* Be the good guy, and establish a customer base. Provide low prices, good customer service, etc. Lose money on the razor-thin margins.
* Once you've got a ton of customers, turn evil, and milk your customer-base for all they've got. Engage in every nasty sleazeball tactic.
I've seen this cycle many times, starting with Network Solutions.
People use GoDaddy because they were the good alternative for a while.
I think their business plan is rather: Lure in general population customers via mainstream media advertising, and don't really care about anything else (including their reputation with tech people). No one in tech that I know would touch them with a ten-foot pool. Most of the non-tech people I know are running to GoDaddy when they have to register a domain for their business/project, because they are almost the only ones doing widespread advertising.
Since then, I've gone through 2 more registrars which went down the same path. I'm gradually migrating to AWS since I'm hoping they have the same incentive structure to f- me over in a few years. The way I figure, if my DNS provider is also providing cloud servers, etc. they'll have more incentive to keep me as a customer.