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Market segmentation is serving different segments with different products; what you're talking about is market abandonment ;-)

It's true that it has served Apple incredibly well recently... but it nearly killed them once.

There was a very interesting talk at the business of software conference of 2009 by Geoffrey Moore:

http://blog.businessofsoftware.org/2010/03/video-of-geoffrey...

that talked about innovation and how you need to out-differentiate to stay on top of the game; the position you never want to be in is to be "best in class" because best in class is for suckers: it consumes enormous amounts of resources for luxury features that customers won't pay for. You want to be out of this world (or good enough).

What Apple did to Nokia is they invented a completely new product that was much more than a "phone"; what is happening now is that

1) Android is becoming "good enough" (even Windows phone, according to some pundits)

2) Apple doesn't seem to care about "goodenoughness"

3) but Apple's products are not an order of magnitude better, as they used to be. They are flirting dangerously with best-in-class territory.




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