The bargaining strength of complementors

A complementor can be defined as a firm that provides complementary products or services, as well as added value to an existing product or services [11]. For example, to install ERP or CRM software from SAP or Oracle in a large company requires huge organizational complexity. Complementors such as Accenture, Cap Gemini Ernst & Young, and hundreds of smaller and more specialized consulting firms, are helping the organization to implement and to adapt to the software. Consequently, the complementors that are backing the software largely drive the value of what they are helping to install.

Similarly, the value of an operating system depends on the number of software applications available on it. Software developers are complemen-tors of Microsoft, Linux, or Symbian. They can have some significant power as Apple discovered the hard way when many application developers left its operation system for MS Windows. The standardization of a technology eases the rise of complementors, which are needed to expand the market, and whose bargaining power may become more important as the more companies depend on them.

Another example is the telecom and satellite field where competitors like satellite providers and cable operators use complementors to create distinct competitive advantages. Satellite providers offer a low-cost solution, especially to cover rural and thinly populated areas, that is able to bypass local content limitations. Cable operators offer an interactive solution through services like PPV or video-on-demand (VOD), a high-speed Internet access with better broadband capacity and picture quality than satellite, without the need for satellite dishes.

Continue reading here: Managing distributors of hightech products

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