Unless you were hiding under a rock today, you must have heard about Google’s acquisition of Motorola and there’s is already chatter on motives of the deal. My take is that this acquisition falls in line with a lot of activity we are seeing in the High Tech industry as companies try to develop solutions provider capabilities. I just published a report “Original Solution Orchestrator, Part 1: Integrating Physical, Digital and Solution Networks to Transform From an OEM to an OSO” in which we describe the Original Solutions Orchestrator (OSO) business model. Our key finding is that if companies truly want to be an OSO, they are going to have into integrate physical, digital and solutions networks. The integration of these networks to make an OSO model is depicted here:
So what does this OSO concept have to do with today’s acquisition announcement? Google has had a clear strategy to tap into the digital and solutions supply chains in it’s development of the Android platform and associated applications. In fact, I discussed this strategy back in October (Android: Google using content in a new “razor blade model”) in which I concluded that content / data is going to be equally if not more important than hardware in the near future. In looking at our OSO model above, note that the Android platform is a clear example of the digital supply chain (DSC) in that it brings content to a device. And Google’s website, analytics, search metrics, etc are all parts of the solutions supply chain (SSC). The acquisition of Motorola will complete the OSO model by enabling a physical supply chain in the distribution of mobile devices.
The implications of a company like Google leading a development an OSO model are quite intriguing. To date, most of the companies who have marketed themselves as OSO’s have almost all been device manufacturing OEM’s. I have seen many of these OEM’s develop the OSO model through a web of strategic partnerships with software vendors and service providers. There’s has been equally as much activity in the acquisition space from these OEM’s as well. Consider Dell’s acquisition of the service provider Perot, Intel’s purchase of McAfee, HP’s of EDS and Palm, and on and on. Today’s announcement shows that the OSO trend is spreading throughout the ecosystem and presents an interesting question for manufacturers, software companies, service providers and telecoms. Who is really my competition?
Today’s announcement highlights the acquisition of hardware manufacturing capability. What are some other activities we may soon see? As we saw with IBM’s sale of the ThinkPad to Lenovo, it’s possible that the hardware manufacturers will sell off parts of their hardware business to focus on services. There has already been a major push to outsource manufacturing across the industry, so a “0 asset” supply chain may be a possibility. We could also see movement from the software vendor ecosystem who have capabilities to capture and manage data. Or even from the telecoms that provide the infrastructure to connect the SSC and DSC with the physical supply chain.
The point is that as we see development of this OSO model, competition is going to get much more complex. The partners and customers of today, may be competitors of tomorrow. The key to surviving to reap the big margins in the OSO world will be to first understand the model and then to craft a clear strategy to manage it.
What do you think? How will the OSO model complicate the High Tech market? What should companies across the ecosystem focus on now to prepare for tomorrow?
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