Classroom Companion: Business

 
Chapter 8 · Value Creation Models and Competitive Strategy

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8
The concepts are exemplified in 
7
Case Study 
8.2
.
Coopetition is particularly important in developing new systems and services as 
explained in 
7
Example 
8.1
.
 
► Example 8.1 Coopetition and Crowdsourcing: Developing New Systems or Services
Some of the largest systems or most complex services of the information and commu-
nication technology have been developed jointly by operators and industries that later 
have become competitors offering services to customers, building infrastructures, or pro-
ducing user equipment and infrastructure components. This is an example of coopeti-
tion in the digital economy.
The largest effort of this kind is the development of standards for mobile commu-
nications (the 3GPP project). The 3GPP project is manpowered by participants from 
more than 700 member organizations, comprising equipment manufacturers, authori-
ties, research organizations, and network and service providers. Other examples are 
distributed processing (e.g., the CORBA project), specification of local area networks 
(e.g., the IEEE Standardization Association), and cloud computing (e.g., the RECAP 
project of the EU). Research groups that are open for participation by anyone are also 
established to improve and upgrade existing technologies such as the Internet, the World 
Wide Web, and local area network standards.
There are several motives for this type of cooperation:
The science community prefers that standards should be public and open for anyone 
to exploit. In several cases, this is also supported by governments because open stan-
dards enhance competition and avoid formation of monopolies. For equipment manu-
facturers, the potential market for internationally accepted standards is large, offering 
good profit margins. For network operators and other infrastructure providers, the stan-
dard opens new opportunities to expand their businesses to new markets.
The aim of these projects is usually to define systems and technologies that can be 
implemented in a global market. This implies that industries and researchers from all 
over the world are invited to cooperate developing the standard. Experience has also 
shown that if the prospects of the project are promising, it is not difficult to voluntarily 
man such projects. Moreover, it is simpler to attract highly specialized expertise to solve 
specific problems if the development process is open for anyone.
The cost to develop these standards is huge and requires large resources, in particu-
lar, manpower. The estimated cost of developing a mobile network standard (e.g., 5G) 
is more than $1 billion and may require several thousand man-years of professional 
work. Cooperation reduces the development costs for both individual manufacturers 
and operators.
The solutions these projects end up with usually meet high performance and technol-
ogy standards and are better than solutions developed by a single stakeholder.
This type of cooperative development of standards is an example of crowdsourcing 
(see 
7
Sect. 
7.2.3
). The projects are managed by an organization (e.g., 3GPP, ETSI, or 
the World Wide Web Forum), and the goal is usually defined in vague terms and within 
an unclear timeframe, for example, developing the next-generation mobile system or 
developing new security algorithms for protecting web services. The final shape and the 
details of the end product are defined as the project progresses, and the end product may 
be very different from the product that was initially anticipated. This type of crowd-