It can be pretty strange the way that some companies choose to make money. They start out with a core product or service and maybe they do very well with it, but then they look at how they can grow. They start to think about business expansion and they can end up in circles where they might not belong.
As you may recall, Cisco recently shut down its Flip Video division. Cisco has always been into networking infrastructure and networking equipment, so how did they end up buying and running a division that focused on dumbed-down camcorders? They didn’t really belong in that sphere, so they shut it down.
And then there is Canada Post. They’re in the business of postal services (though there’s not much of that going on with the current strike action), but did you know that they’re involved in comparison shopping too? If you go to the Canada Post website, you’ll find a section where you can shop for an iPod touch, among other consumer electronics, as well as clothing, barbecues, and power tools.
But why? They might be able to make a decent side income from the affiliate deals, since all the “comparison shopping” leads you to e-tailers like Dell and NCIX, but that’s not at all related to Canada Post’s core business. Wouldn’t it make more sense to focus on taking some market share away from other couriers? After all, with the given strike, any purchases that go through the Canada Post Comparison Shopper can’t get delivered via Canada Post. They’re almost (but not really) advertising for alternatives like UPS and Fedex.
Then again, there are many companies that decided to expand their business portfolio and have done so very successfully. Apple really only sold computers for the longest time, but now Steve Jobs and crew are doing very well with cell phones and tablets too, not to mention digital music and movie sales. Sometimes, expansion works.
Maybe this Comparison Shopper is at least generating some positive cash flow for Canada Post as they sort out this whole strike thing. Some money is better than no money.
Cisco made a mistake in not keeping the Flip division alive. They had many of the core managers to run it, it was a cash cow especially when it’s networking infrastructure are actually not pulling in the profit it used to. I have also read that they are looking to dump Linksys, which they haven’t aggressively pushed to the consumer market since they bought it. They don’t smell to have a great strategy in consumer products.
Having other side revenue streams that you don’t need to worry about is a way to keep your vision on your core group. Just look at John Chow and all the revenue streams he has. He doesn’t have to work as hard at his main job as the front man of Social Media because his revenue stream is self sufficient.
As for Apple, moving to smartphones and tablets was the proper move away from a core business of computers because it is what people are more and more moving toward than a real computer. Plus, a smartphone and a tablet are more of a computer than a phone or toy. When was the last time you used your smartphone for more of a voice phone than texting, twitter, Facebook, the internet, apps to track your business, the news, weather, update your blog?