How has the strategy of giving away a core product to make profits on a complementary product influenced business models of companies like Gillette and Microsoft?

The concept of shifting profits from one product to another, as demonstrated by companies like Gillette and Microsoft, challenges traditional business strategies by focusing on the profitability of the entire product ecosystem rather than individual products. This approach allows companies to strategically adjust prices and margins across their product portfolio based on market conditions and competition. For instance, Gillette practically gives away its razors to earn substantial profits from the complementary product - blades. Similarly, Microsoft barely profits from consoles but makes up for it with the sales of games and services. This strategy can protect overall margins even when competition intensifies.

Companies like Apple and Amazon use a variety of strategies to increase customer willingness to pay and decrease employee willingness to sell. One such strategy is the creation of complementary services or products. By offering a core product at a low price or even for free, these companies can increase the perceived value of complementary products, thus increasing the customer's willingness to pay for them. This strategy also helps to protect overall margins when competition intensifies. Another strategy is the continuous innovation and improvement of products and services, which not only increases customer willingness to pay but also fosters employee loyalty and decreases their willingness to sell.