The Dilemma and Resolution of ODM/OEM Business Model Re-Invent

• Main Authors: Ju-Nan Chang, 張汝南
• Other Authors: Chang-Sung Yu, Ph.D.
• Format: Others
• Language: zh-TW
• Published: 2013
• Online Access: http://ndltd.ncl.edu.tw/handle/87302890714688892373

碩士 === 國立臺灣大學 === 高階公共管理組 === 101 === The personal computing technology advances triggered the PC era, and opened up the global PC market. To promote the technology advance, there are technology visionaries, industry information analysts, industry consortiums, and patent players coming into play. To meet the global demands, the supply chain is then decomposed into design, manufacturing, brand, and channels for mass production. In global PC industry, the ODM/OEM has been a common practice for PC manufacturing, where ODM and OEM are the abbreviations of Original Design Manufacturing, and Original Equipment Manufacturing. ODM is responsible for turning conceptual specifications into feasible design for manufacturing. And OEM is response for the equipment manufacturing. In the global ICT Industry, the ODM/OEM plays important roles in the design-in and manufacturing processes. Initially, the ODM/OEM collaborates smoothly, and jointly makes the mass production of ICT products, such as personal computers, feasible. While more and more components are designed with plug-and-play compatibility, less and less the design-in works are needed for ODM to co-work with OEM. The ODM/OEM profit margins hence dropped dramatically in the last 10 years. In past ten years, the mobile Internet keep evolution and mainly leading by US entrepreneurs’ innovation, the global economic tsunami, China’s operation cost keep raising, the few innovative firms grabbed most of profits (e.g. Apple and Samsung share the more than 90% of profits from global smartphone market in 2012/2013); ODM/OEM lacks of innovation/differentiation result in only few companies (Foxconn and Quanta) shared most of revenue of ICT industry. As well as causing market oversupply and price war everywhere. Taiwan ODM/OEM business model has been challenged to be sustainable and we have to think about why and what the root causes are, and how to re-invent the ODM/OEM business model from the dilemma. Facing the dilemma, Taiwan’s ODM/OEM has to sustain the existing business, in order to keep maintaining the couple ten thousands of employees operation and surviving. OEM team plays as the role of cash cow and look forward to having the innovation products from ODM team. On the other hand, the ODM team can’t access the market to get the real needs due to most of innovative customers’ control not only the market/sales but also the design activities without ODM’s involve. So the ODM team can contribute nothing to the OEM team gradually. This causes the dilemma. The rise of e-commerce opens up an opportunity for ODM to build up innovative products, to grow up as a strong independent organization, and again to collaborate with OEM. This paper shows the steps for ODM/OEM’s business model re-invent. The re-invented business model then resolves the original ODM/OEM dilemma. The value network of organizations will be addressed in this thesis, because of this is one of key factor to success or fail when firms deploy disruptive and sustainable business models at the same time.