A dominant technology company sees its core franchise threatened by a new platform and responds with heavy spending. The market punishes the cost first and judges the strategy later. Half the time the incumbent comes through stronger; half the time it spends its way to irrelevance.
IBM poured investment into PCs, software and services through the late 1980s as the industry's value shifted from mainframes to microprocessors and operating systems it did not control.
What happened next: IBM posted an $8 billion loss in 1993, then the largest in US corporate history, and ceded leadership to Intel and Microsoft before reinventing itself as a services company.lost leadership
Nokia spent heavily on Symbian and later on a Microsoft partnership as the iPhone and Android redefined the handset.
What happened next: Market share collapsed from roughly 50% to single digits and the handset business was sold to Microsoft in 2013.lost leadership
Microsoft spent billions on Bing, Windows Phone and online services to defend against Google and Apple, with years of losses in the online division.
What happened next: It lost mobile but kept its enterprise franchise, and the cloud business built in the same period made it one of the most valuable companies in the world a decade later.defended position
After its IPO Facebook admitted it had almost no mobile revenue and rebuilt the product around mobile, spending on infrastructure and acquisitions while the stock halved.
What happened next: Mobile advertising became the core of the business within two years and the shares rose more than five-fold from the low.defended position
Share of the 4 cases above that resolved this way. Small samples: treat as a prior, not a forecast.
Revenue rose 25% and Google Cloud doubled, but third-quarter capital spending of $51bn and a $9.07bn cash outflow told investors the AI build-out is now being paid for with the balance sheet.
