Service companies definitely understand business problems better than product companies. Case in point: I've been talking a lot lately to both kinds of companies about innovation. When you ask vendors the question, "How do you approach the innovation process?" service companies, on average, say something about business problems first. Product companies, on average, talk about technology.
By no small coincidence, many product companies are now trying to figure out the kind of solutions in which they might play a role. That question has two sides: