When I bought my iPad it was very easy to download my new Kindle application to read all my books I bought on Amazon, and I’m sure that Jeff Bezos knows that my Kindle may be replaced. Bezos can do this because he’s not in the book reader business, he’s in the book seller and publisher business (along with many other products). Bezos is not cannabalizing his core.
By the same logic, Microsoft will never win with Bing because it cannot afford to give away as much software functionality as Google does. Google can radically subsidize their Google Docs platform, GMail, and other functionality even at the enterprise level because the advertising model is so lucrative. Like the NYTimes before it, Microsoft will not be able to answer the upstart in the search market because to give away the core product, is too painful — it would be like asking Gillette to give away the razors.
Image source: dsearls