The electronics industry of the late 1990s bears only a passing resemblance to that of a decade earlier. Some of the names are the same-IBM, NEC, Toshiba, Digital Equipment Corporation (DEC), Matsushita, Siemens-but those big, vertically integrated assemblers of electronic systems no longer control the industry. 1 In their stead a new generation of firms has arisen, mostly but not exclusively American owned, who exercise the kind of market power (and have attained the market capitalization) that is but a passing memory for more traditional firms: Microsoft, Intel, Cisco, Oracle, Netscape, Cadence, Dell, Applied Materials, 3COM, SAP, Sun, Qualcomm, Octel. The new firms look nothing like the old leaders. Most are specialists operating within one (occasionally more) horizontal slice of the electronics industry value-chain rather than full-line systems firms who vertically integrate the value-chain. Most control key technical specifications that have been accepted in the market as de facto standards. Most operate with network forms of production organization. Almost all produce software, albeit often embedded in a hardware product. All deliver value-added services. Despite the similarities, they also differ in important respects. For example, Intel invests heavily in fabrication and assembly, whereas Cisco and Dell rely exclusively on contract manufacturers. Netscape and Sun widely license their technical standards; SAP and Cadence do not.
As the names have changed, so has the global competitive game. The early 1980s saw a widely heralded battle for dominance of world electronics markets between Japanese and American industries. 2 Through innovations in processes and manufacturing, Japanese producers had taken over consumer electronics and a range of component technologies including displays, precision mechanical parts, and semiconductor memory. US firms have been increasingly forced to rely on Japanese rivals for the supply of the underlying technologies, processes, and manufacturing know-how necessary to produce electronics systems. 3 In consumer electronics, such thoroughgoing technology dependence had been a first step toward market exit even for such powerhouses as General Electric (GE) and RCA. Dependence has meant that US firms were far enough removed from the technological state of the art to impede new product development, and that their principal competitors could