I believe it could and already does work for large companies, but differently.
It works so well that we take a lot of it for granted. Look around you, do you know of any big company that came along, offered something with such seemingly good intentions that their offering made the competition look like crooks? I'm sure we could come up with a few examples. Off the top of my head:
- I'm reminded of the days when hotmail would delete my emails without my consent, because I was going beyond the 2mb they were giving me. While they were trying to get me to pay for 200mb, gmail appeared out of nowhere with a red cape and saved me with a free 1Gig that quickly turned into 2Gigs. How could I not look at Google like a superhero and at Microsoft like the villain?
- Similarly, while I visited France a few years ago, I saw that they had this system called the Freebox (http://en.wikipedia.org/wiki/Free_(ISP), http://en.wikipedia.org/wiki/Freebox), that literally revolutionized telecom in a country otherwise very conservative when it comes to technology. Free's offering was so compelling that it created a real disturbance that dramatically affected market pricing (tv, telephone, internet). Even now, in North America we have to look hard to find equivalent pricing and I'm not even sure we can come close. At the time it started the Freebox, Free came like a liberator and in the process racked up subscribers and made billions.
I think we're talking at cross-purposes :-) Did you donate any money to Google or Freebox because of their kind and generous offers, or did you use their free service and just expect them t figure the money part out themselves? (For what it's worth, I switched to GMail and I sure as hell didn't pay Google any money for it voluntarily!)
You're talking about amazing smash-it-out-the-ballpark-and-out-compete strategies. I'm talking about being generous for no obvious reason and letting it float back in on the tide.
Note that this certainly would not work for a large company - it only works for a (very) small-scale outfit.