I feel like I often discover things, which seem obvious and perhaps I have always known them but something suddenly re-crystallizes them in my mind.
One such realization was that when a business, especially technology business, reaches maturity, they often have only one or two cash cows. These continue to bring them large profits every year with very little real innovation. Some obvious examples:
Google – Adsense on search engine traffic
Microsoft – Windows and Office
Ebay – auctions
Experian – credit reporting
I guess this fact should be fairly obvious, but it does lead to a couple of interesting things. Firstly these guys will not do anything new that might rock their cash cow revenue stream. This means that they are often not as innovative as startups even with their much greater resources. Also they collect so much money that it is relatively easy for them to just buy new startup that prove a point in their space or threatens their cash cow.
This is a short post. I feel like the whole cash-cow analysis could go a lot further. I would personally love to come up with a way of attacking a large, non-innovative companies cash cow.
One way of attacking cash cows is by using new trends and advancing technology to find an exposing weakness. For example Office could be attacked by the emergence of more advanced browsers, standards and broadband infrastructure through creating web office. This kind of trend based disruption has probably mean the main downfall of cash cows (this is mostly my definition of disruptive products but I know people have other definitions as well).