|
Microsoft had their own email service, then hotmail came along and ate their lunch. What'd they do? Bought hotmail. And for a premium price; when they were first offering smaller amounts the Hotmail founder told them to go pound salt. Made his investors nervous, but held out for good money because he knew its far more expensive to be an also-ran than someone who has whats known in marketing terms as 'First Mover Avantage'
Consider this; there was a time when Chrysler minivans were just tall K cars. Same 2.2 liter engine, same crappy components. But Chrysler held the #1 minivan spot for over a decade even as savvy competitors like Honda were making better product. Why? They were the first to hit the mass market with it.
This aquisition is a smart move for Google for the same reason - its cheaper in the long run to snap up the First Mover and grab their fanbase than try to start from scratch.
Ironically enough, the only exception is when your product is far and away more effective than pre-existing competition, as Google was when it entered the search engine market. yahoo, Excite, Go.com, and a million others were fighting over share but all their engines were dog slow and dogshit dumb. Back in the day Sergey and Larry tried to sell their creation to Microsoft or Yahoo for $1 million, but both said that was too expensive to buy a product made by Stanford university students still in school. D'oh!
|