The physical origin of the high initial permeability, μi, in Fe based films with a large magnetocrystalline anisotropy and magnetostriction is systematically discussed in connection with the microstructure of the films. In order to decrease the local anisotropy fluctuation to determine μi, a decrease of the effective magnetic anisotropy, Ueff, of each grain mainly caused by sufficient reduction of the grain size is required. Induced uniaxial magnetic anisotropy energy, Ku, plays an important role to decrease Ueff through the micromagnetic interaction. The ratio of Ueff/Ku is proposed as the important key to analyze the magnetization process. The dependence of μi on Ku is classified concerning for Ueff/Ku.