Grove wrote a book on this called "Only the Paranoid Survive". Terrible title. Good book. He points out that if you own the low end, you gain huge economies of

Grove wrote a book on this called "Only the Paranoid Survive". Terrible title. Good book. He points out that if you own the low end, you gain huge economies of scale. You pay for your foundries and R&D with cheap low-end parts, but only barely. Nobody can compete, because they don't want your rubbish margins. But then you can put huge margins on your high-end products by using cost-cutting technology and your huge efficient factories to lower your costs. It doesn't work in all industries. But it's great in technology, as efficiences of scale do exist (what's the maringal cost of 1 more chip, or one more CD-ROM?)