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Extra Revenue That Can Create Your Competition

Interesting debate I heard today. Essentially there is one large company that pretty much dominates a certain industry. As a result they have a very large infrastructure which pretty much services the entire area. If someone new wants to enter into the market they would pretty much lease lines from them to do so as the cost of building your own infrastructure/network to do so would be outrageous. So of course the main company makes money no matter what.

But the debate was would that be the wisest decision if you were that large company? The way of thinking was what happens if that person who say leased lines from you begins to become so big where they can afford to build their own network? Hence, they can then become a serious contender in dethroning you. So while it may have seemed like easy revenue in the beginning it could come back in a bad way.

It almost reminds me of Google. I remember when they were almost a nobody as one day I suppose companies like Yahoo thought that it was a great idea to use their search engine technology on their site. While I’m sure it helped their visitors find relevant web sites and all which equated to more revenue at the same time they helped to create the juggernaut too I’d say. The debate sounded like a game of chess where you want to make the best moves where you will come out on top either way.

I can easily imagine one getting hit with anti competition complaints too if you are too good in controlling the market. So in some ways you can’t really do much as you would want to bring out the competition. I guess if you are a fortune 500 company of sort then you can’t really try too much to limit the competition as opposed to if this was a small local business. As well if you are in the business of supplying resellers with products then it would make no sense to not want them to do well even if they become so big where they can just cut you off after.

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