Who Says Manufacturing Isn't Sexy?
Jennifer Buechel, Chuck Seiber, and Kim Carlton, MBA2s
Issue date: 11/12/01 Section: Features
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How do you take an idea for a killer game system and build a console that competes with Sony?
You leave the manufacturing and design to the professionals. Flextronics and its CEO, Michael Marks, have helped Microsoft to orchestrate one of the most revolutionary products since Cabbage Patch Dolls prompted housewife frenzies in the ‘80’s. With the X-box game console, Microsoft will launch a new era in digital entertainment without spending a dime on building a manufacturing or logistics infrastructure.
Speaking on the “Future of Manufacturing” at the Wired Conversation series last Monday, Marks fairly crackled with enthusiasm. “What we are doing for Microsoft now, no one could have done just three years ago,” he said.
Flextronics is the most dangerous player in the Electronics Manufacturing Services industry (EMS). It has 80 plants in 28 countries around the world, and has grown from $93 million in revenues in 1993 to $15 billion this year. The company makes a range of electronics products including cell phones for Ericsson, printers for HP, PDAs for Palm, desktop copiers for Xerox, and routers for Cisco. This diversification has allowed Flextronics to remain financially stable during the economic downturn.
As companies strive to minimize up-front investments, the trend to outsource manufacturing and logistics is likely to increase. Bear Stearns anticipates that outsourced operations for electronics will grow from 13% today to 50% by 2010. This means that Flextronics, as well as competitors like Solectron and Celestica, will be responsible for producing $500 billion worth of products.
“Flextronics is ‘hollowing out’ the electronics industry” said Marks. “We are allowing young companies with great ideas to get to market faster, with minimal investment.” Flextronics therefore is encouraging competition by lowering barriers both to entry and exit--bad news for large, traditional companies who are finding it increasingly difficult to sustain competitive advantage in manufacturing.
You leave the manufacturing and design to the professionals. Flextronics and its CEO, Michael Marks, have helped Microsoft to orchestrate one of the most revolutionary products since Cabbage Patch Dolls prompted housewife frenzies in the ‘80’s. With the X-box game console, Microsoft will launch a new era in digital entertainment without spending a dime on building a manufacturing or logistics infrastructure.
Speaking on the “Future of Manufacturing” at the Wired Conversation series last Monday, Marks fairly crackled with enthusiasm. “What we are doing for Microsoft now, no one could have done just three years ago,” he said.
Flextronics is the most dangerous player in the Electronics Manufacturing Services industry (EMS). It has 80 plants in 28 countries around the world, and has grown from $93 million in revenues in 1993 to $15 billion this year. The company makes a range of electronics products including cell phones for Ericsson, printers for HP, PDAs for Palm, desktop copiers for Xerox, and routers for Cisco. This diversification has allowed Flextronics to remain financially stable during the economic downturn.
As companies strive to minimize up-front investments, the trend to outsource manufacturing and logistics is likely to increase. Bear Stearns anticipates that outsourced operations for electronics will grow from 13% today to 50% by 2010. This means that Flextronics, as well as competitors like Solectron and Celestica, will be responsible for producing $500 billion worth of products.
“Flextronics is ‘hollowing out’ the electronics industry” said Marks. “We are allowing young companies with great ideas to get to market faster, with minimal investment.” Flextronics therefore is encouraging competition by lowering barriers both to entry and exit--bad news for large, traditional companies who are finding it increasingly difficult to sustain competitive advantage in manufacturing.
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