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I wonder, though, how well such a strategy turns out. Lets take Cisco and Microsoft as examples. Both started with a couple of core products, and quickly satura
by quanticle 16y ago
I wonder, though, how well such a strategy turns out. Lets take Cisco and Microsoft as examples. Both started with a couple of core products, and quickly saturated their market. After achieving saturation, they both tried to force their way into other markets via acquisitions and organic growth. However, their acquisitions have failed to achieve the blockbuster status of their core products, and, arguably fail to do much in the way of ensuring the corporation's survival in the absence of those core products.
Cisco started out making enterprise routers and switches. They quickly gained dominance in that space, and began expanding into other areas. However, none of their acquisitions or expansions (e.g. Linksys, GoToMeeting, etc.) have achieved the same level of profitability as the core router & switch business. If Cisco loses its core router & switch business, it will still be in trouble, with or without Linksys.
The same principle applies to Microsoft. Yeah, they've expanded into a lot of new markets. There has been success in some (e.g. game consoles) and failures in others (e.g. mobile phones). But none of their expansions have resulted in products that would save the company if the Windows and Office cease generating significant revenue.
In the eyes of many investors, this strategy has actually hurt these companies. Rather than staying focused and building absolute best of breed products in one or a few categories, Microsoft and Cisco have lost focus, and are diluted their talents into a set of mediocre products across a wide range of categories.
Given that, I think it would be better for Apple to stick to making damn good PCs, MP3 players, and cell phones, rather than branch out into a wide number of product categories and lose their reputation for excellence.
- patrickk 16y ago"Given that, I think it would be better for Apple to stick to making damn good PCs, MP3 players, and cell phones, rather than branch out into a wide number of product categories and lose their reputation for excellence." Branching out into iPods (plus music), cell phones (plus apps) and tablets is what turned the company around and sent it into the stratosphere though. Prior to the launch of the iPhone and the launch of the iPad you would be hard pressed to find people who would have thought those products would have gone on to be the blockbusters that they've become. The only problem I can see for Apple is how to continue coming up with successful products - how many cool, new consumer electronic devices could they conceivably conjure up? EDIT: typo
- quanticle 16y agoWhile that is true, I do think that Apple runs the risk of becoming another Sony. In the 80s and early 90s, Sony was known for its great TVs and A/V equipment. Then, through the 90s and 2000s, Sony diversified into game consoles, PCs, MP3 players, movie studios and all sorts of other bits of consumer electronics and consumer content. The result was that competing priorities and diluted focus hurt Sony's dominance in its core market (TVs and A/V equipment) without contributing significantly to the bottom line. As a result, Sony has gone from being a big player in few industries to being a middling player in many industries. The one hopeful difference that I see between Apple and Sony is that Apple is much more willing to kill off unsuccessful projects than Sony, as demonstrated by the EOL of the XServe line.
- BenOfTomorrow 16y agoFYI - GoToMeeting was acquired by Citrix, not Cisco.
- quanticle 16y agoThanks for the correction. Unfortunately, the edit window seems to have expired for my post, so I can't insert the necessary correction.