Friday, April 15, 2011

Using Competitors as Suppliers

Not that long ago, a PCB designer posted an interesting question on one of the LinkedIn discussion groups. The question was this:

"How do you feel about using a fabricator that also offers design services?"

I responded to the discussion directly but for the benefit of those who may not be members of the group, I wanted to share my thoughts more broadly because it shows how building connected devices can actually help defend against suppliers who might also be competitors.

It's a really interesting question that you are posing but I think it points to a bigger issue.
I use a mechanic in my local area to service my car. The service he offers (in terms of tuning my car up and changing the oil) can not be differentiated from any other mechanic I might choose to use, but over time, I have become loyal to this one mechanic because the service he offers goes beyond the oil he puts in my car. Sitting at the back of our transactions is a relationship and the history of that relationship is not something that a competitor could replace by simply undercutting the price.
So when it comes to creating an electronics product, I think designers really need to ask themselves whether the sole basis of their business is built on the secret sauce they add to their boards in the form of IP, or does it extend to an ongoing relationship.
I know the Apple example is overused but it really highlights the point. They don't make the cheapest MP3 players, but they have changed the game so that it's actually not an MP3 player that I'm buying from Apple; its a relationship and ability to seamlessly connect into their eco-system of content. In effect, the player is almost ancillary to my real requirement which is to have good quality music / entertainment on the run.
So the best defence against would-be IP thieves is to build products that develop an ongoing relationship and provide a reason for customers to remain connected to you... and then service those customers as if your life depended on it (because it does)!

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