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A vertically integrated company owns increasing amounts of production of their end product. Apple is vertically integrated, they have products where they make t
by ogre_codes 6y ago
A vertically integrated company owns increasing amounts of production of their end product. Apple is vertically integrated, they have products where they make the CPU, the device, the OS, and retail the devices. But ultimately they only sell the end products.
If Apple were to start selling CPUs, you could argue that they had a similar model, but they don't (and won't because their CPUs are a competitive advantage).
What Amazon and SpaceX are doing isn't vertical integration in the classic sense. While Amazon sells AWS, they also have an online retail platform. Their retail platform consumes AWS services. Similarly, SpaceX is both the supplier of launch services and the consumer of launch services.
Amazon's retail operations are profitable, but by being their own best customer, they help Amazon drive profitability and demand for AWS.
- ethbr0 6y agoFlywheel integration is probably a better term. I.e. not vertically integrating for the supply of your current product, but in such a way that demand for both is increased.
- scsilver 6y agoIve heard fly wheel in regards to tech company strategy 3 times in a month, was there a conference I wasnt invited to?
- grzm 6y agoIt's not unlikely you're experiencing the Baader–Meinhof phenomenon. https://en.wikipedia.org/wiki/Frequency_illusion https://en.wikipedia.org/wiki/Frequency_illusion
- jeffparsons 6y agoJeff Bezos talks about it a lot. So it makes sense it would come up in the context of similarities between SpaceX's and Amazon's strategies.
- xmprt 6y agoSame here. I'm guessing it's a term that's come up in a few popular posts here (especially considering Jeff Bezos left Amazon a few weeks ago and he talks about it a lot in his book and in general) and is not part of the vernacular of commenters here. Similar idea for other circles that you might have heard it in.
- ogre_codes 6y agoLike this term a lot.