I got to thinking Monday about old-fashioned business terms like vertical and horizontal integration after reading the at-first-blush surprising report that Amazon is buying a shipping company.
Tech companies aren’t supposed to do things the way they once were done. Thus, after Steve Jobs returned to Apple in 1997 the company didn’t see the need to run its own factories anymore. Cisco was never a collection of businesses. Like most successful Silicon Valley companies it did one or two things exceedingly well. Amazon could peddle anything. But peddling was what it did.
It wasn’t that way before the digital age. For a while conglomerates like ITT and GE were all the rage. Vertically integrated industrial concerns also ruled the roost for years, typified by steelmakers that owned everything from iron ore mines to ore ships to steel mills to processing plants.
Now it looks like what’s old is new again. True, Apple dumped its factories. But around the same time it opened its own retail stores to better market to its customers. Then it bought a chip company and began designing its own chips for mobile devices, though it still buys plenty from the likes of Intel. Amazon, which didn’t confirm the reports it is buying the 75% it doesn’t already own of the French shipper Colis Prive, presumably wants to control a critical facet of its business it has farmed out for years.
Conglomeration seems to be the new thing. Facebook, barely more than a decade old, has become something like a digital holding company. Its brands include Instagram, WhatsApp, and Oculus. Google too is moving toward the conglomerate model, going so far as to create a parent company, Alphabet, to hold its growing list of brands. Even a brand-new concern like Uber isn’t content with one product: It is developing autonomous cars and delivering food too.
So are digital companies embracing vertical or horizontal integration of a lean, focused approach to business? The short answer is yes. They’re doing all of the above, whichever suits their needs of the moment.
Old-fashioned business constructs are dead. Long live new-fangled business constructs—that look a lot like the old ones.
BITS AND BYTES
Hewlett Packard Enterprise wants to unload stake in Indian services company. After almost two years of internal debate, HPE has hired Citigroup to sell its 60.5% stake in Mphasis, which is worth about $1 billion, according to a report by Times of India. The U.S. company inherited the investment when it bought Electronic Data Systems in 2008. Since then, Mphasis has been ramping its non-HP-related revenue. (Times of India)
Uber’s Chinese division now worth $7 billion. The ride-sharing company has signed up new investors including an airline, a car maker and China’s biggest life insurance company. The infusion boosts its valuation to $7 billion, reports the Wall Street Journal. Meanwhile, Uber competitor Didi Kuaidi is pointing to impressive new ridership statistics meant to undercut its fierce rival’s momentum. (Wall Street Journal, Re/code)
GM encourages hackers to attack its connected cars. The giant automotive company wants to know about potential vulnerabilities related to the more than 12 million, Internet-capable GM cars that will be on the road by the end of 2016. This is not a traditional bug bounty program—one that rewards security experts for finding vulnerabilities—but that may change in the future. (Fortune)
Google exec suggests drone deliveries could start next year. During a speech to aviation experts in Washington, Davis Vos said e-commerce companies could start using unmanned aircraft to deliver shipments as early as 2017. That’s provided, of course, the proper regulatory framework falls into place. (CNN)
Sharp finalizes restructuring. The $3 billion rescue plan—the Japanese electronics company’s third bailout in as many years—could be revealed before the weekend, reports Reuters. It includes help from state-run Innovation Network of Japan, along with Bank of Tokyo-Mitsubishi UFJ and Mizuho Bank. Sharp won’t comment, other than to say it’s seeking strategic alternatives for its display technology business. (Reuters)
SAP ends 2015 on high note. A peek at the European business software giant’s latest financials suggests year-end sales promotions meant to push customers toward its HANA technology helped SAP meet its revenue projections, although operating margins slipped. SAP will officially discuss its results, including its ongoing transition to the cloud software model, on Jan. 22. (Reuters)
Fitbit dips below $20 IPO price. The fitness company’s stock has been in free fall since last Tuesday, when it was served with a class-action lawsuit that questions the inaccuracy of its health-monitoring data. This despite its introduction of the Blaze, Fitbit’s answer to Apple Watch. Fitbit shares closed Monday at $18.85, off another 12.4%. (Fortune)
Ongoing controversy over Apple iPhone sales projections. A report from research firm Stifel suggests sales of “non-Android” devices grew 33% last quarter in China. That revelation runs counter to the bearish supply chain forecasts that many analysts are using to trim their Apple stock price targets. (Fortune)
Slack expands executive ranks. The fast-growing collaboration software startup has created two new leaderships positions, as its readies for a future IPO. Its first chief security officer is Geoff Belknap, previously with Palantir. Its new chief architect is Keith Adams, who co-founded Facebook’s artificial intelligence research team. (Fortune)
RIP David Bowie, Internet music entrepreneur. Long before the birth of streaming services like Spotify or Apple Music, there was BowieNet, which the late musician created to help other artists share their work online. (Fortune)
What CES taught us about the Internet of things. Automotive technology and drones made a huge splash at the CES technology show in Las Vegas last week. But there still thousands of square feet devoted to connected gadgets like Wi-Fi enabled TVs and lightbulbs you can control from your phone. Amid the connected chaos there were some clear trends. Stacey Higginbotham explores six of them in her latest online post about CES. (Fortune)
IN CASE YOU MISSED IT
AT&T will offer unlimited data—but there’s a catch by Don Reisinger
How Uber is breaking into public transit by Benjamin Snyder
Majority of women in tech have faced sexual harassment
by Kirsten Bellstrom
Ford: We’re the first to test self-driving cars in the snow by Kirsten Korosec
T-Mobile and the fuss over ‘free’ phone streaming by Jeff John Roberts
Facebook begins eliminating photo sync feature by Andrew Nusca
ONE MORE THING
Look for Satya Nadella tonight at Obama’s final State of the Union. The Microsoft CEO was the only tech exec invited by the White House to sit with the First Lady. (Wired)