At the heart of capitalism derives from competition between companies for the same consumer or business dollar–and the resulting market share. Of course, competition benefits consumers, but it also benefits businesses–by forcing them to become more efficient and innovative in order to stand out from their business rivals.

1. Competition Drives Business
By: Jevin Sackett

2. In the business world, all companies strive to grow their ‘market share’—the percentage of the market
demand for a particular product or service. In fact, the heart of capitalism derives from competition
between companies for the same consumer or business dollar–and the resulting market share.

3. Of course, competition benefits consumers, but it also benefits businesses–by forcing them to become
more efficient and innovative in order to stand out from their business rivals.

4. Which is why it caught my eye when it was revealed this week that Apple Inc. reported 92 percent of total operating
profits from the world’s top eight smartphone makers, during the first quarter of this year. Apple’s ‘iPhone’
generated more than 9 out of every 10 dollars of profit in the lucrative smartphone industry during the first quarter of
the year.

5. An Apple rival in the technology sector is also establishing eye-catching dominance in its field; Google Inc. has
become the dominant force in many tech-based sectors, including its overwhelming 67.6 percent market share of
the search engine world. Google also has a dominant presence in the online advertising, browser, email and video
markets.

6. I applaud Apple and Google’s impressive ability to produce high quality tech products and services that are much in
demand. These are two American companies that have achieved worldwide success in large part by offering their
customers quality products—which have, to a large extent, also transformed the way the world communicates and
conducts business.

7. However, as someone whose rapidly growing entrepreneurial business has to—and chooses to—
compete against many other large, national companies, I am also well-versed in the important role
competition plays in spurring our company towards success.

8. Whether it’s providing state-of-the-art software solutions to our clients in the financial services sector, automotive,
employment screening or retail energy industries, we at SNH recognize that complacency is unacceptable; our
customers have choices, and we can’t—and would not—ever assume that they will remain our clients unless we
can offer them innovative, quality products and services.

9. The level of innovation that Steve Jobs and his team showed by creating the iPhone was born out of
competition, and an entrepreneurial desire to think outside the proverbial ‘box’; Google also became a
dominant player in the world’s tech sector through innovation born of entrepreneurial competition.

10. But when any one company grows so large as to dwarf its competitors—and, as a result, its
competition—will that dominance result in less innovation? There are legitimate reasons to
believe so.

11. Innovation is, by its very nature, born out of a company’s need to delineate itself from its competition; to
be able to say to clients—and potential clients—‘we can offer you a superior product or service, and do
so at a competitive pricing level.’

12. All businesses–even companies that produce desirable products and services such as
Apple and Google–that no longer have to be concerned about fierce competition, rarely
remain hubs of innovation.

13. If it’s true that ‘necessity is the mother of invention’, then it’s equally true that competition is likely
invention’s father. And frankly, any company that no longer feels the need to worry about its competition
is more likely to become an ‘orphanage’, than a parent, to new inventions.

14. For all its perceived flaws, capitalism encourages competition, and that, in turn, encourages businesses
to take risks; and few, if any, great innovations were ever achieved without some degree of risk.

15. Still, perhaps it is just the natural evolution of business that successful start-up companies often grow to become
dominant players in their industries. Reaching this point takes hard work and involves a corporate commitment to
taking calculated risks, which include innovative technology.

16. Some critics of Apple and Google say that as those two companies have grown into international corporate
giants dominating the tech sector, their capacity for innovation has diminished; although they both no doubt
employ smart, innovative people, the tech giants have become so big that they are more concerned with
protecting—rather than growing—their market share.

17. Je
As it always does, Time will tell whether or not Apple and Google’s most innovative days are behind
them. But even if they are, you can rest assured that somewhere out there is a ‘hungry’ entrepreneur
working on a new, innovative product, which will ultimately result in greater competition for the Apples
and Googles of this world.