The last 10 years have seen several big technology launches biting dust. Launched with much fanfare and riding on lofty predictions, these products / companies failed to excite customers. The decade also saw the downfall of some big technology brands due to lack of foresight or strategic miscalculations. Time magazine recently brought out a list of such products / companies that according to it were the biggest tech failures of last decade. These products / companies clearly missed the mark of living up to the potential that their creators expected, and that the public and press were lead to believe was possible. So, here's over to the 10 biggest technology flops of the past decade.
Topping the list is Microsoft's operating system Vista released worldwide on January 30, 2007. The most recent generation of the company's flagship product operating system, Vista was aimed to improve the security of the most widely used PC operating system in the world. However, according to most software reviews, the securities features were not much better than the previous versions of Windows. The fact that Vista came with its own list of hardware requirements for the users too acted as a dampener in the operating system's popularity. Many analysts even claimed that Vista ran slower on PCs than XP. These factors prevented Vista from taking over from its predecessors, according to the magazine. According to research site Net Applications, as of last month Vista's global share of PC operating systems was less than 24 per cent, while Windows XP had 62% and Apple's OS X product had over 9%.
Second biggest failure of the past decade is
Gateway according to Time's list. Founded in 1985, the US PC major was bought by Acer in August 2007. One of the most successful PC companies in the US, its sales quadrupled in 1990. By 2004, it was No. 3 in US market share behind Hewlett-Packard and Dell and had 25 per cent of the retail PC business. However, the company's reluctance to enter the laptop business cost it dear. In fact, it is considered one of the main reasons for its downfall. The company failed to gauge technology shift and move top portable computers as fast as its competitors could. And by 2007 Gateway was in such poor shape that Acer was able to buy it for $710 million. Gateway was also slow in entering the business of selling PCs to enterprises. The company tried to diversify by moving into consumer electronics, but the profit margins were small and this decision only hurt the firm's margins.A prominent tech research firm wrote when Gateway was sold, "The $710 million price tag is quite a comedown from the mid-1990s, when Gateway and Dell were spoken of in the same breath and commanded mega-billion dollars in market capitalisation."
The year 2008 saw the death of
HD-DVD, putting an end to the long-going high-definition format war. At Consumer Electronic Show in January, just hours before the HD-DVD group was due to hold a press conference, Warner Bros film studio announced that it was withdrawing its support for HD-DVD, and instead would be exclusively backing rival format Blu-ray. Warner Brother's defection spelled the end of the line for the North American HD DVD promotion group, which had been backed by Toshiba and Microsoft, among others. And by February, Microsoft too announced that it has stopped making the HD-DVD add-on for its Xbox 360 console, while Toshiba also said it would cease production of HD-DVD players. This made Sony's Blu-ray emerge as the defacto standard for next-gen high definition. Industry analysts estimate that Toshiba lost almost $1 billion supporting the format before abandoning it in 2008. According to analysts there are several factors that led to HD-DVD format lose out to Blu-ray. The most commonly cited explanation, according to Time is that Sony did a better job convincing major film studios to release high definition editions of movies for Blu-ray. Sony owning one of the largest studios also helped the company.
Vonage is regarded as the grandfather of
voice-over-IP (VoIP). However, today the US-based company is hardly a footnote in the growth of the industry which is currently dominated by products from cable companies and free services, says Time. The company went public on 24 May 2006 at a price of $17 per share, and dropped 23.5 per cent to $13 the following day. The closing price on 15 December 2008 was $1. Lawsuits over some of its intellectual property cost the company millions of dollars. Vonage's business has been going from bad to worse, with its operating revenue in the first quarter of this year only standing at $224 million. Vonage is no longer growing. In contrast, cable giant Comcast now has 6.8 million VoIP customers and added almost 300,000 in the last quarter. Analysts blame Vonage's consistent overspending on marketing as one of the company's problems. Some also point out the company's inability to find alternative revenue streams or applications to use its VoIP networks and capabilities as an impediment to success.
