University of Tokyo

MMRC Discussion Paper No. 225

MMRC-F-225

Why Is Interfirm Collaboration Called for in Novel
Technology Platform Adoption?
: Cases from the the Japanese, Taiwanese, andChinese Mobile Phone Industries
Yokohama National University
Masanori YASUMOTO
The University of Tokyo
Jing Ming SHIU
March 2008

ものづくり経営研究センター

Why Is Interfirm Collaboration Called for in
Novel Technology Platform Adoption?
Cases from the Japanese, Taiwanese, and Chinese
Mobile Phone Industries

Yokohama National University
Masanori YASUMOTO
The University of Tokyo
Jing Ming SHIU
March 200835

Yasumoto and Shiu

Abstract:
The study describes the cases of vendor–manufacturer collaborations for novel
technology platform introductions in the Japanese, Taiwanese, and Chinese mobile
handset industries. The global surge of vertical disintegration enhances theinterfirm modularity of development processes. Nevertheless, a novel technology
platform requires collaborative development processes between a technology
platform vendor and a product developer. The cases show that continuous systemknowledge management through intefirm collaboration plays a critical role even inmodularized interfirm development processes. The collaborative process would
even secure the systemic evolution of technologies and products under verticaldisintegration.
Keywords: novel technology platform, vertical disintegration,
development processes, technology platform, system knowledge

36

modularizedUniversity of Tokyo

MMRC Discussion Paper No. 225

1. Introduction
In the past decade, interfirm modularity and related open interfirm networks have drawn our attention (e.g.,
Berger & MIT Industrial Performance Center, 2005; Christensen, Verlinden, & Westerman, 2002; Iansiti &Levien, 2004; Sturgeon, 2002). A variety of component/technology vendors and manufacturers have shaped theglobal, open, interfirm development networks so that even emergent firms may rapidly provide products at a
relatively low cost by adopting novel technologies from specialized vendors.
For instance, wireless handset manufacturers in China have taken full advantage of the global interfirm
network in which specialized vendors provide element technologies (e.g., wireless cores/platforms) to enable
handset manufacturers to quickly release a variety of new models: almost 1,500 models were reported to be on
the market in 2006.
The industrial shift seems to blur the role of close coordination within and between firms, which was once
regarded as one of the most critical factors in effective product development (e.g., Japanese automobile firms;
Clark & Fujimoto, 1991; Dyer & Nobeoka, 2000; Yasumoto & Fujimoto, 2005). Instead, modularity of productsystem and intra-/interfirm relationships has drawn our attentions (Baldwin and Clark, 2000).
In the world of modularity, technology platforms consisting of the chipset, basic software, reference design,
and related technological supports play a critical role in shaping modular interfirm networks (Gawer &Cusumano, 2002; Iansiti & Levien, 2004; von Hippel, 2006). A technology platform is a set of core technologies,
which provides basic system architecture to generally allocate functions to specific components and define theinterdependencies within and between different technologies and components.
The platform provides basic system knowledge conditioning product modularity which securesarchitectural stability. Manufacturers may easily develop products by using the platform that provides
standardized architectural knowledge to define interdependencies between technologies/components and realize
a set of basic product functions. The stability is presumed to secure interfirm modularity.
The traditional idea of such interfirm modularity relies on the presumption that the processes of technology
development and product development are mutually independent as technologies are standardized to the extent
that any product development firm can easily exploit them. The reality of vertical disintegration shows thatprocesses from technology development to manufacturing are modularized into quasi-independent processes sothat different firms can specialize in each process (Jacobides & Billinger, 2006; Sturgeon, 2007).
In many of digital electronics industries, technology development and product development are conducted
separately by different firms in modularized development processes. Core technology development fromtechnology planning to platform development is covered by specialized vendors while products are designed by1

Yasumoto and Shiu
product developers such as brand manufacturers, independent design houses (IDHs), and original design
manufacturers (ODMs). In modularized interfirm processes, each of these vendors and firms plays a different
role. Typically, vertical disintegration is characterized by the federation of modularized interfirm development
and manufacturing processes such as technology platform development, product design, and manufacturing, eachof which is implemented by independent specialized firms.
Yet, a single platform often does not provide sufficient system knowledge for integration (Staudenmayer,
Tripas, & Tucci, 2005). Incomplete product modularity from system knowledge insufficiency needs systemtest/evaluation (Baldwin and Clark, 2000) by multiple vendors/manufactures. Thus, system knowledge could be
provided in a decentralized manner by specialized vendors, such as technology platform vendors, IDHs, andODMs, in the modularized interfirm networks.
The interfirm modularity of development processes would not necessarily secured as presumed. Particularly
when novel technologies are introduced, interfirm modularity will not be in tact. However, we still do not havesufficient knowledge of how the adoption of novel technology platforms, a set of core technologies, is enhanced
under the modularized interfirm development processes.
We attempt to describe how technology platform vendors and product development firms develop newtechnology platforms into product systems through collaboration in modularized interfirm development
processes. In section 2, we overview handset technologies and the interfirm relationships for handset
development. In section 3, we describe successful collaborative interfirm processes for novel technology
adoption to product systems drawing on 3 cases in the Japanese, Taiwanese, and Chinese mobile phone handset
industries. In section 4, we discuss the findings and their implications for novel technology adoption underinterfirm development process modularity. Finally, in section 5, we summarize our findings and implications andpoint to future research issues.

2. Overview of handset technologies and interfirm relationships
2.1. Research backgrounds
The study focuses on the adoption of novel technology platforms to handset designs in Japan, Taiwan, andChina. Handset developers in all these countries have increasingly exploited external technology platforms
from vendors, though the level of vertical disintegration of handset development processes may differ fromcountry to country. All handset developers in these countries attempt to shape proprietary product designs,
particularly product platforms, based on standardized technology platforms. However, several technology
platform vendors and prominent handset developers are in cooperation with each other for novel technology
2Why Is Interfirm Collaboration Called for in Novel Technology Platform Adoption?
platform adoption to handset systems in spite of modularized interfirm development processes.
According to Funk (2002), in the initial period of the introduction of second generation (2G) mobile
phones from the early 1990s to the mid 1990s (2G digital services began in Europe, Japan, and US in 1992 or
1993), mobile phone handset manufacturers internally developed mobile phone handsets using customized corecomponents. However, specialized vendors started to offer standardized core baseband (BB) chipsets from1996 to 1998 and technology platform solutions around 2000. After that, technology platforms and productdesigns were developed separately.
The process modularization raised a new issue in the mobile phone handset industry, namely, how toeffectively refine and introduce a novel technology platform into handsets. Many vendors renew theirtechnology platform every 1 to 2 years, depending on the evolution of applications and technologies. Yet, it has
not been easy to design print circuit boards (PCBs), particularly high frequency and power management circuits,
based on a novel technology platform. A novel technology platform does not sufficiently secure productmodularity and can cause quite a few problems in PCB design due to the lack of both core chipset stability andverified architectural consistency on handset design configurations. Moreover, the necessity of extended PCB
design for application devices and mechanical designs has invited design problems in handset development
activities.

