What Can We Learn From Some of Tech’s Biggest Failures?

The world ofA Big Fat Failure technology is a fast-paced environment in which trends arrive and disappear only slightly slower than the tech startups that accompany them.

Though the tech industry is lauded for its opportunities and having given the world such massive business successes as AppleMicrosoftGoogle & Facebook there is also a much less glamorous and vastly more populated arena of tech. This arena encompasses the tragic failures of products, services and even entire companies that did not take advantage of the tech boom and never fulfilled their potential. Most people prefer hearing success stories yet these failures, both big and small, can teach valuable lessons to the latest crop of tech entrepreneurs who envision products or services that will change the world.

Here are three such lessons:

  1. Be Relevant (Continuously)

In the world of technology and software development it is a cardinal rule for any technology company to continuously seek to remain relevant in fulfilling its customers’ needs. Many prominent tech companies and even entire industries have collapsed due to failure to adhere to this rule. An early example of such a failure was the collapse of the walkman industry when mp3 players and specifically the iPod were released. Over three decades from July 1979, Sony sold more than 200 million units its their ‘walkman’ cassette player and enjoyed great success by any measure. Sony made even more money with variations of the walkman including the compact disc player the Discman.

However Sony failed to react quickly enough to the development of mp3 and digital music technologies. The release of the iPod by Apple saw Sony’s dominance of the mobile music market collapse in short order as Apple conquered the music market. Gateway’s collapse occurred in a similar manner. From a long period dominating the PC market in the 90s, Gateway Computers gradually dropped in value and was bought out finally by Acer in 2006 for a much reduced share value. What was the problem? A failure by Gateway to recognize and react to the rising trend towards mobile computing, and move into the laptop market.

Lesson: Both technology itself and it’s use by consumers are extremely dynamic, stay on top of trends in tech or watch your business fail.

2. Just because it’s new, doesn’t mean it’s good, or useful

Tech is an exciting, ever-evolving field where new ideas and innovations are churned out almost daily by both big and small players in the industry. Many tech firms have well-staffed R&D Departments that are responsible both for coming up with marketable business ideas and bringing them to fruition as fully-fledged products. However, this process doesn’t always end up creating successes like the iPod or Android. Very often, ideas that looked great on paper end up as total flops on the market.

Google, though dominant and successful in the search market has been a particularly notorious victim of such product flops.  Google’s forays into the social media market (Google Buzz, Google Wave and Jaiku) so far have been a series of failures. Perhaps the biggest reason for this is the fact that Google’s efforts were poorly received and failed to reach a critical mass necessary to establish them amongst established and powerful competitors likeFacebook. Ultimately the services were not seen as unique enough to prompt people to shift from the comfort of their current social networks.  Many analysts have even questioned Google’s straying away from its core areas of search to establish a social media service. The jury is still out on whetherGoogle+ will fare better than its predecessors.

Lesson: Stick to your strengths and build around them.  If you really must stray from your core expertise understand that success in one area of technology does not guarantee your success in another

3. Plan to make money

This point may seem redundant at first glance, after all, who would start a business without knowing how to profit from it? However, in the world of tech startups, ideas are often launched and businesses started purely on the merit of the envisioned product/service in solving a problem. Profit considerations sometimes only arise after the product/service has established itself in the market. This is not necessarily a bad approach as tech stars such as Google and Facebook (among others) have shown. Both those services were started by their founders to solve a problem and only later in the life of the company were methods found to profit (very successfully) from the services offered.

The Dot Com Bubble & Burst of the late 90s to early 2000s was a great example of the folly of tech startups which were great ideas on paper but never truly became profitable. CNET reports that Boo.com launched its services in late 1999 and attracted, then blew through, $135 million of venture capital in 18 months. It never met the success it promised and the company folded up by May 2000. YouTube is another pertinent example. Despite its massive popularity and growth since launch in 2005 the service has never been profitable. Google took a risk by purchasing it for $1.65 billion in 2006; however, since then the site has never appeared to be turning a profit. As recently as 2009 it was making a loss of close to $500 million (Credit Suisse estimate). The current state of YouTube can’t be reliably determined as it doesn’t publish its financial data but we still wait to see if Google can transform it into a reliably profitable service.

Lesson: Unless you’re running a charity a realistic and strong business model is essential to survival.

As the above examples show, a mere presence in the technology field or market does not guarantee success. Leaders of tech start-ups as well as the Product Managers of established tech companies must be wary of these potential pitfalls when deciding to launch their new product/service onto the market.

There’s certainly a lot of money to be made….or lost

-Terence Adjei-Otchwemah
Executive, Product Marketing & Social Media Relations
DreamOval Ltd.
 
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