Ten catastrophes: All-time worst tech industry executive decisions
by Jason Perlow | September 1, 2011 1:01pm PDT | Image 1 of 11
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John Opel, IBM: Not buying Microsoft during the PC-DOS/MS-DOS negotiations / Gary Kildall, Digital Research, not licensing CP/M to IBM
Information Technology, software and computer companies are certainly not without their share of poor executive decisions and mismanagement. While dozens of notable examples could have made our list, these were by far the top top 10 worst in the history of the technology industry, causing many billions of dollars of lost revenue or resulted in the downfall of entire companies.
In the late 1970's, a small team within IBM began development of its legendary 5150 PC, which recently had its 30th anniversary. But to run this PC, IBM needed an operating system.
At the time, there was only one serious contender, Digital Research's CP/M, which ran on a number of early personal computers including the Apple ][, The Osborne and the Kaypro, all of which had substantial market share in a small but quickly growing industry.
In 1980, Under the direction of CEO John Opel, IBM attempted to contact Digital Research's founder and CEO, Gary Kildall, to license CP/M for use on the 5150 and other future PCs, but when negotiations failed, IBM went looking for another suitor.
Bill Gates, Steve Ballmer and Paul Allen at Microsoft, seeing an opportunity in the making, approached a tiny software company, Seattle Computer Products, which had an x86-compatible OS which used a similar command interpreter to CP/M called 86-DOS. Microsoft purchased the OS and perpetual usage rights, which they then re-christened as "DOS", for a mere $75,000.
After negotiating an almost unheard of non-exclusive licensing agreement with IBM, the company would be established as the leader in personal computer software for decades to come.
Microsoft's MS-DOS would go on to sell tens of millions of licenses, and the software business for Windows and related follow-on products that Microsoft would generate which would build upon it would turn the company into an industry giant.
Digital Research could very well have had the same licensing deal and IBM could have imposed stricter licensing terms on MS-DOS, or could have purchased either of the two companies outright, giving the company an exclusive. But it was not to be.
Digital Research's CP/M became an also-ran and the company eventually attempted to produce it's own DOS clone, DR-DOS, which although having a number of technical improvements over Microsoft's OS, was a dud. It was eventually sold to Novell, then Caldera and then later on became the property of SCO.
Eventually, the highly competitive MS-DOS based PC clone business made Digital Research's CP/M irrelevant and also would eventually force IBM to exit their own PC business in the late 1990s and early 2000's.
Just In
I picked what I thought were the all-time worst decisions in the history of the technology industry. But maybe I missed a few key ones. What other ones caused billions of dollars of lost revenue or sank entire companies?
@jperlow What about Excite's George Bell turning down Larry Page's and Sergey Brin's offer to sell Google to them for $1M in 1999?
@jim.mcmaster : if you trust wikipedia's recount of the story, Vinod Khosla had decreased the amount to $750K but George threw him out of the office, thinking he had wasted both men's time.
George is now a venture capitalist with General Catalyst and still talks about his tenure at Excite@Home.
http://en.wikipedia.org/wiki/Google#Financing_and_initial_public_offering
http://www.generalcatalyst.com/team/george-bell
George is now a venture capitalist with General Catalyst and still talks about his tenure at Excite@Home.
http://en.wikipedia.org/wiki/Google#Financing_and_initial_public_offering
http://www.generalcatalyst.com/team/george-bell
@jperlow
Xerox's decision to sideline it's PC development then allowing Apple and Microsoft to basically walk in and take whatever they wanted from it at a minimal cost.
The rest is history.
Xerox's decision to sideline it's PC development then allowing Apple and Microsoft to basically walk in and take whatever they wanted from it at a minimal cost.
The rest is history.
@bannedagain: ... paid nothing.
@bannedagain Xerox's PARC (Palo Alto Research Center) was a great incubator of future new technology breathroughs for many others - not for themselves. Besides Steve Jobs grabbing the mouse GUI technology for Apple, Bob Metcalfe - a PARC engineer, invented Ethernet and walked out to start his own company 3Com. Xerox would just say, we are a "document" company.