Based on these conditions, we describe 3 cases of novel technology platform adoption in Japan, Taiwan,
and China. The data on handset development was collected by semistructured interviews from 2005 to 2007, inJapan, Taiwan, and China. We can assume that handset business firms in these countries have different
backgrounds as their industrial development paths and structures vary (Imai & Shiu, 2007). Yet, we should notethat country differences are not our primary focus as the industry is based on the global interfirm networks as is
the cases of other electronics industries (Berger & MIT Industrial Performance Center, 2005).
More than 50 firms, including handset manufacturers, mobile service carriers, wireless technology
platform vendors, software vendors, component vendors, and IDHs were involved in the study. These firms
also include manufacturers and platform vendors from Europe and US. We focus on a relatively competitive
handset developer in each country, who develops proprietary handset designs in close collaboration withtechnology platform vendors. We examine three handset developers since each has participated in thedevelopment of a leading novel technology platform, which has significant impacts on the handset business andmarket in each country and even in the world (Merrill Lynch, 2006; Techno Systems Research, 2007).
About 70% of third generation (3G) handsets of NTT DoCoMo, the largest Japanese operator, were basedon the series of the sample platform in 2007. The second platform series is one of the top-selling low cost3

Yasumoto and Shiu
platforms for the European, US, and leading Chinese manufacturers in the low-end segments of emerging
markets, particularly in China, in 2006. The series of the third sample platform is mostly for the
Chinese/Taiwanese manufacturers, but accounts for more than 40% of the Chinese handset market in 2006.
These achievements make us infer that these samples could provide generalized implications of novel
technology adoption even in the global context.
We also make use of information which appeared in published journals and reports. First, we attempt tobriefly outline the interfirm handset development networks. Next, we examine the novel technology adoption
process in vertical disintegration drawing on three cases of collaboration in these regions.

2.2 Technological structure and interfirm development process modularity
The technological structure of a mobile phone handset is divided roughly into the communication part, signal
processing part, power management, and external I/O part. The communication part receives electric waves
through antennas and converts the signal to digital data for the signal processing part. The signal processing
part has its own central processing unit (CPU) to control the handset system just as Intel processors do in PCs.
The external I/O part controls all information inputs and outputs from every component such as display panel
and keypad. These parts are laid out on a PCB, which is the terminal main body of a mobile phone handset. The
display, key, digital camera, and so on., are devices arranged on the circuit of the terminal main body.
In our investigation, we consider the signal processing part which is in the form of a technology platform
because this is the core technology of a mobile phone handset. This part centers on a BB chip that controls
signals and implements communication processing. A BB chip is reactive: It is not a passive component that
only receives signal. Thus, a BB chip cannot be purchased from integrated circuit (IC) catalogue lists of chip
vendors. Recently, multimedia functions have been emphasized in mobile phone industry. Reflecting thetendency, a BB chip not only processes telephone calling functions but also executes multimedia functions, like
MP3, high quality of camera imaging, games, video playing, and so on. The value added GSM mobile phonehandsets with these functions are called feature phones, smartphones, or PDA phones depending on market
segments.
Because of these various function requirements, engineering man-hours required for handset softwaredevelopment have been rapidly increasing. The application, firmware, and operating system (OS) softwaremust be designed in accordance with hardware components. Smartphones and PDA phones often use Windows,
Linux, or Symbian OS to control the entire systems of these systems. A feature phone uses real time operation
system (RTOS), which conducts real-time switching of each task every 10 micro seconds to control the phone’s
entire system. Nowadays, as a part of a platform, OS is provided for a mobile phone handset manufacturer by a4

Why Is Interfirm Collaboration Called for in Novel Technology Platform Adoption?
technology platform vender together with a core chipset.
The development of a BB chip requires system-level knowledge of mobile phone handsets. As multimedia
functions have increased, BB chip vendors have had to consider the product architecture for designing mobile
phone handsets. BB chip vendors, mostly technology platform vendors, can design powerful BB chips toexecute multimedia functions because of advanced semiconductor process technologies. The requirement forsystem integration may call for a closer relationship between a BB chip vendor and mobile phone handset
developer rather than a simple buyer-supplier relationship. In addition, the design of advanced BB chips
sometimes involves close cooperation with operators.
Handset developers including brand manufacturers, ODMs, and IDHs need to understand theinterdependencies of a chip with handset system design and other components, since the chip is relevant to avariety of functions. The interdependencies drastically increase if BB chip vendors change their chip designs.
In a system of nested modules, such innovations of core component design represent movements up the systemhierarchy and sometimes lead to revolutionary changes that refurbish basic product system foundations(Henderson & Clark, 1990).
When 2G started booming around 1996, specialized chip vendors (TI, ADI, Philips, Qualcomm, etc.)
started to offer standardized BB chip hardware. Nokia and other major manufacturers decided to customize BB
chips by exploiting vendors’ BB chip processes and hardware technologies. These manufacturers loaded basic
software (drivers, wireless interface, RTOS, etc.) into BB chips, and assimilated the customized chipsets withother devices and software for developing their proprietary product/platform designs.
In the early 2000s, these vendors started to provide standardized technology platforms for 2G, 2.5G
(GPRS, EDGE), and/or multimodes to expand their market opportunities to new entrant manufacturers, ODMs,
and IDHs, particularly in emerging markets. Nowadays, handset development processes are modularized into
technology development, technology platform development, handset development, and manufacturing and each
is undertaken by specialized vendors or manufacturers (Figure 1).
In Japan, most mobile phone handset manufacturers have developed handsets based on service
requirements of operators, and have thus adopted advanced telecommunication technologies such as 3G. Until
the early 2000s, major Japanese manufacturers other than CDMA manufacturers, such as Panasonic, NEC,
Mitsubishi, and Fujitsu, were equipped to develop proprietary BB chips and software in accordance withindividual handset model designs for their local market handsets.
In the 3G era, even the Japanese firms began to adopt customized chips based on standardized technology
platforms as they suffered from increasing development costs, which sometimes went up to more than 10
billion yen. Many of these Japanese manufacturers started adopting customized BB chips based on
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Yasumoto and Shiu
Figure 1. Modularity of mobile phone handset development processes* Some major global manufacturers, particularly Nokia, have adopted customized technology platforms.

