Meritocracy Consulting Blog

February 10, 2010

7 more examples of vertical integration gone wrong

Filed under: Uncategorized — Scott @ 2:24 am

If you have read any of my other posts, you would know that as a technology consultant and adviser to businesses, I don’t like vertical integration.

1) Apple’s refusal to work with Adobe (specifically Flash) despite Flash’s 99% market adoption and a huge existing investment by developers and companies. (Also, Apple’s focus on short-term wealth creation over long-term societal…and possibly shareholder value…through more open and extensible products/services).

2) Oracle’s belief that they can provide all IT to all companies (and now ditching their partners to also provide the hardware as well…after buying Sun). Additionally, it should be noted that Oracle picked up MySQL, the leading open source database in this acquisition…I have not heard many annoucements for Oracle’s plans to improve MySQL.

3) Mobile phone operators’ refusal to unlock phones, invest in customer service or improve the mobile data speeds (the US has some of the worst and slowest download speeds).  I would bet that mobile phone operators have more employees working on blocking illegal traffic and apps than they have researching ways to increase internet access speeds.

4) Amazon, Google, Microsoft, IBM and dozens of other companies all moving forward with proprietary cloud computing platforms.

5) Google buying every company under the sun and trying to compete in all markets…possibly doing so successfully because for the past 10 years Yahoo, AOL, Microsoft and a handful of other incumbents lacked leadership and vision in terms of the internet. (Not to forget the effect the post internet bubble had in terms of no available VC or IPO funding. Without 2nd and 3rd round VC funding, companies saw an exit to Google as a preferred alternative to trying to build a standalone great company).

6) Banks attempting to grow through use of complex financial instruments and leverage instead of improving the consumer experience.

7) Walmart moving into groceries, digital music, electronics, banking and generic drugs…instead of continuing to focus. My main gripe with retail is that all companies are focused on boxing out competition instead of trying to improve people’s lives by automating the process of shopping…is there a reason we still go to stores? Yes, the online experience is inferior.

If you disagree with any of these viewpoints, take a step back and look at the entire forest.  Still disagree? If so, I welcome comments, emails or even phone discussion from individuals looking to persuade me otherwise.

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  4. [...] Not convinced that vertical integration is a second rate strategy?  Check out a detailed look at Microsoft’s trend toward vertical integration as well as 7 more examples of vertical integration gone wrong. [...]

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