Okay, understood. If people desert your widget because of low marketshare, and you go out of business, you have a point.
But if a company is wildly successful, addressing a small segment of the marketplace, why is that considered bad?
It isn’t, but it does narrow your survival path. What happens if that market goes away, either from you or in general. Think of it like being king of the two way text pagers 10 or 12 years ago, it was a narrow market but highly profitable, then texting became a checkbox feature on cellphones (even non-smart phones) and text pagers are now on the ash heap of history, had Research in Motion (who were the kings of two way text) not had the BlackBerry in the cell market when paging died they’d have died too.
And right now in the smart phone market there’s the chance of over fractionalizing. Most tech markets have room for 2 or 3 competitors, right now there’s 5 majors plus some clear also rans. 2 or 3 of those majors are toast, depending on how diverse their company is that company could be toast. One of the fun parts about markets in general and the tech market in particular is wildly successful today doesn’t necessarily mean anything tomorrow. 18 months ago nobody though anything would knock iPhone off the top of the mountain, now the numbers make it pretty clear iPhone is no longer on the top of the mountain.