@bannedagain
I knew a lady who worked at Xerox. She almost wept when talking about the stuff tha the research division came up with, but the suits basically gave away for peanuts reasoning that there was no market for it.
I knew a lady who worked at Xerox. She almost wept when talking about the stuff tha the research division came up with, but the suits basically gave away for peanuts reasoning that there was no market for it.
@bannedagain Yes, the Xerox PARC thing has to be the worst fiasco of all time. They had everything, GUI, OOP, TCP/IP, etc., and basically gave it away.
@bannedagain Xerox did not have PC development, they had own personal computer line.
PC was IBM's own personal computer line and it lost it to PC-clone manufacturers who it had licensed PC BIOS and because it did not buy PC-DOS from Microsoft but just licensed and allowed Microsoft to license it to PC-compatible personal computer manufacturers (later made PC-clone personal computers).
Even today Xerox Star GUI is awesome. They had everything correctly then and if Xerox would have continued and pursued that, they would have own the world and today we would have much better tech industry and better personal computers at home and work instead what Microsoft and Apple has come up even today (OS X 1.6, iOS 5, Windows 7, Windows 8, Windows Phone).
Thanks to IBM who invented the PC at 1981 as without it, we would have now incompatible personal computers (if not counting what Xerox was doing).
PC was IBM's own personal computer line and it lost it to PC-clone manufacturers who it had licensed PC BIOS and because it did not buy PC-DOS from Microsoft but just licensed and allowed Microsoft to license it to PC-compatible personal computer manufacturers (later made PC-clone personal computers).
Even today Xerox Star GUI is awesome. They had everything correctly then and if Xerox would have continued and pursued that, they would have own the world and today we would have much better tech industry and better personal computers at home and work instead what Microsoft and Apple has come up even today (OS X 1.6, iOS 5, Windows 7, Windows 8, Windows Phone).
Thanks to IBM who invented the PC at 1981 as without it, we would have now incompatible personal computers (if not counting what Xerox was doing).
@bannedagain
Maybe it was the best decision for us - users. Ideas are not worth much without implementation.
Maybe it was the best decision for us - users. Ideas are not worth much without implementation.
@jperlow great article but how did you leave out Xerox PARC? If you calculate the value to computing of Ethernet, the mouse and the GUI interface, three developments that were born at XEROX PARC and walked righgt out the front door, I think this closely parallels the Microsoft -IBM blunders.
@whooizit1 Xerox PARC is a big time blunder, but the company was never really serious about creating a PC industry or being a real computer company. It was pure research. For the money they put into these technologies compared to some of the other catastrophic losses we're talking about on this list, it's probably not on the same order. Had they continued to develop it and make a real business out of it and ship the Alto in numbers (remember the early graphical workstations they made in limited quantities cost a fortune) they may have created something wonderful and made a lot of money, but I have difficulty quantifying "losses" with PARC per se. There is no question that Apple was able to capitalize on PARC, but it wasn't until years later when the board electronics could be miniaturized and the costs could be brought down to produce the first Mac.
@whooizit1 I don't get author's rationale ("research entity") excluding Xerox given their colossal blunders. Another missed opportunity... Adobe founders are also PARC alumni.
Xerox's workstations were still being produced (and pricey - $12k) a few years after the Mac's intro.
Xerox's workstations were still being produced (and pricey - $12k) a few years after the Mac's intro.
@jperlow ... the personal loyalty of one man to another has cost shareholders untold money, and humbled a once vibrant and powerful company.
Microsoft 1995: Toyota
Microsoft 2011: Kodak
Microsoft 1995: Toyota
Microsoft 2011: Kodak
@HollywoodDog
HollywoodDog 1995: John Travolta
HollywoodDog 2011: Gilbert Godfried.
Oh, that's not tech related. Wow, just like you.
HollywoodDog 1995: John Travolta
HollywoodDog 2011: Gilbert Godfried.
Oh, that's not tech related. Wow, just like you.
@HollywoodDog ... That's a good one, thanks.
