Lateral Innovation

Interesting read over at Asymco this morning that really continues to pique my interest on the business differences between companies like Google, Samsung, and Apple.

It gets down to the fundamental questions of defining what business you’re actually in. For this specific discussion, it gets into deciding if raw volume / market penetration is really the game to be in. Looking at Horace’s analysis comparing Google and Samsung (mobile only), the Android platform starts looking like an interesting case study in profitability. Who’s making money on Android? In reality, Google doesn’t actually make that much on it, while the phone manufacturers (notably Samsung) are putting out impressive revenue numbers.

Despite the fact that Google’s Android OS has huge (and growing) market share, the finances behind it are different than you might expect. It turns out that the real money is on the hardware side of the equation these days. Samsung is making a lot more operating profit from Android phones than Google makes from all of its businesses combined. And Apple is even farther down that path with their profit numbers based on owning the whole iOS package.

Google vs Samsung Mobile - Asymco

Google vs Samsung Mobile – Asymco

And now we see Google trying to make a move into the high end laptop market selling their own Chromebook (versus partnering with other PC makers as in the past). It’s a high end machine, purpose built around tight integration with Google’s cloud services. They clearly see some opportunities to make more money and it will be interesting to see how they do with it.

From an innovation perspective, it comes back to that question of defining the business you’re in. Sometimes the best move for providing better products / services for your customer can be to make a lateral move into an adjacent space to provide a solution from a different angle. And ironically, that move can also shift the profitability in your favor as well.

Getting the vision clear on who exactly you’re serving and what problem you’re solving gives you a tremendous platform to work from. It helps give the clarity needed for building out great solutions … for both you and your customer.

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