Value creation and value capture in the smart hardware platform: a case study of Huawei and Xiaomi

Abstract With the rapid development of technology and the diversification of market demand, the smart hardware platform has rapidly emerged. How to effectively realize the value creation and value capture in the platform has become a key issue of make-or-break. For the purpose, the smart hardware platform enhances the dynamic capabilities of hardware manufacturers through various ways to promote the deep integration of hardware products and digital services to attract more manufacturers and expand the platform’s ecological advantages. Therefore, it is significant to study the specific mechanisms and strategies of value processes in the smart hardware platform. This paper focuses on the value creation and capture path of empowering hardware manufacturers through multiple case studies in the smart hardware platform to explore its inherent value creation mechanism. We divide the value process of the platform into three stages: value consensus, value creation, and value capture. Our findings suggest that: First, in the value consensus stage, through the relationship empowerment, the smart hardware platform provides structural support for the formation of network effects, enhancing trust and cooperation among participants. Second, in the value creation stage, the platform boosts the collaborative innovation capabilities of hardware manufacturers through bidirectional investment of capital and resources, facilitating innovation-driven value creation and value addition, which in turn drives the stable expansion of the platform ecosystem. Third, in the value capture stage, the platform leverages marketing resource support through three value capture pathways: brand empowerment, channel empowerment, and scenario expansion empowerment, thereby broadening the user base and further strengthening cross-side network effects.