When they make the movie of my life, I was rather hoping for Richard Gere, not Gilbert Godfried.
When they make the movie of my life, I was rather hoping for Richard Gere, not Gilbert Godfried.
@HollywoodDog
Didn't Richard Gere get a hampster shoved up his butt?
hmm... nice ambition
Didn't Richard Gere get a hampster shoved up his butt?
hmm... nice ambition
@jperlow I see that there are already numerous replies regarding Xerox, but I wanted to cast one more vote. They invented the GUI, mouse, laser printer and Ethernet and gave it all away. They virtually help Apple steal the Mac technology and never received a dime from it, then they tried to sue Apple 10 years later.
Read the book "The Billions Nobody Wanted" which is about the copier industry and then contrast it to what Xerox did with all the brilliant ideas that came out of PARC.
Obviously as hot button of mine as an ex-Xeroid!
Read the book "The Billions Nobody Wanted" which is about the copier industry and then contrast it to what Xerox did with all the brilliant ideas that came out of PARC.
Obviously as hot button of mine as an ex-Xeroid!
@adolimpio I think ncr had some horrible blunders too but don't recall them.
@adolimpio
if xerox PARC is unforgiving we won't have a vibrant tech industry. luckily they forego greed for the benefit of the US of A, kudos to them and many thanks.
if xerox PARC is unforgiving we won't have a vibrant tech industry. luckily they forego greed for the benefit of the US of A, kudos to them and many thanks.
@adolimpio Indeed. They ought to have just open sourced their GUI if they were going to give it away for almost nothing anyway. Thank god for open source OSes, otherwise we're locked into Windows or Mac exclusively forever.
@jperlow
.... the dropping of OS/2, the only decent (better) alternative to MS Windows.
.... the dropping of OS/2, the only decent (better) alternative to MS Windows.
@kd5auq
But the neglect of OS/2, maybe. I actually think the neglect was due to fear of punishment by MS, making it an act of cowardice, though perhaps rational from a purely dollars and cents point of view.
But the neglect of OS/2, maybe. I actually think the neglect was due to fear of punishment by MS, making it an act of cowardice, though perhaps rational from a purely dollars and cents point of view.
@kd5auq I agree. They were upgrading it, and making it much better, while shooting it in the foot with stupid comments. I just couldn't believe the incompetence. They just threw away a great OS. They could have at least sold it to someone who wanted it.
@kd5auq
OS/2 was doomed based on it's inherent inability to share resources based on IRQ/DMA. Processors were just too limited with available hardware IRQ's at that time. OS/2 Warp tried to make amends by allowing sharing using software mapped IRQ sharing, but by then it was too late. But, they continued along the MCA bus route, while the rest of the world decided to adopt PCI, PCI-x64, PCIe. In short, OS/2 limited itself to only IBM hardware, which in turn limited it's future. Why you'd say it was 'better' may be true in some light (technically accurate), but not when the market was larger than only IBM systems (foresight and marketing blindness).
OS/2 was doomed based on it's inherent inability to share resources based on IRQ/DMA. Processors were just too limited with available hardware IRQ's at that time. OS/2 Warp tried to make amends by allowing sharing using software mapped IRQ sharing, but by then it was too late. But, they continued along the MCA bus route, while the rest of the world decided to adopt PCI, PCI-x64, PCIe. In short, OS/2 limited itself to only IBM hardware, which in turn limited it's future. Why you'd say it was 'better' may be true in some light (technically accurate), but not when the market was larger than only IBM systems (foresight and marketing blindness).
@kd5auq
IBM could not sell OS/2 properly. At first it required too much resources and later IBM just did not know how to sell. Just like Microsoft does not know how to sell Windows Phone today.
IBM could not sell OS/2 properly. At first it required too much resources and later IBM just did not know how to sell. Just like Microsoft does not know how to sell Windows Phone today.
@jperlow
Wang Laboratories was reported to be positioned in over 70% of major offices in the early 80s. The IBM PC was becoming popular with a copy of Wang word processing available from 3rd party. When Wang PC became available, Dr. Wang insisted on a Proprietary version with non standard bus, non standard BIOS, and non standard German color monitor. Only software useable was from Wang catalog.
The company went from a Five Billion dollar annual revenue to running in the red in 18 months.
Wang Laboratories was reported to be positioned in over 70% of major offices in the early 80s. The IBM PC was becoming popular with a copy of Wang word processing available from 3rd party. When Wang PC became available, Dr. Wang insisted on a Proprietary version with non standard bus, non standard BIOS, and non standard German color monitor. Only software useable was from Wang catalog.
The company went from a Five Billion dollar annual revenue to running in the red in 18 months.
@RonRat1038
remember those companies that require dongles or other safety features, they went down the toilet. who wanted to buy products from companies that treat their customer as trashes and thieves.
remember those companies that require dongles or other safety features, they went down the toilet. who wanted to buy products from companies that treat their customer as trashes and thieves.
@jperlow
The greatest loss that was never told properly ( yes, I've scanned that book that was mostly disinformation ) was how Cray Research was destroyed by John Rollwagen. I know, I had a front row seat as the actual drama unfolded.
I knew Cray Research was doomed when JR decided that Cray Research WOULD NO LONGER DESIGN AND BUILD SUPERCOMPUTERS, we would instead ONLY SERVICE THE ONES WE HAD ALREADY SOLD. Product maintenance would carry our growth...( yeah, right )
I have some of the internal tapes of the reasons why he made that decision...( they asked us who would have the duplicating equipment at the time and I volunteered to make copies )...
We informally went into the real estate business and other " diversifications " while cutting off the money for our Development Groups. ( Dr. Chen and Seymour were both told NO, your prototypes were too expensive to build ). We had an over the weekend clean out of the offices of most of Steve Chen's Development Group and now I had a loyalty issue to deal with...
Follow a company or a person?? In retrospect, was I naive and made the wrong decision? I stayed with Cray Research and had to clean up the mess that was our Development Group, including archiving the remaining data..( and I access to ALL the remaining records ).
My final split was created when Steve Nelson was made head of design. Nelson was a MANAGER, not a designer!
This came to a head when I was asked to join the NEW " design team ". I replied ( TO NELSON'S FACE ) " You couldn't design your way out of a paper bag ".
Shortly after that, I was asked what I wanted before I would leave Cray Research? ( yes, I had other high level management friends still at Cray Research )
Since I was already an expert in computer interoperability ( I knew the best ways to make computers communicate in the private sector ) I said "teach me everything Cray Research knows about TCP/IP and ETHERNET and this DARPAnet that we were linked to.
The rest is history.....And I still have those training manuals as proof " I have a better claim to inventing the Internet than Al Gore has "
Yes, truth can be stranger than fiction.
The greatest loss that was never told properly ( yes, I've scanned that book that was mostly disinformation ) was how Cray Research was destroyed by John Rollwagen. I know, I had a front row seat as the actual drama unfolded.
I knew Cray Research was doomed when JR decided that Cray Research WOULD NO LONGER DESIGN AND BUILD SUPERCOMPUTERS, we would instead ONLY SERVICE THE ONES WE HAD ALREADY SOLD. Product maintenance would carry our growth...( yeah, right )
I have some of the internal tapes of the reasons why he made that decision...( they asked us who would have the duplicating equipment at the time and I volunteered to make copies )...
We informally went into the real estate business and other " diversifications " while cutting off the money for our Development Groups. ( Dr. Chen and Seymour were both told NO, your prototypes were too expensive to build ). We had an over the weekend clean out of the offices of most of Steve Chen's Development Group and now I had a loyalty issue to deal with...
Follow a company or a person?? In retrospect, was I naive and made the wrong decision? I stayed with Cray Research and had to clean up the mess that was our Development Group, including archiving the remaining data..( and I access to ALL the remaining records ).
My final split was created when Steve Nelson was made head of design. Nelson was a MANAGER, not a designer!
This came to a head when I was asked to join the NEW " design team ". I replied ( TO NELSON'S FACE ) " You couldn't design your way out of a paper bag ".
Shortly after that, I was asked what I wanted before I would leave Cray Research? ( yes, I had other high level management friends still at Cray Research )
Since I was already an expert in computer interoperability ( I knew the best ways to make computers communicate in the private sector ) I said "teach me everything Cray Research knows about TCP/IP and ETHERNET and this DARPAnet that we were linked to.
The rest is history.....And I still have those training manuals as proof " I have a better claim to inventing the Internet than Al Gore has "
Yes, truth can be stranger than fiction.
@jperlow He spent $12.5B just to get 18 patents, instead of licensing the technology they copied/clone/stolen from others.
On top of that, the purchase will soon show that it may had being a fatal blow to the partnership they had with many Android OEMs. Just look at today's news .... Samsung is talking about Bada and barely mention Android.
On top of that, the purchase will soon show that it may had being a fatal blow to the partnership they had with many Android OEMs. Just look at today's news .... Samsung is talking about Bada and barely mention Android.
@wackoae You are reading too much into the tea leaves. So WHAT if on ONE DAY they talk most ly about Bada? Bada has long been important to them, as the best way to provide high quality UI (approaching Android's) on far less capable phones. And from Samsung's POV, it has never got enough attention yet.
@wackoae Are you trying to set yourself up for a libel suit? Whether Google STOLE the technology is now being contested in court. The Court will make that decision, not you.
In the meantime, there really is good reason for the rest of us to believe that it was NOT stolen, since Sun really did put the LANGUAGE in the open. And Google really did build their own platform, they did not steal Sun's.
The distinction between the Java language and the Java platform really is important, and not just for this court case.
In the meantime, there really is good reason for the rest of us to believe that it was NOT stolen, since Sun really did put the LANGUAGE in the open. And Google really did build their own platform, they did not steal Sun's.
The distinction between the Java language and the Java platform really is important, and not just for this court case.
@wackoae
Not so fast. Samsung doesn't see Bada as an alternative to the Android in markets like the US. Different product for different purposes. In fact, Samsung has said repeatedly that Bada will never be available in the U.S. Have a look : http://www.informationweek.com/news/mobility/smart_phones/231600714
Not so fast. Samsung doesn't see Bada as an alternative to the Android in markets like the US. Different product for different purposes. In fact, Samsung has said repeatedly that Bada will never be available in the U.S. Have a look : http://www.informationweek.com/news/mobility/smart_phones/231600714
@wackoae I played with a Bada phone and I think that it's a lot more stable than Android. They should be pushing it. The friend that bought it is definitely not a techie and he's quite happy with it. He doesn't care that there aren't a lot of apps. Don't get me wrong, I like Android, but some of the goofy things that it does can stress out a technically challenged person.
@jperlow
I disagree on the Scully firing Jobs one. If Jobs had not been fired, there never would have been a Next (key design elements carried forward to OSX) or Pixar ($$$$). Quite frankly, without these two key elements, the Apple today would not exist.
I do like you capturing the HP, Compaq, Alpha, and Itanium fandango so succinctly.
I disagree on the Scully firing Jobs one. If Jobs had not been fired, there never would have been a Next (key design elements carried forward to OSX) or Pixar ($$$$). Quite frankly, without these two key elements, the Apple today would not exist.
I do like you capturing the HP, Compaq, Alpha, and Itanium fandango so succinctly.
@facebook@... Although I don't disagree with you, the fact is that firing Jobs was a HUGE mistake. Things way have fallen into place afterwards .... but it was still a very bad decision on the part of the CEO.
@facebook@...
It may have forced Steve Jobs to "get his act together" as apparently he was not doing a good job at Apple, as he would not have been fired it he was.
It may have forced Steve Jobs to "get his act together" as apparently he was not doing a good job at Apple, as he would not have been fired it he was.
@wackoae
Not only would Apple have lacked the funds to continue without Jobs' Pixar money, even after Microsoft's investment they would have had no direction to go without Next. There never would have been an OSX and its progenitors.
