Going Vertical

The foundation of the tech business has nearly always been based on the idea of creating products and services that appeal to as wide an audience as possible. As we begin to enter a more mature, slower growth phase of the industry, however, the possibility of going horizontal is getting increasingly difficult. Particularly as we look to the business world, all the best opportunities are about finding specific niche opportunities that offer a smaller set of customers a more customized fit. In a word, it’s now all about going vertical.

One of the many benefits of tapping into vertical markets is the ability to run a profitable business because companies/individuals with specific needs are much more likely to pay a premium to get exactly what they’re looking for. The challenge, of course, is that to really grow a business that’s focused on serving verticals, you often need to find several of them.

At last week’s DellWorld event in Austin, TX, I was one of the co-hosts of the DellWorld Live streaming TV coverage and, as part of that job, had the pleasure of interviewing people from a wide variety of companies with an enormous range of perspectives. Though there were many different themes that were discussed throughout the event, one point that became clear is that companies like Dell and its partners are increasingly focused on finding solutions that are targeted at many specific vertical industries, such as healthcare, retail, finance, education, manufacturing, etc. These verticals often have very unique requirements, so it can be difficult meeting their demands, but they represent strong opportunities for growth for many different types of vendors.[pullquote]Despite all the hype around increased mobility in the workplace, the reality is that most companies are just now starting to get serious about building custom mobile applications for their businesses.”[/pullquote]

Apple’s recently announced deal with IBM for developing mobile apps for business was/is also targeted towards verticals. In fact, much of IBM’s focus in that partnership is geared towards leveraging their expertise across a wide variety of these specific industries into custom mobile applications. Despite all the hype around increased mobility in the workplace, the reality is that most companies are just now starting to get serious about building custom mobile applications for their businesses. As a result, there’s a strong interest in developing solutions that meet the specific demands of the business. Up until now, many of the business-oriented mobile apps have been more broadly, horizontally focused, so there’s a relative dearth of vertically-focused options.

In some cases the differences between apps across different vertical industries may not be all that great—it could be as simple as simple different field names in a database, for example—but in others, it boils down to understanding different business processes, different workflows, different requirements, and so on.

At the end of the day, businesses want to feel like their unique needs are being met. That means learning more about these businesses and how they operate, and devising solutions that will help them feel like they’re being more effective or more productive than they were before they started using the new tool(s). It’s hard work, to be sure, but the days of easy, horizontal solutions for business are going away. Companies that can learn how to specialize in these specialty industries—and go vertical—are the ones who will be best positioned for success in the years to come.

Published by

Bob O'Donnell

Bob O’Donnell is the president and chief analyst of TECHnalysis Research, LLC a technology consulting and market research firm that provides strategic consulting and market research services to the technology industry and professional financial community. You can follow him on Twitter @bobodtech.

4 thoughts on “Going Vertical”

  1. I’m not sure about that. Most companies I can thing of have been striving to go up and/or down the value chain:
    – MS: OS, desktop apps, server apps, business apps, consumer apps, hardware -remember MSX ?-, consulting, cloud
    – Oracle: RDBMS, business apps, OS, hardware
    etc, etc.

  2. I’m not so sure about your premise. Benedict Evans keeps pointing out that smartphones are the first piece of tech that is going to be owned by (almost) everyone on the planet. In my opinion, there’s still a lot of room for horizontal growth.

Leave a Reply

Your email address will not be published. Required fields are marked *