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Vertical versus Horizontal


I'm not too much affiliated with the business world, thats why I need some help with the terminology.

I know a vertical merger means a merger with say a supplier, and a horizontal merger means one with a competior. But if seen these words used in other ways which I could not intrepet. Could someone clarify what exactly the words vertical and horizontal mean in the business world?
Friday, March 25, 2005
I think vertical refers to a chain of cutomer/suppliers.


I buy a car from a dealership who buys the car from Honda, who buys parts from ACME parts.

So moving from one to to the other is moving vertically.

Horizontal, I'm less clear on.
Mr. Analogy {uISV owner} Send private email
Friday, March 25, 2005
Vertical can also mean a particular industry or sector, ie, "Oil & Gas" or "Auto manufacturing".  In this sense, vertical aligns with SIC codes.

Horizontal would be a categorization that cuts across verticals, ie, "Windows system administrators" or "Accounting managers".
D. Lambert Send private email
Friday, March 25, 2005
With respect to market segments, going vertical means targetting a group of customers who are all in the same industry.  For example, a vertically targetted ISV might go after Financial companies or Manufacturing companies.  Each one of those examples represents a vertical market.

Targetting a Horizontal market segment means making your products or services available to a variety of different companies that do totally different things.  For example, Windows XP has broad Horizontal appeal because it's in use by all kinds of businesses, consumers and even students.  Totally different types of users.
Hamid Shojaee Send private email
Friday, March 25, 2005
When I sold Sun hardware, vertical scaling meant that you could add more CPUs, RAM, etc to one machine. Horizontal scaling meant adding more smaller machines.

The web tier of a 3-tier solution should scale horizontally (more load = more servers). The DB powering the backend should be on hardware that scales vertically (more load = more RAM, CPUs, etc).

Friday, March 25, 2005
"...For example, a vertically targetted ISV might go after Financial companies or Manufacturing companies...."

Hmmm.. Manufacturing doesn't quite jib with my own sense of vertical.

You could be manfucturing cars, or PCs.  One is the PC market, the other is the automobile market.

Perhaps we should be using INTERFACES not INHERITANC-HEIRARCHIES to describe these ?<g>
Mr. Analogy {uISV owner} Send private email
Saturday, March 26, 2005
Here's a good link to a GOOGLE ANSWER on this:


is a graph with a vertical axis which is CORPORATE LAYER/FUNCTIOn and horizontal axis which is INDUSTRY.

So you might have:

MANUFACTURER    Ford                   
PARTS DEALER    Acme Parts
SERVICE        Jimbo's Repair
SALES          Smarmy Bill's Auto Sales

                  Automobiles  Furniture

Searching Google brought up the following results: 

According to Investorwords.com, a horizontal market is:

‘A market which meets a given need of a wide variety of industries,
rather than a specific one: for example, word processing software’.


The same site classes a vertical market as:
‘A market which meets the needs of a particular industry: for example,
a piece of equipment used only by semiconductor manufacturers’.


So, for example, most software is usually sold to multiple HORIZONTAL markets.  I.e., a Bug Tracker used by Automobile software companies, architecture software companies, etc.  Or Quickbooks - used by The accounting dept of just about any sort of business.

My own sense is that if two customers don't have a RELATIONSHIP (ideally, supplier-customer) then they're horizontal.  They might perform similar functions (accounting at a automobile company or at a chemical company). But they could be unrelated, in which case the "horizontal" classification becomes meaningless.
Mr. Analogy {uISV owner} Send private email
Saturday, March 26, 2005
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Sunday, March 27, 2005

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