Is the future of business success in the 21st Century to enter a business you don’t need to make money from? by Jamie McIntyre

How can this be and how can it lead to success?

Well it’s proving to be a strategy used by many of the larger digital companies like Amazon, Google and Apple.

Amazon

Amazon is rumoured to be entering the smartphone market with a kindle phone.

It’s not a business it needs to make money from, nor is it likely to, yet it can lead to much greater business success.

You see Amazon is a content provider in the sense its core business is selling digital books, songs, movies and so on from it’s Amazon website.

Releasing a phone at cost or even at a loss can still see the company grow its profits from the increase in users accessing Amazon via their Amazon phone to buy its products and services.

They did this with their popular kindle eBook reader, expanding their eBook digital sales.

Google

Google is entering the tablet market.

Not to make money from tablets, which is lucky because they’ll be selling them at cost so they won’t. And because they don’t care about making a profit they can undercut Apple’s iPad price and pose a threat to companies who have to make money because it’s their core business.

Why?

Well, more people accessing the Internet through a Google powered tablet is more revenue for Google’s core advertising business with Google AdWords.

They entered the smart phone software market purely for the same reason with the release of Android, which has been very successful, giving it away to phone manufacturers for free rather than trying to make money from it.

Microsoft & Apple

You’ll see Microsoft try it too, entering the tablet market (they tried with a Windows mobile and largely failed). Not to make money from entering those businesses directly but to expand their software sales.

But because Microsoft has been slow to adapt (and some say arrogant due to their large profits from their core software business) they have failed to stay ahead of both Apple and Google, who have overtaken Microsoft for future control of running the Internet.

Apple knew it could never compete with Microsoft in computers, so it moved to a new battleground where it could, initially music with the iPod and then iTunes.

And then the iPhone, which has seen Apple achieve huge success. And now with the iPad it will erode Microsoft’s software dominance on PCs as the majority of computer sales shift to tablets.

This is despite Microsoft predicting the rise of tablets well before Apple.

Apple have been able to use the strategy of entering new businesses to grow its existing business and still profit from the new business due to vertical integration. Meaning it’s both a software and hardware maker.

The iPhone business is very profitable. It makes more per phone than its rivals like Samsung.

Yet iPhones have grown iTunes’ business whilst cannibalising its iPod business.

iPads have been one of Apple’s most lucrative businesses to date, yet it’s also grown its iTunes business while potentially cannibalising some of its computer business, particularly laptops. But it can afford to and would rather cannibalise its own business before a competitor does.

(I cover this in my latest book, 101 Lessons The World Can Learn From Steve Jobs. Visit www.stevejobsbook.net.au for more information.)

How can smaller businesses model strategies like these, used by larger companies?

That’s the key and requires creative thinking.

For instance I’ve been investing into media assets such as magazines, online TV and online news sites.

I don’t need to make money from these assets because ultimately it grows my core businesses from exposure and traffic.

I have a competitive advantage over traditional media companies who are reliant on external advertisers.

Just like Amazon is a threat to phone companies because it can sell phones at a loss and make money elsewhere, whereas, say, Samsung has to make money from phone sales because that’s its core business.

However Samsung could think outside the box and invest in content assets to make money from content so it’s not just reliant on phone sales for revenue but phone sales could grow its content business, if it had one.

What can your business expand into that you don’t have to make money from but increases your success in your core business?

Or is your core business only a core business for now and could you move to a new battleground?

Like what Apple did so it could be first to market and compete better with iPods then music via iTunes and then iPads. And now computers are no longer its core business because it’s focused on dominating new industries, even if it cannibalise some of its existing businesses.

Food for thought.

The question is, what business are you really in?

Jamie McIntyre is the founder of the 21st Century Group of companies and CEO of 21st Century Education. He is also bestselling author, successful entrepreneur, investor, sought after success coach, internationally renowned speaker and world-leading educator. www.jamiemcintyre.com

Jamie McIntyre is the founder of the 21st Century Group of companies and CEO of 21st Century Education. He is also bestselling author, successful entrepreneur, investor, sought after success coach, internationally renowned speaker and world-leading educator. http://www.jamiemcintyre.com

Author Bio: Jamie McIntyre is the founder of the 21st Century Group of companies and CEO of 21st Century Education. He is also bestselling author, successful entrepreneur, investor, sought after success coach, internationally renowned speaker and world-leading educator. www.jamiemcintyre.com

Category: Business
Keywords: 21st century,21st Century Education,amazon,apple,Book,business,Google,invest,money,Steve Jobs,wealth