Not only would Apple have lacked the funds to continue without Jobs' Pixar money, even after Microsoft's investment they would have had no direction to go without Next. There never would have been an OSX and its progenitors.
@facebook@...
amen to that...
amen to that...
It could also be that firing Jobs at that time perhaps helped to eventually soften his harsh demeanor just enough that when he returned to Apple he was a better leader for it. Hard to say, but you never know....
@jperlow I would vote for the greatest loss in sgarholder value vs Missed Opportunities.
AOL/Time Warner all the way!!
AOL/Time Warner all the way!!
@jatbains
should be number ONE in so many ways.
should be number ONE in so many ways.
@jperlow Not only did you miss a few key ones, your description of the CP/M fiasco was completely inaccurate. It was not because Kildall did not want the deal; it was because of a scheduling error: the IBM reps showed up on the day they were told to, but Kildall's calendar showed that day free, so he was flying his private plane over the Pacific ocean at the time.
But IBM could not understand this was a scheduling snafu, they took it as a personal affront. That closed off the opportunity for a deal.
Don't you do ANY fact checking before you publish lists like these?
But IBM could not understand this was a scheduling snafu, they took it as a personal affront. That closed off the opportunity for a deal.
Don't you do ANY fact checking before you publish lists like these?
@mejohnsn I in fact did, I spoke with sources familiar with the situation, and your accounting is a myth.
@jperlow
You missed out Clive Sinclair, he made so many you could write a whole book on them.
You missed out Clive Sinclair, he made so many you could write a whole book on them.
@Alan Smithie
And Alan Sugar. He had the British and European PC industry all wrapped up untill he bought a bad batch of disk drives without testing them and ruined Amstrad's customer trust.
And Alan Sugar. He had the British and European PC industry all wrapped up untill he bought a bad batch of disk drives without testing them and ruined Amstrad's customer trust.
@jperlow
jason, am just wondering if we can add DMCA to the mix. did it add value to the technical prowess of the united states or bound the hands of would-be hp-, intel-, zilog-, apple-founders, since they can not experiment with anything without big brother breathing around their necks. just musing... and can we put monetary value in those lost chances?
jason, am just wondering if we can add DMCA to the mix. did it add value to the technical prowess of the united states or bound the hands of would-be hp-, intel-, zilog-, apple-founders, since they can not experiment with anything without big brother breathing around their necks. just musing... and can we put monetary value in those lost chances?
@jperlow I believe that Lew Platt should also be credited with the hiring of Carly Fiorina.
BTW, he also made some pretty bad decisions when he was the head of the medical products division of HP.
So the city of San Jose named a section of highway 87 for him. Go figure!
BTW, he also made some pretty bad decisions when he was the head of the medical products division of HP.
So the city of San Jose named a section of highway 87 for him. Go figure!
@jperlow
how about fairchild's decision to ignore the intel's founders ideas... are they worth anything? last time i heard intel is a hundred of billions dollar golden company.
how about fairchild's decision to ignore the intel's founders ideas... are they worth anything? last time i heard intel is a hundred of billions dollar golden company.
@jperlow
You may have missed Alan Kay's decision to guarantee non-obsolescence with the KayPro line of computers. It was a good idea, with some detail of forethought, but just not enough. I personally think the idea could/should re-imerge, but not just base it on a separated backplane model.
You may have missed Alan Kay's decision to guarantee non-obsolescence with the KayPro line of computers. It was a good idea, with some detail of forethought, but just not enough. I personally think the idea could/should re-imerge, but not just base it on a separated backplane model.
I have to question including Adam Osborne but not Lotus Development Corp, which had the most successful program in the first decade of the PC era, 1-2-3. Lotus's decision to exert so much effort and resources on protecting 1-2-3's character mode menu led it to underestimate the impact of Windows 3.1. I remember 1-2-3 Release 1 for Windows (Release 3.1 with a GUI). It stunk. It was the most perfect example of a character mode program which remained a character mode program in Windows despite its GUI features. Excel 5 had been out for more than a year before 1-2-3 Release 4 for Windows came out. By then it was too late for Lotus.
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