Open Innovation by Opening Embedded Systems

1 INTRODUCTION With the increasing capabilities of today’s smart phones, the demand of consumers for new applications has risen dramatically. By opening up these smart phones and providing third parties the opportunity to develop “apps” for their systems, producers like Apple and platform owners like Google can offer much more value to their customers. As smart phones are one kind of embedded systems (ES), the question arises if similar development can also take place in other kinds of embedded systems. ES, consisting of hardware and software, are embedded in a device to realize a specific function, in contrast to personal computers, which serve multiple purposes [4,30]. The notion of incorporating external actors in the innovation process has been coined open innovation which has become increasingly popular in research and practice since Chesbrough introduced the term in 2003 [12]. By opening up their innovation processes for external actors, firms could benefit from internal as well as from external ideas. In this paper, the notion of open innovation will be explored in the context of ES. The case of ES is particularly interesting, as it requires not only the opening of innovation processes, but also the opening of the embedded system itself. Some of these platforms are opened only to a small degree like Apple’s iPhone, in order to enable others to create new applications for it. Similar developments also take place for example in the automotive software domain, especially concerning infotainment systems. However, most kinds of ES have been spared out by this development until now. As more than 98% of all chips manufactured are used for ES [10] and high-performing computer chips are getting cheaper [38], opening considerations could also prove valuable for a large number of other application domains. However, opening up innovation processes in the context of ES is challenging from both an organizational and technical perspective. First of all, embedded systems are subject to a variety of constraints in contrast to multi-purpose computing devices, like realtime and security constraints or costs and resource constraints. Second, ES are quite diverse both in their composition and in terms on their requirements. In this paper, we want to explore, how the different properties of embedded systems influence possible open innovation processes. This will be done by drawing on to the characteristics of firms implementing the three core open innovation processes suggested by Gassmann and Enkel (2004) [15] and conceptually explaining how the characteristics of ES enable or hinder open innovation processes. As a result, a classification of the OI processes in terms of ES characteristics is provided