This reminds me of a vendor of networking products that we could call L. They ended up with a portfolio of machines that were almost perfect for handling all the dial-up traffic an ISP could want, with good management and reference designs and consultants ready to show you how to start or grow your ISP with many many points-of-presence.
And they sold their expensive equipment and made lots of money, only it turned out that many ISPs couldn't really afford all this upfront, and it made sense for L to operate a financing company itself and finance the purchases of the expensive hardware. There was a huge and growing demand, and if an ISP defaulted, well, L could take back the equipment and refurb it and sell it to the next company that came along.
Only when the market actually saturated, there was L holding all these valuable financing agreements backed mostly by the hardware that nobody new wanted to buy.
I am curious why you used the mysterious L in your comment instead of referring to Lucent by name? None of what you wrote was libelous. For people not around at the time it will not be obvious who you are referring to. As a result only the "cool older kids" know who L is and it makes it hard for newcomers to learn about the history of the industry. Personally I do not think hacker news comments should be written in such a way as to reinforce boundaries and segregate "people in the know" from the unwashed masses.
Because it doesn't really matter which company L was: the point applies across markets. When you finance all of your sales with only the products you make as collateral, market failures come easily.
And they sold their expensive equipment and made lots of money, only it turned out that many ISPs couldn't really afford all this upfront, and it made sense for L to operate a financing company itself and finance the purchases of the expensive hardware. There was a huge and growing demand, and if an ISP defaulted, well, L could take back the equipment and refurb it and sell it to the next company that came along.
Only when the market actually saturated, there was L holding all these valuable financing agreements backed mostly by the hardware that nobody new wanted to buy.