Reed Elsevier(RE) reported their year-end 2005 results on Thursday; Thomson the previous Thursday. Both companies have four divisions, three of which parallel each other (Legal/Regulatory, STM, and Education). They differ in that Thomson has a financial division, and RE has a business publishing division. The divergent strategies of these two publishing giants can be illustrated by comparing the two divisions that do not overlap, among other things.

Both companies recognize the need to transform their businesses from their original print publishing businesses to digital content providers and that a critical element of the transformation depends on providing content in the formats and venues that fit with the users' work processes. Delivering on this goal requires internal technical investment to transform legacy production systems, as well as investment into understanding the core applications of the users who ultimately pay for the information provided by the publishers.

Both companies are following these basic objectives; however, they differ in their approach in a few key respects. Thomson is far more focused on developing a platform that they hope users will adopt as their primary resource for external reference information. By means of data mining tools, users of the Thomson Pharma platform, for instance, can follow guided pathways through the large repository of data to extract a collection of relevant information. Compare that to Reed Elsevier's approach, which one could characterize as a more specialized user approach, where data and delivery tools are customized for specific markets. Furthermore, revenue models are more customizable in the RE approach. To circle back to the original point above, consider Thomson's tactic of selling off all advertising-supported content in its financial division to focus on subscription-based electronic services. RE, on the other hand, is benefiting from the growth in online advertising in its Reed Business group, and even its Elsevier group is in a position that conceivably could lead it toward more online advertising-supported revenue.

Both companies are under pressure to demonstrate the success of their product and service strategies through organic growth. Investment analysts understand that organic growth requires investment in internal systems and product development efforts; however, they also require certain rates of return on their invested capital. For 2005, RE edged out Thomson in terms of organic growth by a single digit, with 5% organic growth versus Thomson's 4% organic growth. At this point, it is not apparent that one company's strategy will trump the other's in the longer-term. But, it will be interesting to observe how the different strategies evolve over the next year or two.