For every successful technological breakthrough, there will be at least one corresponding failure somewhere in the archives. VHS eclipsed Betamax just as Blu-Ray finished off HD DVD, while the Nissan Leaf achieved what the Sinclair C5 couldn’t by bringing full electric motoring to the picture.
Ironically, these high-profile failures provide useful lessons for today’s entrepreneurs as they seek to pioneer new markets or develop revolutionary products. The funding methods might have changed from bank loans to crowdfunding campaigns, but today’s startup enterprises could easily become tomorrow’s failed technologies. Analysing what went wrong in the past might help to prevent common mistakes and oversights occurring in the future…
Examples of failed technologies
The product: Prestel. As far back as the 1970s, British households were receiving digital data down a phone line. The Post Office developed Prestel, which offered mailbox messaging alongside interactive services including ecommerce and the UK’s first online banking portal.
The reality: Prestel was extremely slow, incredibly expensive (costing as much as 99 pence for a single screen of data) and offered little more interactivity than CEEFAX. Like other failed technologies throughout history, the price didn’t justify the user experience.
The lessons: By misjudging hardware and data fees, the Post Office alienated customers who might otherwise have adopted Prestel as part of the 1980s’ explosion in home computing. They also priced out companies by charging punitive fees for hosting data. As CEEFAX and ORACLE provided comparably high-resolution content for free across analogue TV signals, tying up the phone line for such scant rewards seemed uneconomic. France’s Minitel service became successful because terminals were given away to homeowners, boosting take-up.
The product: Value America. As the Amazon of its day, Value America established a one-stop ecommerce portal in the late 1990s. Its charismatic founder developed a just-in-time model where manufacturers supplied customers directly after sales via Value America’s website.
The reality: Despite several rounds of investment, Value America collapsed after four years. Senior management became lost in a jet-set lifestyle, unaware that rival online retailers had far wider product choice, more reliable websites and better customer service.
The lessons: As J David Kuo’s seminal Dot Bomb book reveals, Value America’s IT systems couldn’t cope with a stockless model. Manufacturers weren’t used to processing individual customer shipments, and Value America often became the last to know what was happening. Another error involved concentrating on covering the largest number of market sectors, rather than offering choice in each individual micro-market. Ongoing competitor analysis may have saved Value America, as might direct control over stock and dispatch.
The product: BT Midband. A high-profile launch in 2002 hailed Midband as a domestic ISDN rival. Connections of up to 128Kbps were promised to customers struggling with sluggish dial-up speeds, mainly in areas where broadband wasn’t yet available.
The reality: After three years, BT admitted defeat and pulled the plug. It was estimated that just 3,300 people held Midband contracts by that point, many of whom promptly ended up back on dial-up services.
The lessons: Like other failed technologies, BT oversold Midband’s potential. Line speeds were twice as fast as dial-up, but nowhere near the 128Kbps promised in marketing materials.
Disgruntled customers trolled the service online, destroying its reputation. The company had also announced at Midband’s launch that only 90 per cent of UK homes would ever receive ADSL, yet the figure stood at 99 per cent by 2005. By underestimating their ability to roll out superior infrastructure, BT sold its own customers a compromised product at a high price.