Intel Corp (INTC)

[wbmw]

the difference between horizontal vs. vertical, IMO, boils down to quantity vs. quality.

That's not necessarily true. While it is true that horizontal model comes with quantity, with more entrants competing for differentiation, improvements in quality tend to emerge as well.

With the vertical model, a company needs to get it right on all tiers of the model. It needs an robust OS, an impeccible design, a broad software environment, and continued innovation in the components. Apple got the formula right with iPad, but as it has created a walled garden, it is now incumbent upon Apple to continue getting it right year over year - because there's no alternative if they fail on any one of the tiers. That's why blowback on iOS6 was so harsh. A few bad apps affected the perception of the entire platform. IMO, Apple will continue to do very well with their loyal base of the market, but they will struggle to maintain dominate market share as others vie for the same markets.

Meanwhile, as Intel ramps the horizontal players to compete, some of them will emerge as market share leaders, either because they can cut costs better, or design form factors better, or extract performance better. It's a rich ecosystem of choice, and does not at all imply lack of quality compared to the vertical players.