Horizontal Market Software
Horizontal Market Software (HMS) is designed to serve a wide range of industries or markets. These solutions offer more generalized capabilities that can be applied across different companies and users. Companies and products in this space may be attractive due to the potential for achieving scale.
In contrast to Vertical Market Software (VMS), HMS products have a broad scope and are less specialized to fit a specific industry's needs. Think products like Microsoft Excel.
Characteristics of successful HMS companies include:
- Scale: products appeal to many industries and geographies
- Large market size: products may have a huge growth potential
- Multiple revenue streams: Not dependent on one specific industry or sector
Important Factors to Consider
- Barriers to Entry: features are general and more easily to replicate
- Competition: can result in lower prices/margins
- Lower switching costs: may result in less customer loyalty
- Commoditization risk: products having a large market may lead to free or low cost alternatives including open source
It's important to note that it is possible to overcome drawbacks typically associated with HMS products. Economies of scale and network effects, for example, can raise the barrier to entry.
Companies
Example companies provide HMS products: