I get the point you're making but this specific example strikes me as so backwards that it's making me question the point being made in the post.

In my experience, one of the most reliable heuristics for finding a place that makes good sandwiches is "go to a place that's a good bakery and see if they make sandwiches".

I can't think of a time I've gotten a sandwich from a (good) bakery where the sandwich wasn't at least quite good, and frequently, very very good. On the flip side, if you just buy a sandwich from a dedicated sandwich shop? On average it will be bad. There are excellent sandwich shops, for sure, that do not bake their own bread. But there are very few bakeries that make sandwiches that do not make extremely good sandwiches. (Subway doesn't count: they are not a bakery, in that they do not sell bread or other baked goods. They only produce their disgusting "bread" to enable them to sell sandwiches).

It also strikes me that this argument is essentially the inverse of the Alan Kay line "People who are really serious about software should make their own hardware" that Apple people are always quoting.

I think perhaps the Sandwich Fallacy lacks explanatory power, because the Stack Fallacy does as well. I think if the reason why big companies consistently fail to win markets in which their customers compete was because of the points made in the post, then we would see evidence that big companies are disproprotionately successful at winning markets in which their suppliers compete, the layer _below_ them in the stack: "The bottleneck for success often is not knowledge of the tools, but lack of understanding of the customer needs." the companies that build these sandwich-filling layers are the customer, they understand this quite well, but I don't think they generally succeed at this. So there must be something else at play.

I also find the examples in the article unconvincing:

"Apple continues to successfully integrate vertically down — building chips, programming languages, etc., but again has found it very hard to go up the stack and build those simple apps — things like photo sharing apps and maps."

Apple's photo app is extremely popular. Apple's messaging app, Messages, is so compelling it continues to sell Apple's ludicrously expensive devices. It's literally a Killer App for iOS, in the Visicalc mode. Apple has been building top-tier first party applications for it's platform since the 1980s. For iOS, it's Photos, Messages, Notes, Music, and Safari (I'm not arguing that Safari isn't terrible, or that Apple isn't holding back the progress of the entire open web via failing to make progress on Mobile Safari (they are). I'm simply arguing that it's undeniably successful.) Before the mobile era it was the 'digital hub' apps like iPhoto, iMovie, Garage Band. In the 'productivity' era it was ClarisWorks. In fact, it's so common that there's a slang term for when Apple-the-platform-vendor starts to compete with it's application developers and uses its structural advantages to win the market: "Sherlocking".

"It is therefore no surprise that Apple had an easier time building semiconductor chips than building Apple Maps."

Did they? They bought PA Semi a zillion years ago. Apple Maps had a rocky launch but now it's quite good. I concede I have no evidence that it's popular or successful in the market. It looks to me like Apple was successful in both categories.

"In the 1990s, Larry Ellison saw SAP make gargantuan sums of money selling process automation software (ERP) — to him, ERP was nothing more than a bunch of tables and workflows — so he spent hundreds of millions of dollars trying to own that market, with mixed results. Eventually, Oracle bought its way into the apps market by acquiring PeopleSoft and Siebel."

I mean, sort of? Oracle is an absolutely dominant player in this market category now. They got their through the usual mix of Oracle chicanery. You know where Oracle is struggling? All the layers _below_ them.

So I think it's pretty safe to reject the Stack Fallacy and the Sandwich Fallacy. There's clearly a pattern where big companies fail to win markets of their customers as well as markets dominated by their suppliers, which is confusing given the strategic advantages they would have expanding in either direction, but I would argue that if there are common structural explanations for this, the proposed explanations are not correct.

I guess I just think it's funny that when I skimmed the initial post I just thought "hmmm, maybe?" but when I read your sandwich analogy I was like "oh, right..this doesn't make any sense. Bakeries make awesome sandwiches, almost always!" and I started thinking about it more. Whereas if you made the same point with almost any other example I would have probably been like, "yeah! This guy's right! None of the best ice cream shops are also dairies! None of the best coffee shops are also coffee farms! I've never seen a successful textile weaver start a line of pants! None of the best...tire stores...also...produce industrial rubber compounds?" I don't know. So it's a funny choice.