This model seems to ignore ideas that could be big if you could find a cheaper distribution strategy other than ads, ie social, virality, etc. It also ignores ideas that don't have demand yet.
By this analysis you guys would have likely killed AirBnb and Dropbox.
This is cool and all, but I encourage you all to just find artists you like and follow them on soundcloud / mixcloud / youtube. There is a ton of great electronic music out there that aids in concentration but is actually fun to listen to. I'm not sure how everyone settled on really slow and droney music being great for programming. I find it pretty boring (no offense to the author).
I love SodaStream despite the razor blade model. For me it is not really about cost saving, it's about time and energy saving. Making on demand sparkling water is just much easier than lugging 3-6 1.5 liter bottles of sparkling water up to my 3rd floor apartment ever trip to the market. Maybe this is different for people who can drive right up to their door, but for those of us who live in cities that's often not an option.
Let's not forget all of these N7s come with a $25 Play credit. This is great for Android devs. We've seen a big increase in sales since it went on sale this summer.
I make a living off of Android, and I don't think fragmentation is overblown. Sure, you can make the argument that the PC world has dealt with different screen sizes and hardware specs for a long time, but at least MS was the sole vendor of Windows.
As Android developer you have to deal with myriad of manufacturer and community developed permutations of the OS - TouchWiz, Sense, Cyanogenmod, MIUI to name a few. If you make a widget app like us, you not only have to deal with HTC, Samsung, etc's launcher you have to deal with 3rd party launchers too - ADW, Apex, Launcher Pro, GO, etc.
How about when HTC decides to break multitasking in favor of better battery life?
Personally, I think it's a bit of a double edged sword. A lot of the issues that make Android hard to develop good apps for make it a fun platform, ie the ability to choose whatever launcher or rom you want. That said, you're kidding yourself if you think fragmentation is not a major issue.
By this analysis you guys would have likely killed AirBnb and Dropbox.