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What are some examples of companies cannibalizing their own business and suffering because of that? Has it ever happened?


Sun, perhaps, with Java. Business-wise, it makes very little sense for a company that makes expensive proprietary hardware to develop a programming language that lets you write once and run anywhere.

The connection is pretty tenuous though - Linux may've eaten Sun's lunch anyway. But it would've been a little harder if we had to port all our #ifdef'd C++ software from Sun servers to commodity Linux Dell boxes, instead of just moving a few JAR files over.


I'm still not seeing that connection, as it lowered the barriers to entry of using their product and gave them the platform to say "we have the best hardware for running Java".


It lowered the barriers to entry for using everybody else's product too, though. I think it probably helped other people more than Sun, though. IIRC, the Sparc had a pretty advanced development environment in the mid-90s, yet developing on/for a Linux system in the same time period was pretty painful.

And they said "we have the best hardware for running Java", but the average business doesn't care. They just want their software to run, cheaply and fast. Everybody I know runs their Java apps on commodity Dell servers. Maybe it was different in the first dot-com boom; IIRC, Sun servers were the big thing back then.


Many chain stores end up doing this. Krispy Kreme had a great business because people would drive an hour out of their way to eat there -- but that means that having two locations within an hour of each other is redundant.


Starbucks does this intentionally. They place franchises within walking distance of each other (in downtown Boston, there are literally 2 Starbucks on opposite sides of the block), knowing that they'll cannibalize each other's sales. But they do it for branding reasons: by placing stores so close together, they make Starbucks ubiquitous and turn it into a cultural phenomenom, which helps the corporate bottom line at the expense of individual franchisees.

It seems to have worked fairly well, at least up until the recent economic downturn.

Dunkin Donuts as well. In my town, there are 3 Dunkin Donuts within a 500 foot triangle. One is standalone, one's in a supermarket, one's in a gas station.


Starbucks does not franchise operations.

http://www.starbucks.com/customer/faq_qanda.asp?name=common


Crossing the street during a morning commute in a busy city is not trivial. There probably is some cannibalization of sales, but they may make up for it with the people who don't want to take the extra minute or two it costs to cross the street during rush-hour.

I'd be interested to see data on this.




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