4 ms·

>In the end what matters in business is sustainable profit not marketshare. With network effects and other market effects, sacrificing profit for marketshare f

>In the end what matters in business is sustainable profit not marketshare. With network effects and other market effects, sacrificing profit for marketshare for years/decades might be the longer/smarter play. For example, Amazon is happy to undercut their competition and lose money for years. Is that a bad decision? Remains to be seen, but if they'd focused on sustainable profit, I suspect they'd have a lot more competitors. Walmart jumps into a new small-town and buries their competition with non-stop deep discounts. Competition closes, Walmart now has tremendous power to price however they want. I think Apple's appetite for profit is awesome, but it leaves less room for their "partners" (carriers), which means every other player in the marketplace has incentives to push Android/etc. Result: http://www.statista.com/chart/1099/smartphone-operating-system-market-share/ http://www.statista.com/chart/1099/smartphone-operating-syst... And from the existential side of things... Would you REALLY rather have the 40% margin business that owns 5% of the market or would you rather have the 1% margin business than owns 95%? Either way, you're a gazillionaire. I'd personally rather impact more lives.

gress 13y ago
It sounds as though you think the best way to impact more lives is to use predatory pricing to drive the competition out of business in order to establish a monopoly. It's logically true that this might work as a strategy, but it's rather depressing.
- webwright 13y ago
  Walmart certainly takes it to predatory levels. I only used them as an example of what can happen to businesses that focus on "sustainable profit" above all else. I'm not sure the strategy of "earn zero-to-no profit to gain market share and scare away potential competitors" is inherently evil or predatory (though it certainly can be).
  - gress 13y ago
    I think that the reason why it's problematic is that it is focused on reducing diversity of competition, which reduces the number of ideas that get developed and tested in the marketplace and retards progress.

gress 13y ago

It sounds as though you think the best way to impact more lives is to use predatory pricing to drive the competition out of business in order to establish a monopoly. It's logically true that this might work as a strategy, but it's rather depressing.

webwright 13y ago
Walmart certainly takes it to predatory levels. I only used them as an example of what can happen to businesses that focus on "sustainable profit" above all else. I'm not sure the strategy of "earn zero-to-no profit to gain market share and scare away potential competitors" is inherently evil or predatory (though it certainly can be).
- gress 13y ago
  I think that the reason why it's problematic is that it is focused on reducing diversity of competition, which reduces the number of ideas that get developed and tested in the marketplace and retards progress.