standardized technology platforms provided by specialized vendors or by collaborations between
manufacturers and vendors.
In Taiwan, PC manufacturers apply their successful ODM business model to the mobile phone handset
business. They develop detailed specifications for mobile phone handsets including Ultra Low Cost (ULC)
ones by following the specifications from major global manufacturers such as Motorola and Sony Ericsson. At
the same time, these ODMs also expanded their component procurement capabilities, and thereby took
advantage of economies of scale in their handset development and manufacturing business.
On the other hand, there have been several types of handset development in China. The Chinese mobile
phone industry can be regarded as being on a divergent path of upgrading. While export growth has been
overwhelmingly led by multinational corporations, the advent of the local handset manufacturers has ignited
increasingly fierce competition in the domestic market.
The advent of the local manufacturers has induced a unique industrial evolution in the form of two
backward linkage effects: (1) the outgrowth of IDHs specializing in mobile phone handset development, and(2) the emergence of IC fabless ventures that design core ICs for mobile phone handsets. The emergence andevolution of China’s mobile phone handset industry will have international implications as the growth of global
demand for low-cost and multifunction mobile phone handsets is expected to accelerate (Imai & Shiu, 2007).
6

Why Is Interfirm Collaboration Called for in Novel Technology Platform Adoption?
Table 1. Brief description of design and test stages

Tasks

Outcomes

Circuit/PCB Design

Engineering Verification Test
(EVT)

Design Verification Test
(DVT)

Production Verification Test
(PVT)

Simulation,
Lists (PCB Check, Net List
& Single Pin Check),
Checks (Mechanical, Layout
Rule, EMI Preview),
Placement Confirmation

Pre-Test (Working Samples):Component Test & Simulation,
Testing (H/W,S/W, Design Quality,
EMI, Application & BIOS)

βTest (Pilot Run Sample):
Customer Test,
Testing (Total, H/W, DFM,
Application, EMI, BIOS),
BIOS Porting

Circuit Design,
ICT (Circuit Testing),
Gerber File,
BOM (Bill of Materials),
Driver & BIOS,
Draft Manual

αTest Report,
Test Reports (EMI Pre-Scan, On
Board Function, Driver,Component Templates,
Environmental, Assembly System
Template, Power Consumption,
S/W EVT, Design Quality Margin,
Vibration/Shock, Customer
Environment Simulation),
Reports (H/W Timing,
Voltage/Signal & Margin, Chipset
Register Check & Performance
Adjustment, Component Spec.
Check, EVT Pilot Run),
Simulation Results & Real
Onboard Signal Confirmation,
EVT Sample Bug Confirmation,
EVT Bug Trace List, Manual

Final Test Report,
Reports (S/W DVT Test,
Safety, Certification, DVT
Pilot Run),
EVT Sample Bug Solution
Confirmation,
DVT Sample Bug Trace List

Pilot Test (Production Pilot Run
Samples):
Pilot Run Test,
Testing (Production, Total, H/W,
DFM, Application & BIOS,
EMI,S/W),
BIOS Porting
Transfer to Factory,
Formal Test Report,
DVT Sample Bug Solution
Confirmation,
PVT Bug & Limitation

Source: Interviews and documents of firms

Here we focus on a leading IDH since the profits of IDHs are relatively higher than those of the Chinese
local mobile phone handset manufacturers. IDHs specializing in the development of electronic devices wereborn in the US in the trend of design outsourcing beginning in the 1990s. Cellon, a San Jose-based venture
established in 1999 by Chinese and US engineers, claimed to be the first IDH specialized in mobile phonehandset development. An IDH in the context of the mobile phone handset industry is a firm that is specialized
in the development of handsets (Imai & Shiu, 2007).
Relying on electronics manufacturing service (EMS) manufacturer’s volume production, IDHs focus on
design business to develop handsets according to customer mobile phone handset manufacturers’
requirements/specifications. The profits of IDHs come primarily from design fees. Another benefit comes fromthe printed circuit board assembly (PCBA) business. IDHs provide PCBAs on which components are mounted.
The PCBA business’s benefits have been increasing compared to design fees since it can benefit from
economies of scale of component sourcing. Accordingly, the PCBA business has approximated the ODMbusiness.
In the PCBA business model, an IDH licenses a BB chip from an external technology platform vendor andthereby provides lists of product functions for their customers. After the customers decide target functions, theIDH starts to select preverified components suitable to the customers’ requirements for developing a PCBA.
Compared to design service based on customer specifications, the PCBA business model demands more
meticulous market research for function proposals and component selections because of the fast market change
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and shortened product lifecycle in the industry. In our research, we examine the PCBA business model as it
shares some critical characters (i.e., original design, component selection and sourcing, and related market
research) with brand manufacturers’ and ODM businesses.
Our cases shed light on handset design-testing stages as these stages are significantly relevant to novel
technology platform adoption. Handset developers share the same mobile phone handset development stages,
including (1) product definition (function, specification, component definition); (2) product design (industrial,mechanical, hardware designs, and software engineering); (3) pilot production and review (proto production
review and design modification); (4) testing and acquisition of compulsory certification; and (5) preparation forvolume production. Tasks and expected outcomes of these stages (Table 1) are related to system design ofnested modules rather than component technologies.
Sometimes a function of a novel technology platform is implemented by various components. For instance,in the development of the MP3 music function, designers must consider the memory size for storage, thealternative technologies for playback (i.e., software or hardware), the modification of the play settings during
calling-in, and other usages.
These problems require handset developers to consider NAND memory (hardware), BB chip (hardware),OS (software), UI (software) and other related components so that MP3 function can be achieved withcompatibility between these components. A technology platform that relates these elements to MP3 function ismodified and introduced into a product system design in iterative design-testing processes.
Furthermore, a novel technology platform adoption sometimes gives rise to more than 10,000 software
bugs and 1,000 hardware bugs. Such processes lead us to infer that novel technology platform adoption
requires collaboration within and between firms, particularly between technology platform vendors and handset
developers.

