You can also look at it as a "scorched earth" strategy.
If an adjacent business can profit, it can build a war-chest and invest that in attacking your niche.
So destroy the potential profitability of their sector by giving away a free alternative.
If an adjacent business can profit, it can build a war-chest and invest that in attacking your niche.
So destroy the potential profitability of their sector by giving away a free alternative.
i.e. can be compared to a form of "dumping" (not quite what dumping is normally, but close enough I think0.