Enter an established market with a product that is "good enough" and free. (Gmail)

Every product in every market only has a couple of passionate users. Everyone else is kinda ok with whatever, ya know? So the majority of users switch to the free product.

The people who charge for their version of the product are left with nobody onboard except the die-hards, who can't/won't pay enough to sustain the company. And Poof! The company is either acquired by some misguided twit who thinks they can consolidate all the remaining users from all the dying products, and somehow manage a heroic last stand... and then they die too. (Or fall into obscurity.)

Google, in the mean time, has been iterating and building ever-better versions of their app, and now has oodles of really tasty Big Data on the back-end, which people pay them for.

They then release a slightly improved version of the app and charge a nominal fee for it. (Google Apps for Business)

Now Google is making $.50 per user on 600m users, when the products that used to be in the market got $5 from each of their 25,000 users.

Google wins.