3. Cases
3.1. Japanese mobile phone handset manufacturer
Ever since NTT DoCoMo, Japan’s largest operator, introduced i-mode service in 1999 and 3G service(W-CDMA) in 2001, the mobile phone handset has been not only a verbal and text communication tool but alsoa multimedia terminal. In Japan, three operators are competing while 11 mobile phone handset manufacturers
have strived for product differentiation. Firm A is one of the late-entry manufacturers, who started the handset
business in 1998. However, the firm has developed more products compared to others, and hit the highest
market share in 2007.
Firm A’s handset business has four business units, including three handset development business units and8Why Is Interfirm Collaboration Called for in Novel Technology Platform Adoption?
a platform development center. Three of the handset development business units receive service requirementsfrom three different Japanese operators and develop mobile phone handsets tailored to each of the domestic
operators. Although these three domestic operators’ requirements are different, Firm A attempts to sharecomponents between its handset lineups, particularly for each operator.
In order to share product platforms and common components within and between handset development
business units, the firm established the platform development center. This center plans product platforms (i.e.,
sets of chipsets, OS, and PCB), develops common basic software, applications/user interface (i.e., browser,
mailer, etc.), and hardware (display panel, camera module, etc.) in advance of specific model developments,
and also manages the libraries of common components that include definite specifications.
For instance, most parts of user interface application software do not have product-specific feature
characters, so that such parts can be regarded as a common software platform and shared with different mobile
phone handsets. To give another example, DoCoMo’s 904, 905, and 705 handset models share the same PCB
design, while the 904 model has video graphics array (VGA), 3 mega camera pixels, and other functions, the905 model adds an extra mobile television function, and the 705 abandons high functional performance inexchange for a slimmer body.
These handset development business units use different technology platforms. The business unit for
DoCoMo handset development manages technology platforms (i.e., core chipsets and Symbian OS), which arecommon between Firm A’s handsets for DoCoMo. Firm A had used iTron OS on NEC-Panasonic BB chips andTI OMPA application processors until 2003. However, the increasing cost and lead time of software
engineering, which accounted for more than 60–70% of engineering-hours of handset development, encouraged
Firm A to adopt a common Symbian-based OS for DoCoMo’s 3G handsets from 2004. Accordingly,
NEC-Panasonic chipsets and PCBs were shared between several Firm A’s models such as 902i, 702iD, 902iS,
and so on.
In 2007, Firm A released its models based on the first generation of Vendor A’s handset technology
platforms. Vendor A developed the first generation in cooperation with DoCoMo, focusing on application rather
than communication. The platform series was deployed on the basis of de facto standard high-end application
processor chipsets both in Japan and worldwide, which Vendor A released in 2002.
The platform series was equipped with high speed BB, application processors, large-capacity memory for
application processing, full hardware accelerator, effective power management, and a variety of other modules
and interfaces. The platform series was expected to be more suitable to the Symbian-based OS that wasdeveloped and/or shared between several DoCoMo manufacturers. Yet, the Linux OS of an Indian software
vendor, Wipro Technologies, also became available on the platform in 2005.
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The newness of a technology platform can cause unexpected software bugs and system-related problems.
Long debugging and testing processes, sometimes lasting more than 6 months, are always required. The lack ofpractical usage experience causes various unexpected bugs and problems during the development stages of botha chipset and its handset systems. Moreover, a technology platform with advanced multimedia functions, which
are required for advancement and to meet market competition, can aggravate compatibility issues with softwareand hardware components. For example, when Firm A used a technology platform composed of a
NEC-Panasonic BB chip and a TI OMPA application processor to design 900i series mobile phone handsets in
2003, it had to make enormous efforts to debug to verify system stability.
In addition, product developers need to cope with other design issues related to electromagnetic
interference (EMI), radio wave interference, and power consumption by examining the compatibility of corechipsets with the circuit design and other components (particularly for RF and power management circuitdesigns). Usually, a vendor offers development boards and reference designs for problem-solving and to
shorten product development lead time. However, even though Firm A referred to the development boards andreference designs offered by vendors such as NEC, Panasonic, and TI, they often did not include informationindispensable for proprietary handset designs.
This problem made Firm A believe that a deep reliance on vendors’ development supports would hinder
the understanding of interactions among components and the nurturing of knowledge about product systemdesign. Moreover, Firm A did not have the experience of designing core chips, which other major competitors
had. The lack of the experience made it difficult for Firm A to check chip-related design problems and/or tocreate product system newness. In practice, Firm A’s handset development lead time was up to 18 months in
2002, which was longer than the 10–12 months average lead time in the industry.
These experiences led the firm to conclude that it was necessary to closely cooperate with technology
platform vendors in order to assimilate required system knowledge into these vendors’ core chipsets. Afterward,
in early 2006, Firm A joined the technology platform development project with DoCoMo, Vendor A, and twoother manufacturers. In the project, they attempted to develop a series of comprehensive mobile phone handset
platforms with the Symbian-based OS. The new technology platform series was expected to help accelerate theglobal adoption of the W-CDMA 3G services and reduce the cost of handsets for mobile phone handset
manufacturers at the same time.
The technology platform for dual-mode phones supporting W-CDMA and GSM/GPRS was built on
Vendor A’s existing single-chip LSI, which was a combination of a BB chip and an application processor as ofJuly 2004. The technology platform added new functions such as supports for HSPDA and EDGE
technologies, and covered OS, middleware for multimedia applications, and drivers. This technology platform10

Why Is Interfirm Collaboration Called for in Novel Technology Platform Adoption?
serving as a base system for W-CDMA handsets could eliminate the need for mobile phone handset
manufacturers to develop separate systems each for specific handset functions, and thus it would reduce thetime and cost of development to almost half. Further cost reductions in mobile phone handsets are expected if
more firms adopt the platform.
Firm A started to participate in the collaborative development processes before the sample chipset release.
That was more than 10 months before the technology platform release. This cooperation enabled Firm A topropose their requirements for technology platforms at the platform specification planning stages and put its
IPs into the platform to receive royalty fees. At the later stages, Firm A carried assigned software engineering
portions, examined prototype chipsets on engineering boards, and thereby contributed to settling problems fromthe stages of testing and debugging for chipset prototyping.
As a technology platform vendor, Vendor A did not have sufficient know-how on application management,
system stability, electronic current control, unexpected handset usage analysis, and other system-level issues.
The collaborative processes encouraged Vendor A to assimilate such know-how into the technology platform
earlier. At first, the information of handset system, particularly related to application, helped the platform’s
function/specification design at platform planning stages. Such design determined function-partitioning andinterfaces between the chipset, other components/devices, and software.
At the later stages of chipset development, the collaboration from the chipset’s system verification related
to handset functions also contributed to examining and improving the stability of handset system designs.
System problems related to the chipset had been probed in the handset system designs of Firm A and othercollaborative manufacturers. The processes helped cope with system problems at the early handset
development stages.
Firm A enjoyed other benefits of time-to-market compared to its competitors. It took about 10 months tocomplete a new handset design after receiving a novel technology platform (derivative handset designs basedon matured technology platforms needed 4–6 months). The overlapping of technology platform verification andearly handset development stages could reduce the handset platform development leadtime. In the collaborative
processes, Firm A could understand the characteristics of the novel technology platform and the critical testing
points for debugging and handset design verification. Handset development leadtime may be shortened to lessthan half if firms are acquainted with such information.
Yet, more essential is the fact that the involvement in the collaboration allowed Firm A to enjoy its earlier
release of the first handset model with the novel technology platform months ahead of its competitors. Total
development leadtime from the technology platform development to the first handset release is about 2 years;
more than 12 months for platform development and 10 months for handset development. However, the total
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leadtime in this case was expected to be 16–17 months. Novel technology platform adoption would beaccelerated in the collaborative interfirm processes rather than modularized ones.

