One Company. Multiple Domains. Microsites. Does this work?

The outline of the scenario is as as follows:

  • One company, ‘Competitor A’
  • ‘Competitor A’ already has a main, large website
  • ‘Competitor A’ purchases domains for the most highly searched industry, ‘Product X,’ keyphrases
  • ‘Competitor A’ develops microsites with unique content focused on keyphrase of domain
  • Goal: Try to corner ‘Product X’ market organically within Google, Yahoo and Bing

First and foremost, I see the concept and tactic in this, but I do NOT favor this method by any means. I am curious as to what some of the other SEO guru’s have to say about this subject. I have read quite a few “dated” blog posts and articles regarding this subject, but with the changes in Google’s search algorithm’s over the last few years I haven’t seen any current information on how this tactic is perceived now. I for one would rather develop one large site focusing on all keyphrases related and become the authority compared to developing multiple web sites to serve the same purpose.

What are you opinions?