Complementors
Quick Definition
Complementors refers to companies whose products or services increase the value of another firm's offerings. Introduced by Brandenburger and Nalebuff as the sixth force beyond Porter's Five Forces, complementors represent the positive-sum dimension of competitive dynamics where one firm's success directly benefits another.
The Core Concept
The concept of complementors was formally introduced by Adam Brandenburger and Barry Nalebuff in their 1996 book Co-opetition, which proposed adding complementors as a sixth force to Porter's Five Forces framework. Their value net model placed complementors opposite competitors: while competitors reduce the value of your product when customers can choose between you, complementors increase the value of your product when customers can use both together. This represented a significant expansion of strategic thinking beyond the purely competitive lens that had dominated the field since Porter's foundational work.
Complementors matter strategically because they can dramatically expand the total value available in a market, creating growth opportunities that no single firm could generate alone. The relationship between complementors is defined by the willingness of customers to pay more for a product when a complementary product is also available. Hardware and software have always exemplified this dynamic: a smartphone is more valuable when there are many apps available, and apps are more valuable when there is a large installed base of smartphones. This mutual value enhancement creates powerful incentive structures that shape entire industry ecosystems.
The relationship between Microsoft and Intel, sometimes called the Wintel alliance, is the defining historical example of complementor dynamics. For over two decades, Intel's faster processors made Microsoft's increasingly demanding software more appealing, while Microsoft's feature-rich operating systems gave consumers reasons to buy Intel's latest chips. Neither company had a formal alliance, yet each firm's product roadmap was designed to complement the other's. This complementor relationship drove the entire PC industry's growth cycle, with each firm's innovation spurring demand for the other's products.
In the modern technology landscape, app developers serve as critical complementors to platform companies. Apple's App Store hosts over 1.8 million apps that collectively make the iPhone more valuable to consumers. Apple explicitly cultivates this complementor ecosystem through developer tools, APIs, and revenue sharing arrangements. The strategic calculation is clear: every high-quality app increases the iPhone's appeal, justifying its premium price and strengthening Apple's competitive position against Android. Google pursues the same logic with the Play Store, and both companies invest heavily in developer relations precisely because complementor health directly drives platform value.
For strategists, managing complementor relationships requires a nuanced approach. Unlike competitors, complementors deserve cultivation and support because their success directly benefits you. However, the relationship can become complex when complementors grow powerful enough to capture a disproportionate share of the jointly created value, or when they begin competing with you in adjacent areas. Amazon's relationship with third-party sellers illustrates this tension. Marketplace sellers are complementors who expand Amazon's product catalog and attract customers, but Amazon has been accused of using seller data to introduce competing private-label products, straining the complementor relationship. Managing this tension between cultivating complementors and capturing value is one of the central challenges of platform strategy.
Key Distinctions
Complementors
Suppliers
Suppliers provide inputs that become part of your product or enable its production. Complementors provide separate, independently purchased products that increase the value of your product when used together. A chip manufacturer supplying processors is a supplier; a software developer creating applications for the platform is a complementor. The customer buys from both you and your complementor, whereas supplier products are embedded in yours.
Classic Example — Intel and Microsoft
For over twenty years, Intel and Microsoft operated as the defining complementor pair in technology. Intel's faster processors required more capable software to showcase their performance, while Microsoft's increasingly demanding Windows releases motivated consumers to upgrade their hardware.
Outcome: The Wintel complementor dynamic drove the entire PC industry upgrade cycle, helping both companies achieve dominant market positions and generating hundreds of billions in combined revenue through the 1990s and 2000s.
Modern Application — Apple and App Developers
Apple's App Store ecosystem hosts over 1.8 million applications developed by independent companies and individual developers. Apple provides developer tools like Xcode and Swift, APIs, and a revenue sharing model where developers keep 70 to 85 percent of sales revenue.
Outcome: The app ecosystem is a primary driver of iPhone differentiation and customer lock-in. Apple reported that the App Store ecosystem facilitated over $1.1 trillion in developer billings and sales in 2022, demonstrating the enormous value created by complementor relationships.
Did You Know?
Brandenburger and Nalebuff defined a complementor with a precise test: a player is your complementor if customers value your product more when they have the other player's product than when they have yours alone. This customer-centric definition distinguishes true complementors from companies that merely happen to sell non-competing products.
Strategic Insight
The most powerful competitive positions often depend more on complementor ecosystem health than on direct competitive superiority. A platform with superior complementors can defeat a technically superior rival, as VHS demonstrated against Betamax and Android demonstrated against Windows Phone.
Strategic Implications
Do
- ✓Actively invest in making your product easy to complement through open APIs, developer tools, and clear integration standards
- ✓Monitor the health and satisfaction of your complementor ecosystem as a leading indicator of your own competitive position
- ✓Create incentive structures like revenue sharing that make it profitable for complementors to invest in enhancing your platform
- ✓Identify potential complementors in adjacent industries whose participation could expand your total addressable market
Don't
- ✗Compete directly with your key complementors without considering the damage to ecosystem trust and long-term value creation
- ✗Capture so much value from the complementor relationship that partners lose the incentive to invest and innovate
- ✗Ignore complementor quality, as poor-quality complementary products can degrade the perceived value of your own offering
- ✗Take complementor relationships for granted, as complementors can switch to rival platforms if they feel undervalued or threatened
Frequently Asked Questions
Sources & Further Reading
- Adam M. Brandenburger and Barry J. Nalebuff (1996). Co-opetition: A Revolution Mindset That Combines Competition and Cooperation. Currency Doubleday.
- Michael E. Porter (1980). Competitive Strategy: Techniques for Analyzing Industries and Competitors. Free Press.
- Annabelle Gawer and Michael A. Cusumano (2002). Platform Leadership: How Intel, Microsoft, and Cisco Drive Industry Innovation. Harvard Business School Press.
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