1) DEC also had bumper years just before they failed. That's a common pattern, according to Christensen (and his empirical data), caused by the incumbents' retr

1) DEC also had bumper years just before they failed. That's a common pattern, according to Christensen (and his empirical data), caused by the incumbents' retreat upmarket (away from the new threat) - where the margins are higher. For Google, this is optimizing its advertising reach and effectiveness. I haven't checked trends, but I'm sure that over time higher margin goods have began advertising online, and the competition for ad ranking has increased, bidding up google's price (they worked that system out well). Overturning everything, in order to match a competitor, is a sign of something. As facebook figures out how to use its data to sell to people, it can target advertising more effectively than google's approach can. I think facebook is a threat because you can advertise better the more you know about your audience - google's been gathering personal data, but they aren't in the same league as facebook (and I get the impression they haven't exploited it as effectively as they could). i.e. it's not really a contest between two companies so much as between the approaches they champion. Of course, Google is trying to become a champion of social; so the second issue is whether google can beat facebook at its own game. Christensen found that incumbents practically never win this. It's because they are not incumbents in this new approach - here, facebook has had years of experience in social, of the technology, of the needs of people, how to address them, what works, what doesn't, and an organizational structure with values shaped over time around improving those issues, and synchronized to the rhythms of that business - and of course, astonishing marketshare and mindshare. Google beating them is like some other company beating Google at search. It's really hard to do, because there are so many advantages that an incumbent can build up over time. It's different for "sustaining" technologies (which support the same way of doing business, same market, same values) - incumbents almost always win those. For example, if a new way of doing search came along, totally different from PageRank, google would likely still win that: they have habits of customers and advertisers; they have engineers that are great at doing it; and their whole organization is naturally galvanised around any such technology. Everyone involved would be excited about this new technology, because that's what they were hired for. They would probably also try to buy the competitor, paying whatever it took (which wouldn't be that high, since they'd be on the lookout and would catch them early). 2) Thanks for your insight on costing those innovations. Unwillingness to adapt is bad sign (i.e. change infrastructure). It makes sense: google's infrastructure is great. Excellent technically, and a world-beater when applied to Google's way of making money. It might not be valuable for other approaches, other ways to make money in other markets, based on other values.