3.2. Taiwanese mobile phone handset ODM
The Taiwanese mobile phone handset industry began in approximately 1994 when BenQ began to develop
mobile phone handsets. In 2000, the Taiwanese PC ODMs such as Quanta Computer, Compal Electronics,
Inventec, and Arima Computer simultaneously started investing in their mobile phone handset subsidiaries orin-house divisions to launch the production of mobile phone handsets. Between 2001 and 2004, Chi-Mei group,
Hon Hai Precision, High Tech Computer, Asustek Computer, Mitac International, Wistron, and Gigabyte
Technology also entered the business. Some firms developed their own brand mobile phone handsets, whileothers applied the ODM business model of PC to the mobile phone handset business.
Firm B entered the mobile phone handset industry in 1999 and became one of the biggest handset ODMs in
Taiwan. Nowadays, Firm B has seven product development teams for developing 2G, 2.5G, and 3G handsets. In
2006, its mobile phone handset models were developed based on several different technology platforms
including 2G chipsets such as Calypso and LoCosto from Vendor B and 3G chipsets from Qualcomm. Firm B
used Calypso and Locosto to develop two to three product platform models and six derivative models in 2006.
In the R&D division, the “New Product Development Team” surveys several different technology platforms
and proposes to their customers to replace their current core chips if new technology platforms perform better andshow a cost advantage. It receives specifications from Motorola and so on, and took charge of detailed mobile
phone handset designs, verifications, and manufacturing.
Firm B develops software (i.e., native applications, device drivers, file manager, UI, etc.) for multimedia
functions and integrates some IC chips (i.e., Bluetooth, NAND memory, melody IC, image sensor, etc.) fromthird parties. However, when adopting a new Vendor B’s platform for developing mobile phone handsets, Firm B
faces a number of system problems. For instance, the initial period of adopting a novel technology platform
involves innumerable software and hardware bugs related to critical components and devices. The reason forthese bugs is the fact that Vendor B does not commit to total solutions with complete information on productsystem architectures, because its platforms allow customer firms to develop proprietary product designs withspecifications proper to these customer firms.
Vendor B provides the platform as a package consisting of a set of core chipset and basic software, areference design with a sample board, bill of materials (BOM), test and verification data reports, technicalsupports, and so on, which could help customers’ handset development. However, the availability of its platforms
on handset system designs should be examined according to customers’ design and specification requirements. In
12Why Is Interfirm Collaboration Called for in Novel Technology Platform Adoption?
addition, Vendor B does not intend to cover all the usages of customers. Thus, for instance, a handset design
based on a Vendor B solution could easily run out of battery if inexperienced customers attempt morepicture/video functions than expected.
Firm B emphasized that in order to overcome these problems it enhanced the debugging capability by hiring
more quality assurance engineers 3 years before. More essential is the fact that Firm B started to cooperate with
Vendor B as its α-site customer. Since the release of LoCosto engineering samples in 2005 by Vendor B, Firm B
had exerted efforts on debugging for the new core chip. Firm B participated in the later stages of Vendor B’s
technology platform development after the chipset engineering sample release, which followed testing andverification at the chipset level.
As an ODM, Firm B had rich system-level experiences such as circuit designs, component compatibility,
device arrangement, EMI and signal interference management, power management, and other system design
issues which are closely related to the usage of customers. Thus, the collaboration with Firm B could be expected
to yield feedback on system-level verification from Firm B, thereby leading to an improvement in the consistencyof technology platforms with handset designs. As an α-site customer, Firm B contributed to stabilizing the newtechnology platform.
At the same time, the role of an α-site customer helped Firm B eliminate system problems on handset
designs before the formal platform sample release. Firm B received a novel chipset engineering sample about one
year earlier than its competitors. Thus, Firm B could start its handset design and engineering sample verificationon the basis of the new technology platform well ahead of its competitors.
The earlier access to novel chipset knowledge enabled Firm B to design its handsets with checking thecompatibility of the platform with handset system designs and other components before the technology platform
release. The earlier access also contributed to reducing handset development lead time, sometimes from 10
months to 6 months. The collaboration fostered the assimilation of a novel technology platform into handset
designs in accordance with system-level requirements.

3.3. Chinese mobile phone handset design house
In the early 1990s, the mobile telecommunication service industry started its full-fledged global expansion. The
trend soon spread to China. Driven by the surge of demand from the international and domestic markets, China’s
mobile phone handset industry has exhibited a spectacular growth since the late 1990s. Export and domestic
consumption grew at almost parallel rates until 2003. In 2005, around 75% of handsets produced in China were
exported. Although the local mobile phone handset manufacturers recently became outward-looking,multinational companies still account for approximately 95% of China’s total mobile phone exports.
13

