Functional products (FPs) comprises of integrated hardware, software, and a service support system components that are bundled together to offer higher customer value and possibility to generate revenue. However, offering FPs requires forming and managing win-win collaboration with diverse global value chain partners. Based on twenty explorative interviews at two Swedish manufacturing companies, we specifically focus on the collaboration between FP provider and its value-chain delivery organizations. Our results show that such collaborations can lead to win-lose or lose-win situations. Furthermore, we identify six diverse relational challenges which could negatively influence the collaboration between FP providers and its value-chain delivery organizations