Strategy Rules

Build Complements Critical to the Customer Experience

Bring the Big Profit Centers In-House

Attack the Chicken-and-Egg Problem

Competitors, including IBM, Lotus, WordPerfect, and Netscape, all claimed that they received information on new versions of Windows later than Microsoft’s application groups.

Intel patented but did not charge royalties for most of the essential platform-related technologies it developed. Intel also arranged cross-licensing agreements to seed its innovations throughout the industry. Grove’s goal was to get as many companies as possible working together to improve the functionality of the PC, and thereby attract more complementary innovations and, ultimately, more users.

Intel patented but did not charge royalties for most of the essential platform-related technologies it developed.

Grow the Whole Pie
Intel, for example, had a long history of educating industry participants about its leading-edge products.

For Intel and Microsoft, the strategic problem was simple: If Intel sold a great microprocessor and Microsoft sold a great operating system that went into an inferior computer, few people would buy it. Without the right memory configuration, bandwidth, and critical software drivers and applications, the user experience would be terrible. Apple sold complete systems but faced a similar conundrum: Even if company engineers designed great computers, without great peripherals (for example, printers and software drivers), great third-party software applications, and a well-oiled supply chain for components and assembly, Apple could not offer the consumer a complete solution and great user experience.

THINK ECOSYSTEMS, NOT JUST PLATFORMS

Microsoft is the company that has worked with independent software developers more than any other company. . . . Why did we beat other operating systems? Because we worked with independent software companies to get them to write applications.27

—BILL GATES [1991]