Yasumoto and Shiu
When we turn our eyes to the domestic market, however, a strikingly different picture appears. Starting fromjust around 5% in 1999, shares of local brands rapidly increased until 2003, when China’s official media
triumphantly announced that the Chinese mobile phone handset makers had captured more than 50% of thedomestic market. However, the majority of the local mobile phone handset manufacturers slid into a retreat after
2004 that continued until early 2006. In 2006, even with their financial achievements, the improvement is still
smaller in market share compared to major foreign companies such as Nokia, Samsung, and Motorola.
The increasingly heated competition in the domestic market encouraged the local handset manufacturers to
introduce organizational or technological innovations which were ignited by strong cost sensitivity and an
enduring quest for product variety. One can find innumerable phone models; there are estimated to be more than
700 new models released in the market in 2006 (about 1,500 models were on the market in total).
Yet, the number of sales for each model is relatively small, on average less than 50 thousand units. Handset
manufacturers aim at 500 thousand units of sales per one model in Japan; however, in China, 50 thousand unit
sales are the minimum volume to make a profit. In Japan, the lifecycle of a model is 6 months, but there is no rule
for the lifecycle of a model in China. On average, the lifecycle of a model is 9 months, but some models are soldfor longer than 2 years. The fall in the Chinese local manufacturers’ market share will continue if they cannot
release a variety of models every month.
The Chinese local manufacturers’ lack of ability to develop a variety of models has been compensated for by
IDHs. The performance of the IDH industry did not fall as much as the local mobile phone handset manufacturers
did. According to the investigation of a U.S. research company, iSuppli, there were about 50 to 60 IDHs in China,
and it was expected that the products that IDHs design would account for 50% or more in terms of the volume of
shipment of the local mobile phone handset manufacturers (iSuppli, 2005). The top 5 IDHs were once estimatedto account for 70% of the Chinese mobile phone handset market.
Major IDHs have the ability to implement all the processes of mobile phone handset development: PCB
circuit design, software engineering, component arrangement, industrial/mechanical design, testing andverification, certification, and preproduction preparation. IDH’s business model provides total solutions forcustomer firms.
This type of business model has gradually expanded to component procurement and manufacturing services,
areas in which ODMs are strong. Yet, a conformational shift of the chipset market has radically changed thebusiness environment for IDHs in China in recent years. IDHs procured chipsets mainly from American andEuropean venders such as TI, Phillips (NXP), and Infineon until 2004. However, the Taiwanese IC technology
platform vendor, Vendor C, started to release its proprietary total solution chipsets at the end of 2004, suppressing
the license fee. The market share of Vendor C had radically increased to about 40% in 2006, so that it exceeded
14Why Is Interfirm Collaboration Called for in Novel Technology Platform Adoption?
the market share of the top vendor TI as the adoption of the total solution platforms by IDHs increased (Merrill
Lynch, 2006).
Compared to TI’s technology platforms, Vendor C’s technology platforms perform more powerfully when
executing multimedia functions. In other words, Vendor C’s technology platforms integrate more multimedia
functions such as Bluetooth, camera, and MP3 than TI’s chipsets. In addition, Vendor C’s platforms enable fasterhandset development since they integrate a large portion of handset functions and provide real PCB board
reference designs. However, the total solution platforms contain a lot of system problems. Vendor C needs an
α-site customer in order to effectively settle such problems.
The α-site customer of Vendor C’s 6217, 6218, and 6219 chipsets was the Taiwanese IDH called Darts
where Vendor C invested before 2004. However, two of Darts’ development teams were pulled out of the
Taiwanese ODMs, Arima and Foxconn. Although the situation demanded Vendor C to search for a new α-site
customer, major Chinese IDHs and manufacturers except for Firm C were not willing to adopt the platforms.
Thus, after 2004, Vendor C chose Firm C as an α-site customer in order to develop 6226, 6228, and 6229 chipsets.
Vendor C expected that rich experiences in both handset development and customer/market contacts helped Firm
C become an important α-site customer for Vendor C.
On the other hand, Firm C concluded that Vendor C’s technology platforms would fit the requirements of
the Chinese market, and thus began to adopt them for its handsets beginning at the end of 2004. Firm C
emphasized that a successful mobile phone handset development should match the needs of the target market
with available related technologies. When Firm C observes a selling point in the target market, various divisions
including the sales and R&D divisions are organized into a “Project Research Committee.”
The members of these divisions are expected to include different technologies, market demands, and/or
operator perspectives in the discussion of the possibility of the chipset commercialization. Unlike other major
mobile phone handset manufacturers, the committee of Firm C is not a permanent organization for advanced
technological researches, but is a task force for analyzing both technical trends and market requirements. Vendor
C’s chipsets are at first studied in the committee.
A chipset development takes 10 months or more while a handset development based on a novel technology
platform needs at least 10 months. Firm C cooperates with Vendor C for 6 months. At the time of Firm C’s
involvement, Vendor C has already completed its chipset engineering samples. Reference design (and BOM)
development and preproduction testing follow the engineering sample release. Firm C helps Vendor C develop
reference designs, giving the information to Vendor C on what the system architecture of the handsets would be.
Firm C checks the chipsets’ problems concerning product system and the interdependencies of the chipsets withother components at system level. Firm C develops real PCB board reference design which provide a practicable15

Yasumoto and Shiu
PCB circuit design and related component configurations while Vendor C improves its chipsets.
In close cooperation with Vendor C, Firm C has attempted to solve system-level compatibility problems at
the early stages of its handset development projects. At these stages, Firm C has verified the compatibility ofchipsets on real product system designs, not only debugging Vendor C’s chipsets but also examining othercomponents or devices in laboratory tests. The problems of compatibility come up unexpectedly, so that it isnecessary to fine-tune the settings between Vendor C’s chipset and components/device drivers such as image
sensors and flash memory.
Firm C emphasized that cooperation with Vendor C helped in checking the chipsets’ problems concerning
product system and interdependencies between components. Moreover, Firm C also pointed out that thiscooperation shortened the product development lead time compared to that of its competitors. Firm C can takeadvantage of novel chipset knowledge 6 months earlier than its competitors. The early availability of novel
chipset information has allowed Firm C to precede its competitors by 4 to 5 months in new product releases. Firm
C has already verified the system compatibility of the chipsets on its real handset design by understanding thesystem-level characteristics when novel technology platforms are released.
In 2006, Firm C successfully developed nearly 50 types of proprietary product platforms, each of whichused Vendor C’s several technology platforms. To this date, the number of Firm C’s mobile phone handset
models that have been developed by these product platforms has exceeded 100 types.

4. Findings
In modularized development processes, any single firm, even a system integrator, can hardly invest in and control
all the complementary knowledge necessary for novel technology adoption. Knowledge boundaries are
sometimes beyond firm boundaries in spite of definite task partitioning between firms (Brusoni & Prencipe,
2001; Brusoni, et al., 2001; Takeishi, 2002) even under interfirm development process modularity.
Interfirm modularity seems to blur the role of close coordination within and between firms. However, thecases show that close, bilateral communication channels between product developers and technology vendors arealso indispensable in modularized development processes when core technologies change. Each firm’s businessscope is not oriented to vertical integration. Nevertheless, the coordination is not as open in the transition of coretechnologies.
Our interviews with the Chinese local mobile phone manufacturers and IDHs since 2005 also provide someevidences of the criticality of interfirm collaborations between technology platform vendors and productdevelopers. Even the Chinese local mobile phone handset manufacturers and IDHs, which have been thought to16

Why Is Interfirm Collaboration Called for in Novel Technology Platform Adoption?
rely on modularized interfirm processes, share the same perspective: “the cooperation with core chip vendors willcontribute to their product development.” The interviewees all emphasized that in their handset development
projects for novel technology platforms it was sometimes difficult to identify where the problems came from. As
a result, these problems have always delayed their product development.
Technical information and support from core chip vendors usually help solve these problems. Furthermore,some of them attempt to be α-site customers while others commit to deeper cooperation with core chip vendors.
An IDH established in 2005 pointed out that it was necessary to be an α-site customer of Vendor C, not only
because the firm could receive lower sell prices but also because the firm could develop their handsets with thelatest core chipsets earlier than competitors. These firms also emphasized that vendors expected to make use of
the design capabilities and end-user experiences of these firms in the collaboration.
In general, a simple buyer-seller relationship is not proper to related firms. In reality, one of the major IDHs,
Techfaith, established in 2002, also launched a joint venture with a technology platform vendor, Qualcomm, in2006 as the multimedia functions would be more value-added in the future. A local mobile phone handset
manufacturer, Amoi, provides another emblematic case. Amoi has also worked with Spreadtrum, China’s local
technology platform vendor, to develop GSM/GPRS mobile phone handsets and the Chinese 3G standard
TD-SCDMA handsets.
The collaboration within and/or between firms may be enhanced by technological uncertainty as shown inpast researches (e.g., Iansiti, 1997; Takeishi, 2002). The uncertainty accruing from new technologies would be
relevant to supplier-manufacturer relationships. However, novel technology platform adoption under verticaldisintegration is characterized with system integration rather than technology integration. The cases here showthat collaborative processes are not driven by technological uncertainty, but are rather triggered by systemic
problems resulting from the adoption of novel technology.
In modularized interfirm development processes, vendors and product developers each have heterogeneous
capabilities to cope with different development problems under vertical disintegration. Vendors need to becapable of managing technological uncertainty of new core technology system development while productdevelopers are destined to manage product system designs. The search and selection processes of technologies
for technology integration are rather left to vendors.
Reflecting such interfirm labor division, the collaborative processes between vendors and productdevelopers focused on system integration to ensure system stability of technology platforms and product designs.
Firms collaborated with each other based on system knowledge, which enhanced systemic problem-solving,
relevant to the interface between core chipsets, product designs, software, and other components. According to
our interviews, firms attempted to check both novel technology platforms’ system stability and compatibility
17

