Nine Companies That Destroyed Their Largest Competitors

Google vs. Yahoo!

It is hard to believe that Google (NASDAQ: GOOG), at any point, was not the undisputed leader in the search world, let alone actually just a small part of the market. In the early days of the Internet, search engines like Lycos, Excite, AskJeeves, and others competed for pieces of the pie. By the end of the 20th century, however, Yahoo! (NASDAQ: YHOO) emerged as the leader, surviving the dot-com bubble that dragged the smaller companies under. Yahoo! then purchased most of these for next to nothing. In 2000, the site had 56% of search engine referrals, six times times its closest competitor. Google had roughly 1% of the market in June of that year. In 2001, Yahoo! began using Google’s search algorithm. And as Google began competing for share, Yahoo! began to quickly lose steam. By 2002, the popularity of Google’s efficient engine had grown exponentially. It referred 31.8% of all searches, compared to Yahoo!’s 36.3%. During the the next eight years, Google rocketed to the top, gaining a near-monopoly on the market. According to Comscore, in July of this year, Google had more than 65% of market share, while its closest competitor, still Yahoo!, had just 16.1%.

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Hewlett-Packard vs. Dell

Dell (NASDAQ: DELL) was once the worldwide leader in global PC sales, with 13% of market share. Now-defunct Compaq was second with 11.2% share. Over the past decade, the landscape of the personal computer market has changed dramatically. In May 2002, Hewlett-Packard (NYSE: HPQ) acquired struggling Compaq for $25 billion. In 2005, Dell was still the market leader with a 17.2% market share, but HP was quickly closing the gap with a 14.7% share. In less than three years, by the third quarter of 2008, HP surpassed Dell and it has held the top spot since. By the second quarter of 2011, HP’s lead widened to 5% (17.5% compared to Dell’s 12.5%). Meanwhile, Lenovo has also been gaining market share and is just behind the former leader at 12%. It will likely surpass Dell if its annual growth of 22.5% continues. Dell’s growth was just 3.3%.

Apple vs. Nokia

In the fourth quarter of 2007, Nokia (NYSE: NOK) had more than 50% of the worldwide smartphone market, with Research In Motion’s (NASDAQ: RIMM) BlackBerry at 10.9%, and Apple at just 5.2%. However, Apple, which has been dominating the digital music device market consistently for years, was about to do the same for smartphones in less than four years. As recently as the fourth quarter of 2010 the Apple iPhone still retained only a small portion of the market with a 16.1% share — a little over half that of Nokia’s 28%. But eye-popping sales numbers have quickly driven Steve Jobs’s company into the lead. As of the second quarter of 2011, according to IDC, the company had 19.1% market share with an annual growth rate of 141%. Nokia, which has moved into third behind Samsung, had a 15.7% share, with a growth rate of -30.7%.

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Facebook vs. Myspace

In July 2005, Rupert Murdoch’s News Corporation (NASDAQ: NWS) purchased up-and-coming Myspace for $580 million when membership at Facebook was still restricted to college students. According to Comscore, in May 2007, Facebook’s unique monthly viewers were just shy of 30 million, while Myspace’s were at roughly 70 million. In May of 2009, Facebook met and surpassed Myspace’s unique viewers, which had remained at 70 million. By May of this year, Facebook had nearly 160 million users. Myspace, meanwhile, has dropped below 40 million users and that number keeps falling. In June, Murdoch sold the dying company for $35 million, 93% less than the original purchase price.

Fox vs. CNN

At the beginning of the 21st century, CNN was the dominant cable news network with 800,000 prime time viewers compared to Fox News Channel’s 500,000. The war in Afghanistan boosted the viewership of all of the major news networks, but FNC’s skyrocketed. By 2002, Fox had nearly 1.5 million primetime viewers, while CNN fought to stay above 1 million. The trend continued throughout the decade, and by 2004 it was not simply the leading cable news provider, it was completely dominant. Since 2008, Fox has had more primetime viewers than CNN, HLN and MSNBC combined. As of July of this year, Fox had nearly three times CNN’s primetime viewers, and CNN is now fourth in the ratings.

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