YouTube is the world's largest video sharing site. According to comScore, 99.7 million viewers watched 5.9 billion videos on YouTube.com in the US during March 2009. However, the fact that the company despite being a no. 1 and huge user base is still struggling to make profit is what makes it a part of the list. YouTube was bought by Google in November 2006 for $1.65 billion. However, according to Time article, "YouTube has not come up with a model to make money by either selling advertising or charging for premium content, even though it has an a enormous audience and library of content." In its regulatory filings, Google has said that YouTube revenue is "not material." Recently, Credit Suisse estimated that YouTube could lose as much as $470 million in 2009, despite generating $240 million in revenue for a 20 per cent year-over-year (YoY) increase. Even though YouTube is the clear leader in the online video market with about 41 per cent share of total domestic video streams, monetization remains a challenge, according to Credit Suisse. Compounding the problem is YouTube's considerable expenses, including the cost of bandwidth, content licensing, ad-revenue shares, hardware storage, and sales and marketing, which equal roughly $711 million, landing the video site in the red for this fiscal year.
Microsoft's Zune was launched in November 2006 as an rival to Apple iPod which had been in the market since 2001 and dominated the multimedia player and music download business globally. The software giant managed to get the four largest music labels to sign licensing agreements with the company. However, the company could not manage to excite customers. According to Bloomberg Television, between the launch date and mid-2007 only 1.2 million Zune players were sold. In May 2008, Microsoft said that it had sold two million players since its launch. The Wall Street Journal reported that revenue from the Zune player was $85 million during the 2008 holiday season compared to $185 million in the same period in 2007. Apple's iPod revenue during the last quarter of 2008 was $3.37 billion.According to recent reports, Microsoft Corp plans to launch a new version of its Zune portable media player later this year, incorporating high-definition video, touchscreen technology and Wi-Fi connection.
Next debacle of the past decade, according to Time is
Palm. The company which pioneered smartphones is staring a bleak future at a time when smartphones are hottest property in the gadget world. Palm produced both a portable wireless device and an operating system for portable hardware devices and desktops. The company launched its Palm Pilot hardware device in 1996 as a personal organizer. In 1999, it released its Palm V. The Palm Treo smartphone was developed by Handspring which Palm acquired. In the quarter that ended in September 2005, Palm sold 470,000 Treo units, up 160 per cent same quarter the year before. During this time, three companies dominated the smartphone market: Palm, Research-In-Motion, maker of the Blackberry, and cell phone giant Nokia. By the September 2007 quarter, Treo sales had only moved up to 689,000, but sales of the Blackberry hit almost 3.2 million and the newly launched Apple iPhone sold more than a million units during the same period after it debuted on June 29 of that year. In November 2008, Global Crown Capital analyst Pablo Perez-Fernandez cut his rating on the company to Underweight from Neutral. Some other analysts too downgraded the stock and called into question whether the company can raise the capital necessary to turn its fortunes around.
Iridium, the global satellite phone company backed by Motorola filed for bankruptcy in 1999. The company is often called a $5 billion flop. The Motorola-backed venture that sought to build and launch its infrastructure of satellites to provide worldwide wireless phone service. To work properly, the system needed 66 satellites. The creation of this enormous system forced the company to default on $1.5 billion of debt. The service had been such a failure that it only had 10,000 subscribers. Finally, the system that cost Motorola more than $5 billion to build ultimately sold for $25 million. According to a Dartmouth Tuck Business School case study on the history of Iridium in 1998, the company forecast that it would have 500,000 subscribers by the following year. But, the service was expensive for customers, and the cellular phone business had started to take hold as its infrastructure was built out in most of the large developed countries. An Iridium handset cost $3,000 and talk time was as much as $5 a minute. Cellular service was not as broadly available, but it was far less expensive.
The last on Time magazine's biggest technology failures of the past decade is
Segway, the two-wheel transportation vehicle launched in 2002. During Segway's much-fanfared launch its head said, "It will be to the car what the car was to the horse and buggy". A famous VC predicted that Segway sales might hit $1 billion as fast as any company in history. The company spent about $100 million developing the product. However, the company failed to get the pricing right. According to Time, "Segway did not understand that its price point, well above $3,000 for most models and $7,000 for some, was too high to draw a mass consumer base." Another unforeseen trouble for Segway was that the vehicle was classified as a road vehicle in some countries requiring licensing, while it was illegal to use on roads in other nations. Thus from 2001 to the end of 2007, the company could mange to sell only 30,000 units.