Yasumoto and Shiu
with handset designs and other components in close cooperation.
In our cases, vendors and manufacturers mutually played complementary roles. Vendors were notdominant players as presumed in platform management studies (e.g., Gawer and Cusumano, 2002). Productdevelopers made efforts to acquire new core technology knowledge, which defined the basic configuration of
product technology bases, in order to quickly design their products’ configurations consistent with novel
technology platforms. At the same time, technology platform vendors took advantage of these collaborations torefine and verify their solutions according to system knowledge of product circuit designs.
These cases show that the necessity of system knowledge rather than technological uncertainty drives
collaborative novel technology adoption under interfirm development process modularity. Accordingly, theoverlapping processes are restricted to the late technology platform development and early product development
stages, though the scope of collaboration could varydepending upon cases.
Moreover, we should suggest that the range of

Figure 3. The range of interdependencies
Case 1: Japanese Firm A and Vendor Ainterdependencies is different by the cases (Figure 3). Firm A
adopted Vendor A’s new technology platform in order todevelop 3G high performance and multimedia smartphones.

Vendor A

development with Vendor A and several firms. Highperformance requirements, particularly related to complex

PCBs
Circuits

BB, Basic Software

Firm A participated in collaborative technology platform
Application Chip

HandsetReal PCB
Board

RF
PMU

Firm A
Chips
Devices
Middle-ware

Application
and Related
Devices
Mechanics

Case 2: Taiwanese Firm B and Vendor B

application processing, required sufficient consideration to
the function-partitioning and interfaces between the core andother levels in interfirm collaboration. Firm A provided theinformation of function/specification requirements andcontributed to application-related system simulation and test,

Vendor B
BB, Basic Software

Application Chip

HandsetReal PCB
Board

PCBs
Circuits
RF
PMU

Firm B
Chips
Devices
Middle-ware

Application
and Related
Devices
Mechanics

while sharing necessary information about the BB chipset
Case 3: Chinese Firm C and Vendor C

architecture with Vendor A.
The technology platform of Vendor B did not offer acomplete solution set of chips, software, and devices, but
provided a low cost solution with basic handset functions. Yet,
the development needed systemic checks of the platform in
product system. Firm B worked with Vendor B to solve
systemic bugs of unidentified interdependencies, while
18

Vendor C
BB, Basic Software

HandsetReal PCB
Board

PCBs
Circuits

Firm C

Chips
RF
Devices
PMU
MiddleApplication Chip
-ware
Application and Related Devices

Why Is Interfirm Collaboration Called for in Novel Technology Platform Adoption?
obtaining the BB chipset information related to handset design.
In the case of cooperation between Firm C and Vendor C, the total solution development faced high degreeof interdependencies between several levels. Vendor C coped with the interdependencies within the firm bylearning from customer firms how to encapsulate the interdependencies into the solution. Firm C helped develop
the reference design, while learning how to exploit the solution in its handset development.
These cases show that the difference in collaboration timings must be explicated by the issues of systemlevel problem-solving rather than technological uncertainty (Figure 4). Firm A was involved in the technology
platform development from the beginning of platform planning (e.g., functional requirement and specification
Figure 4. Differences in collaboration object and timing in Japan, Taiwan, and China
Technology Platform Development
Technology
PlatformPlanning(Function/Spec. Design)

Simulation& Debugging

Engineering Sample
System Test &Debugging

Reference
DesignDevelopment

Product Development(Firm C, IDH)

Product Development (Firm B, ODM)

Product Development (Firm A, Brand Manufacturer)

setting) collaborating with DoCoMo, Vendor A, and some manufacturers.
DoCoMo has intended to establish common software platforms to accelerate its service introductions
reducing development cost. Corresponding to the attempt, these firms including Firm A started to develop atechnology platform based on the vendor’s application chipsets. Firm A partly coped with system architecture
setting and technological uncertainty reduction with its partner firms at the stage of each technology platform
specification planning and software engineering stage, particularly in simulation process. However, Firm A did
not exert development capabilities until the chipset was tested and verified in terms of product system
consistency.
On the other hand, Firms B and C were involved in collaborative problem-solving after the engineering
sample releases, when technological system configurations had been already nailed down by technology platform
vendors. Firm B helped debug the system after the partner platform vendor prepared its chipset engineering
samples. Firm C was not involved in chipset development until reference board design was started by the partner
19

Yasumoto and Shiu
Table 2. Brief description of differences in collaborations

Technology Platform
Range of Platform(Vendor’s Coverage)
Interdependencies
between Core Chipset
and Other Levels

Collaboration Typeand Purposes (ProductDeveloper’s Role)
Collaboration Timing

Firm A
3G(W-CDMA); Symbian
OS and RTOS
Core, A part of C1 and C2

Firm B
2G/2.5G (GSM/GPRS),
Nucleus RTOS
Core, C1, A part of C2

Firm C
2G/2.5G (GSM/GPRS),
Nucleus RTOS
Core, C1, C2, A part of C3

with C1 (Circuits,
Recommendation
Components),
with C2 (PCB Reference
Board Design, Some Chips
and Devices, SW),
with C3 (Some “Advanced”
Applications and Devices)
Collaborative Partner forTechnology Platform
Development with Vendor A
and Several Firms

with C1 (Circuits,
Recommendation
Components),
with C2 (PCB Reference
Board Design, Some Chips
and Devices),with C3 (-)

with C1 (Circuits,
Specific Components),
with C2 (PCB Reference
Board Design, SpecificChips and Devices, SW),
with C3 (Real PCB Board
Design, Specific
Applications and Devices)
α-site Customer of Vendor
C for Reference Design
Development

