Business models for the computer industry for the next decade: When will the fastest eat the largest?

Abstract Over the past 30 years the computer industry has grown into the largest product and service sector in the USA and will soon hold an equivalent place in Japan and Europe. The industry has recently been undergoing a fundamental restructuring which has much to do with the move to low-cost, low-margin systems, based on common standards. However, a slower but more drastic change is simultaneously in progress, of recentring from a market of large and medium-size business customers, to a huge diffused commodity market for all sizes and types of customer. With this comes a third fundamental revolution—the move away from a technology-oriented industry to a marketing-oriented industry, similar to the fast moving consumer goods sector. The net effect is equivalent to the opening of a market by deregulation, so lessons drawn from deregulating markets can be usefully applied. These effects mean catastrophic reductions in margins and thus radically rethinking the value chain. Long-term survival for many current players depends on re-evaluating the company value chain, reengineering the firm, and replacing the old culture following a new business model based on new products and services.