In IDC's view, there is reason for optimism. Suppliers will be forced to evolve new manufacturing models, yet there is ample room for value-add through services, brand management, and distribution. The hardware market is in transition. At this point in the cycle, a significant amount of stable technology is being delivered by a diverse, very competent set of component suppliers. This high level of technology stability has allowed hardware suppliers to transition business models that outsource not only component technology but even the design, component specification, and manufacture of products.
Most suppliers face a similar scenario.
The disintegration of the technology value chain can be traced back to IBM's decision to outsource key component technology of its personal computer. This fueled an entire industry whereby the key components of a system are developed by discrete technology providers, then integrated by system manufacturers. Technological modularity has had a dramatic effect on the hardware marketplace, effectively giving manufacturers key access to components that otherwise would have to be developed internally with considerable investment in resources. Technological modularity stands opposed to technological integrality. Technological integrality exists when the key components of a system are developed internally by a system manufacturer and integrated into that same supplier's system.