Hi-tech flops: Lessons learned

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Hi-tech flops: Lessons learned

By Richard Morochove

First published December 31, 1998

For each computer industry success, there are several hi-tech flops. Even though technology manufacturers invest millions in designing and launching a new product, they still can't guarantee its success. Here are my picks of some of the biggest recent technology flops, along with a lesson that can be drawn from each.

Take the case of the MD or Mini Disc. At first glance, this digital audio format appears seductively attractive. The Mini Disc is smaller than the Compact Disc and offers digital recording capabilities.

During a recent visit to Japan, the MD's popularity in that country was clearly evident. At the Japan Electronics Show in Osaka, both Sharp and Sony displayed many new models of tiny MD players and recorders, small and light enough to fit on a belt or even a wrist strap.

Yet MD is virtually non-existent in North America. I chatted with some Japanese marketing executives who wanted to know why the MD wasn't popular over here.

I thought first of the lack of pre-recorded music in the MD format. A visit to just about any music store will show you that MD titles are dwarfed by those available in CD format.

There is another peculiarity to the Japanese music market, which I believe is key to MD's success. CDs are relatively expensive, retailing for the equivalent of $30 or more. The high cost of buying CDs has encouraged the establishment of CD rental outlets, which appear more ubiquitous than video rental outlets in Canada. For about two bucks, you can borrow a CD overnight. Many MD owners rent CDs and then copy the music tracks they like to blank Mini Discs.

Lesson: What problem does the product solve? Investigate to see if that problem, such as the high cost of CDs, exists in most other markets.

NetPC

In the summer of 1997, companies such as Compaq Computer and Hewlett Packard announced the NetPC, a slimmed down version of the personal computer. It promised to be less expensive to purchase than the PC as well as easier to set up and maintain.

The NetPC resembles a Windows-based PC without expansion capabilities. Its design eliminates the capability to install new pieces of hardware that require an expansion option slot for a controller board, such as a scanner.

While the NetPC manufacturers could pretty well guarantee that computers leaving their factory worked, the makers could not know what incompatibilities lurked in hardware peripherals that might be installed by the purchaser. So if you can't add on new hardware, that gets rid of a big source of potential future problems and delivers most of the maintenance benefits.

The first NetPC models arrive in the fall of 1997 and met with a cool response from buyers. Now, little more than a year later, the NetPC has almost vanished from the computing scene.

The NetPC was developed to respond to the competitive threat of the NC or Network Computer, developed by Sun Microsystems and Oracle, not due to any grassroots demand from PC buyers. As PC prices declined over the past year, the cost advantage of the NetPC melted away. The competing Network Computer is on life support and seems unlikely to expand beyond its niche market.

Lesson: Introduce a product to satisfy buyer's needs, not to follow the lead of your competitors.

Handheld PCs

If I had to choose just one hi-tech area that was riddled with flops it would be the personal digital assistant or handheld PC. These little computing devices are supposed to help us save time by staying organized while we're on the road and away from our main computer.

With the notable exception of 3Com's Palm Pilot, most of the handheld PCs have been disappointing. The now-discontinued Apple Newton was infamous for the poor quality of its handwriting recognition. Microsoft's handheld PC design was picked up by a number of large computer makers including Philips and Compaq, yet total sales barely registered above a blip.

The chief problem with Microsoft's handheld PC is that it was designed as part of the software giant's plan to make Windows available everywhere. It appears the Redmond, Washington-based whizzes never did stop to consider if the Windows user interface was suitable for a handheld device.

You need to take out a stylus and tap the screen again and again to get to the application you need. Try doing this with one hand. Furthermore the little processors in these devices groaned under the weight of the bloated Windows code. Every time you started a program or a menu option you had to ... wait ... until the microchip could finish processing your request.

Lesson: What's the key benefit of the product to a purchaser? Ensure it delivers this benefit, such as saving time, before you launch the product. CW

Richard Morochove, FCA, is a Toronto-based computer consultant.

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