Internet and the horizontal integration of IT businesses

For information and communication technology (ICT) companies, the business opportunities arising with Internet-based technology products look like the new cash cows. However, their strategic thinking needs to be disentangled from the traditional ICT-providing mindset, to ensure they reap long-lasting Internet technology benefits. The authors' work on the design of IT architectures revealed that in the next few years the market Internet technologies and services is likely to focus on a select number of players that offer a cost edge. To sustain their competitive advantage, ICT companies cannot rely exclusively on their technology competencies anymore. They need to strengthen their relationships with customers and become real service-based organisations. Hence, they need to become proactive at sensing their customers' needs, accompanying products with a variety of services, and, ultimately, enhancing their perceived customer value by adding content to their technology products. The more content they can add to technology, the deeper providers will horizontally integrate with their customers' business. There is evidence that their ability to deploy this horizontal integration strategy in different sectors will be a crucial success factor that will distinguish between commoditized and leading ICT firms.