Management literature is almost unanimous in suggesting to manufacturers that they should integrate services into their core product offering. The literature, however, is surprisingly sparse in describing to what extent services should be integrated, how this integration should be carried out, or in detailing the challenges inherent in the transition to services. Reports on a study of 11 capital equipment manufacturers developing service offerings for their products. Focuses on identifying the dimensions considered when creating a service organization in the context of a manufacturing firm, and successful strategies to navigate the transition. Analysis of qualitative data suggests that the transition involves a deliberate developmental process to build capabilities as firms shift the nature of the relationship with the product endusers and the focus of the service offering. The report concludes identifying implications of our findings for further research and practitioners.