While Google and Microsoft downplay the significance of their Nexus 7 and Surface tablets, the message to their device manufacturers is abundantly clear: If you’re not building devices that surpass what we can do ourselves, you’re not adding value. Their intent in sending this message is to push device manufacturers to abandon their race-to-the-bottom strategy that emphasize low prices and incremental improvements over new product innovation.
As I discuss in my new report, Humdrum Hardware: Why Google And Microsoft Are Goading Their Partners To Innovate, this strategy worked well in the Windows PC era, when there were no other viable ecosystems to draw consumers away and device manufacturers competed primarily on price, but they are no longer relevant in today’s post-PC world, where multiple ecosystems (Apple, Google, Amazon, and Microsoft) compete against one another. To survive in the post-PC era, device manufacturers must get tough:
- Pick sides in the platform wars. Device manufacturers need to concentrate their resources and commit to a single platform if they expect to develop compelling and innovative products that can compete against Apple.
- Start playing hardball with Google and Microsoft. When Nokia went all-in on Microsoft, Nokia demanded special benefits, support, and concessions in exchange for platform-exclusive innovations. Other device manufacturers should replicate this model.
- Push Google and Microsoft to adopt a co-opetition-based ecosystem model. In order to compete effectively against the vertically integrated ecosystems of Amazon and Apple, Google and Microsoft need to coordinate and optimize the innovation efforts of device manufacturers.
- Focus on bigger innovations for fewer products. Rather than churn out countless undifferentiated devices, device manufacturers need to focus on making a few highly innovative devices that can turn the tables on more-dominant players.
Given the changes that have taken place, what do you think device manufacturers need to do to survive in the post-PC era?