A modular strategy is a strategy that leverages the advantages of modular product
architecture. A modular product is a complex product whose individual elements have
each been designed independently and yet function together as a seamless whole. This
kind of product has been rapidly adopted in the computer industry where the modules
might be thought of as including hard disk drives, operating systems, and
microprocessors. By adopting a modular strategy, International Business Machines
was able to achieve dramatic reductions in the lead times for designing and
manufacturing its System 360. However, the definition and subsequent
standardisation of the modules led to the success of Microsoft and Intel, as value was
captured not by the architects of a modular strategy but by the modular suppliers.
Nevertheless, the distribution of the profits resulting from the adoption of a modular
strategy is driven by different industry specific characteristics.