Take a look at a market over time. Any market. Now look at who has the bigger marketshare: The players in the high-end or low-end of the market. In the beginning it will typically be the high-end market that dominates the market. Primarily because the market is new, the technology is hard, the idea is novel, or simply because customers are willing to pay a high price for a new commodity. Inevitably, at some point low-end players will enter the market, and start selling cheaper products. Over time, the low-end players will want to increase their marketshare and the only way to do this is by cutting into the high-end market. Usually by offering better and cheaper products than the players in the high-end market. The high-end players don’t have the option of going into the low-end market because they will cannibalise their high-end market. You can’t all of a sudden start to sell your highly priced product at a fraction of the price and expect to retain your current business.br /br /The graphs shows how a market will develop.br /img src=”http://www.maximise.dk/blog/highend_lowend.gif” /br /br /So the players in the low-end market squeeze the players in the high-end market against the ceiling. Sun did it to mainframes, Intel did it to Sun, Apple is doing it to Avid, and Henry Ford did it to the high-end carmakers of his day. br /br /So aim for the low end of the market, and rest assured that the rest will come to you over time if your product is any good.
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