workforce issues, and emerging technologies.


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