The article by Michael E. Porter and James E. Heppelmann explores how smart, connected products are transforming competition and industry structure. These products, which integrate hardware, sensors, data storage, microprocessors, software, and connectivity, are revolutionizing the way products are designed, manufactured, and serviced. The authors argue that these changes are reshaping value chains and forcing companies to rethink their internal operations and external partnerships. Smart, connected products offer exponential opportunities for new functionality, reliability, and utilization, and they transcend traditional product boundaries. This transformation is driven by advancements in processing power, device miniaturization, and ubiquitous wireless connectivity. The changing nature of products is disrupting industry structures and creating new industries, prompting companies to ask fundamental questions about their business models. The authors highlight the strategic choices companies must make, such as how to create and capture value, manage the vast amounts of data generated, and redefine relationships with traditional business partners. They also discuss the impact of smart, connected products on industry competition, including changes in the bargaining power of buyers, competitors, new entrants, substitutes, and suppliers. The article emphasizes the need for companies to build a new technology infrastructure, known as a "technology stack," to support these products. This stack includes hardware, software, connectivity, a product cloud, security tools, and integration with enterprise systems. The authors provide examples of how smart, connected products are being used across various industries, such as heavy machinery, energy, and consumer goods. Finally, the article outlines the strategic choices companies must make to achieve competitive advantage in this new landscape, including deciding which capabilities to pursue, how much functionality to embed in the product versus the cloud, and how to leverage data and analytics to enhance customer value. The authors conclude by emphasizing the importance of strategic positioning and operational effectiveness in achieving sustainable competitive advantage in the era of smart, connected products.The article by Michael E. Porter and James E. Heppelmann explores how smart, connected products are transforming competition and industry structure. These products, which integrate hardware, sensors, data storage, microprocessors, software, and connectivity, are revolutionizing the way products are designed, manufactured, and serviced. The authors argue that these changes are reshaping value chains and forcing companies to rethink their internal operations and external partnerships. Smart, connected products offer exponential opportunities for new functionality, reliability, and utilization, and they transcend traditional product boundaries. This transformation is driven by advancements in processing power, device miniaturization, and ubiquitous wireless connectivity. The changing nature of products is disrupting industry structures and creating new industries, prompting companies to ask fundamental questions about their business models. The authors highlight the strategic choices companies must make, such as how to create and capture value, manage the vast amounts of data generated, and redefine relationships with traditional business partners. They also discuss the impact of smart, connected products on industry competition, including changes in the bargaining power of buyers, competitors, new entrants, substitutes, and suppliers. The article emphasizes the need for companies to build a new technology infrastructure, known as a "technology stack," to support these products. This stack includes hardware, software, connectivity, a product cloud, security tools, and integration with enterprise systems. The authors provide examples of how smart, connected products are being used across various industries, such as heavy machinery, energy, and consumer goods. Finally, the article outlines the strategic choices companies must make to achieve competitive advantage in this new landscape, including deciding which capabilities to pursue, how much functionality to embed in the product versus the cloud, and how to leverage data and analytics to enhance customer value. The authors conclude by emphasizing the importance of strategic positioning and operational effectiveness in achieving sustainable competitive advantage in the era of smart, connected products.