General business model for product modularity
by A. Mehran Shahhosseini; Eric W. Friesel; Brad Richardson
International Journal of Data Analysis Techniques and Strategies (IJDATS), Vol. 7, No. 4, 2015

Abstract: A general business model is presented to analyse the strategic 'business case' for modularity in new product development (NPD). This model for assessing modular value is presented and applied to telecommunication industry customer premise equipment (CPE). Content service provider CPE production decisions present major investments with lasting impacts. CPE, including the commonly familiar 'set top box', delivers digital content to consumer households and businesses. Typically millions of CPE units are fielded for extended time periods of up to ten years or more. Analysis results indicate a potential net present value (NPV) increase for modular compared to baseline 'integral' systems when technology innovation occurs during CPE lifetime; and upgrade supply interactions increase modular system NPV at median new technology 'take-rates'. General model theory, application, contributions and limitations are described. We suggest use of the model as an investment decision tool and for heuristic research investigating modular value structures and processes.

Online publication date: Sun, 27-Dec-2015

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