Partly from Platform
Planning(Function/Specification
Design),Simulation & Debugging
before Engineering Sample
Tape-out

System Test & Debugging forEngineering Sample

α-site Customer of Vendor B
for System Test & Debugging

Reference
DesignDevelopment

technology platform vendor. The firm contributed to the partner’s real PCB board reference design developmentby implementing chipset debugging in relation to other components on PCBs.
Firms B and C were mostly engaged in system-related problem-solving (e.g., device compatibility,internal/external interfaces, electromagnetic and wave interferences, power management). The differences incollaboration object and timing result from the fact that the scope of system integration in technology platforms
differ between Firm B and Firm C. Firm B used less integrated chipsets while Firm C adopted total solutions ofmore integrated chipsets and functions.
These findings suggest that collaboration purposes and timings may reflect the level of system knowledge
requirement (Table 2) and interdependencies. Firms have several levels of interfirm collaboration for technology
development and product development according to the difference between the platform range and the range ofinterdependencies between core components and other system levels of nested modules, though interfirm
relationships are often characterized by simple classifications, such as closed/open dichotomy.
The capabilities of novel technology adoption rather rest on the management of system knowledge acrossfirms even in the interfirm modularity of technology development process and product development process.
System performance is rather dependent on its ability to mediate between a variety of types of knowledge within
and between firms (Brusoni & Prencipe, 2001; Brusoni et al., 2001; Henderson & Cockburn, 1994) to the extent
that mutual compatibilities between core technologies and components/devices are ensured. Thus, the ability to20

Why Is Interfirm Collaboration Called for in Novel Technology Platform Adoption?
span knowledge boundaries between firms is particularly highlighted in modularized interfirm development
processes (Prencipe, 2003).
At last, we should suggest that even encapsulation is enhanced by collaboration with productmanufacturers. Technology platform vendors attempt to encapsulate a variety of element technologies into theirtechnology platforms (Iansiti & Levien, 2004). The progress of encapsulation built on SOC (System on Chip)
continuously redefines the architectural interdependencies of functions and components. Encapsulation could beoriented to vertical integration by platform vendors in place of mutual interfirm coordination, and reduce therole of manufacturers as system integrators. Nevertheless, the cases show that a vendor enhancing
encapsulation continuously paradoxically needs product developers with rich system integration experiences inorder to develop and evolve its platforms.

5. Conclusion
Development and manufacturing processes is often regarded as the critical source of manufacturers’ inimitablecompetitiveness. Nevertheless, nowadays, product developers can exploit even core technologies from
specialized vendors as such vendors provide standardized technological solutions. The cases elucidate how andwhy product developers and technology platform vendors collaborate with each other for novel technology
platform adoption in the modularized interfirm development processes.
The cases show that standardized core technologies, technology platforms, do not automatically securesufficient system knowledge to realize product modularity and related interfirm relationships. Rather specialized
vendors and firms under vertical disintegration collectively carry system knowledge through modularizedinterfirm development processes.
Encapsulation would unilaterally urge product developers to exploit total solution platforms so that thesedevelopers can develop products without sufficient system knowledge accumulation. Encapsulation seems toenhance thorough interfirm modularity, more divided relationship of development processes between vendors
and product developers, and thus hinder bilateral mutual learning between them. However, encapsulation is also
encouraged by system knowledge exchange in vendor-manufacturer collaboration.
The cooperation under interfirm development process modularity is oriented to system integration rather
than technology integration. Although a platform has been presumed to exclusively provide system knowledge,
the partial distribution of system knowledge as well as component knowledge across firms drives thecollaborative process. Each single firm cannot maintain all the knowledge relevant to problem-solving. A productdeveloper should acquire new core technology knowledge, which provides basic architectural system
21

Yasumoto and Shiu
configurations according to underlying product technology bases, in order to quickly design their products
consistent with novel technology platforms. At the same time, a technology platform vendor needs to examine
and refine its solutions according to product system knowledge of product system designs.
Modularized interfirm processes have blurred how basic system knowledge contributes to
product/technology evolution (Henderson & Clark, 1990). Yet, the lack of sufficient system knowledge due totechnology platform renewals is continuously compensated for with close interfirm coordination, in place ofvertical integration, between specific technology platform vendors and product developers.
These finding should contribute not only to revealing the managerial issues involved in novel technology
adoption in modularized interfirm development processes, but also to explicating the dynamism of thetechnology development and product development in open interfirm networks. As elucidated in the HDD case,the lack of system knowledge may decay firms that depend upon product modularity and corresponding
modularized product development (Chesbrough & Kusunoki, 2001).
However, the cases reveal that complementary knowledge (i.e., system knowledge) is provided in thecollaboration between manufacturers and vendors. The finding would show a witnessing fact that productmodularity and corresponding modularized product development does not necessarily hinder the system
reformation owing to technological changes. Specialized firms under interfirm development process modularity
can support each other to overcome such knowledge insufficiency problems.
The Chinese 3G TD-SCDMA development may confirm this finding. The Chinese digital product industries
seemingly rely on and take advantage of interfirm product modularity. However, the TD-SCDMA development
collaborative networks between base station vendors, technology platform vendors, brand manufacturers, IDHs,
and software vendors have successfully advanced TD-SCDMA technology development. The insufficiency oftechnological and system knowledge in the Chinese local firms would be compensated for by major global
technology platform vendors (e.g., ADI, TI, Infineon, NXP) and brand manufacturers (e.g., Nokia, Motorola,Samsung, LG) who have been indirectly involved in the networks through partnerships with the local firms.
At last, we should note that product system architecture is determined by manufacturers in many cases inmobile phone handset industry. Although a platform provides basic system architecture, handset manufacturers
are in charge of specific function allocation and interface definition according to their product specifications(particularly applications). Encapsulation or interface standardization by total solution vendors reduces thenecessity of system integration for system architecture definition in manufacturers, but at the same time
deprives handset manufacturers of their preserve to develop distinctive products and/or evolve handset systems.
The logic of interfirm modularity in PC industry is often applied to other industries. Yet, different from PC
industry, system architecture and interfaces are not sufficiently conditioned in many of other industries like22

Why Is Interfirm Collaboration Called for in Novel Technology Platform Adoption?
handset industry. The conditional difference makes interfirm knowledge/task boundaries much more fluid inother industries than in PC industry. Thus, vendor-manufacturer relationships, particularly interfirm
knowledge/task boundaries relevant to system architecture setting and the management of related systemknowledge, are still critical for effective technology/product development in many of other industries. Suchissues of technology platform management must be left to future research.

Acknowledgement
The study was financially supported by the Grant-in-Aid for Scientific Research B (2005-2006, 2007-) andC (2006-), Ministry of Education, Culture, Science, and Technology, Japanese Government.

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