Growing the Business - Deep or Wide?

Reading through an HBR case for ITMgmt, on Merrill Lynch's decision to aggressively move to online services (1999), it highlighted an interesting contrast in strategies.  On one hand, they talked about aligning their services in a vertical manner, "holding more wallet-share of the existing customers".  This model is less expensive for customer acquisition, but it adds the cost and complexity of providing greater value through an integrated set of products.  On the other hand, Merrill Lynch set huge 2005 growth goals with these new services, and the only way to reach those numbers would require them to aggressively add new customers, outside of their sweet-spot customer segments. These new customers were typically younger customers, with net-worth less than $75,000, and more familiar with online transactions through low-cost providers like Charles Schwab (this was pre-eTrade, etc.).

Some questions come to mind:

• Can both strategics co-exist in the same organization, especially with different capture models and different margin models?
• Does one model work better with new products than with existing products?  
• Is this just a matter of market segmentation, and not really two different strategies?
• Should a company go-to-market for new customers with a deep vertical offering, or should they initial start with a simpler model to ease adoption by new customers? 

Both my previous and existing company are both going this dual strategy challenge, so I'll be very interested to see how the discussion in class, with viewpoints from classmates experience, matches or diverges from my experiences.