Summary The focus of many European and American companies is currently on "modular" strategies in product design and production. A modular product has individual elements which are designed independently but function together as a seamless whole. In this article Mari Sako and Fiona Murray compare the experiences of the computer industry - where modularity was consumer led - with that of the automobile industry where the impetus for adoption has come from cost and complexity reduction. They discuss the strategic choice between integration and modularisation for original equipment manufacturers, note the changing role of suppliers, and conclude by describing recent research which highlights regional differences. The automobile industry has been the source of major strategic thinking throughout this century. Ford's moving assembly line, for example, first standardised work, while Taiichi Ohno's Toyota Production System and, more recently, lean production techniques were important managerial innovations. The design, manufacture and distribution of the automobile capture the key strategic challenges associated with a complex and technologically sophisticated product with the result that companies in other sectors have sought inspiration and lessons. Now the focus of many European and American manufacturers is on so-called modular strategies in product design and production. This article assesses the success of this new development and its value as a strategic weapon in the search for new sources of competitive advantage in manufacturing industries.