Ten catastrophes: All-time worst tech industry executive decisions

Ten catastrophes: All-time worst tech industry executive decisions

Summary: IT, 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.

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  • While the Itanium partnership with Intel surely started HP down the road to hell, it was accelerated in 2001 when HP, under the guidance of CEO Carly Fiorina decided to merge with Compaq in a $25 billion dollar deal.

     
    Many large shareholders opposed the merger, including Walter Hewlett, the company's outspoken director and son of the company's co-founder, who engaged in a proxy battle in an attempt to prevent it. The prime objection was that Compaq had many overlapping product lines and would get the company involved in the low-margin PC business that its main competitor, IBM, was already in the process of exiting.
     
    Under Carly Fiorina's reign, the merged "New" HP lost half of its market value and the company incurred heavy job losses. Fiorina stepped down in 2005.
     
    Since the Compaq merger, HP has endured numerous problems with failed initiatives, dubious acquisitions (3COM, EDS) and has been plagued with ineffective management, including two major ethics scandals that have forced Chairwoman Patricia Dunn and CEO Mark Hurd to resign.
     
    The PC business that HP gained from the Compaq merger is now in the process of being spun off, after losing money in the face of tremendous low-margin industry competition. 

     

  • Mention the name "Windows Vista" in most circles, you'll probably get a mixture of reactions. Groans, snickers, and utter disgust.

     
    Windows XP wasn’t supposed to last as long as it did. As soon as XP shipped in 2001, work got under way for the next version, code-named “Longhorn.” The feature list got bigger and more ambitious as time went on, and Longhorn was shown off with great fanfare at Microsoft’s Professional Developers Conference in 2003.
     
    Those plans were tossed aside completely in August 2004, with what later became infamous as the “Longhorn reset.” In September 2005, Windows boss Jim Allchin publicly acknowledged the do-over, acknowledging that Longhorn had been “crashing into the ground.”
     
    The design goals of what was eventually named Windows Vista were admirable: improve Windows' security model, introduce widespread 64-bit technology into the desktop OS, improve networking performance, refine the user interface, and better integrate search capabilities. Unfortunately, the unwieldy and disorganized project took more than five years to deliver unsatisfactory results.
     
    Windows Vista was released to manufacturing in November 2006, with a consumer debut in January 2007. Vista got mostly negative reviews, thanks to significantly higher resource requirements, incompatibilities with some popular hardware and software programs, and a controversial security feature called User Account Control (UAC) that was derided as overly intrusive. Service Packs would later resolve many of Vista's issues, but its reputation as a slow, buggy failure was sealed.
     
    Eventually, the technologies that were created for Windows Vista were refined and re-engineered. Vista’s successor, Windows 7, was released a little less than three years after Vista's introduction to much better reviews.
     
    Nobody knows how much the Vista debacle really cost Microsoft, but it damaged the company's reputation and almost certainly amounted to billions of dollars of stalled upgrades and a significant exodus of users to Apple’s Mac platform.
     
  •  

    In 1985, Apple Computer was in the midst of a technology transition. In the previous year, the company had just launched its first Macintosh computer, which had replaced the Apple ][ and Apple III line it had been selling successfully for the last several years.
     
    Founder Steve Jobs had recruited former Pepsi-Cola executive John Sculley to act as Apple's CEO, in order to help grow the company. While Jobs was considered to be a charismatic and dynamic employee at Apple and at the Macintosh division which was under his direct leadership, he was also erratic, difficult to work with and temperamental, and it was beginning to put a strain on his relationship with his team members as well as on the Board of Directors of the company.
     
    Facing a sales slump due to overwhelming competition from companies like IBM and Compaq that were selling PCs and clones, Jobs' relationship with Sculley deteriorated which resulted in his ouster from the company he and Steve Wozniak founded.
     
    The 11-year period that Apple continued on without Steve Jobs is universally considered to be a major low point for the company. Without Jobs' vision and guidance, innovation slowed and Apple underwent several leadership changes. Revenue and stock valuation plummeted, the company was on the verge of financial oblivion, and by the mid 1990's the company was in desperate need for a replacement to the aging Macintosh OS. 
     
    In 1996, Apple purchased Steve Jobs' NeXT, which would serve as the foundation for what would become OS X and later on the iOS which powers the iPhone and iPad. Gil Amelio, the current CEO, was ousted in 1997 in a boardroom coup and Steve Jobs returned as Chairman and CEO.
     
    Jobs would guide the company into the release of the iMac, the iPod, OSX and and x86-based Macs, and then later the iPhone, iPad and Apple TV, ushering in a new golden age for Apple.
     

Topics: Banking, CXO, Enterprise Software

About

Jason Perlow, Sr. Technology Editor at ZDNet, is a technologist with over two decades of experience integrating large heterogeneous multi-vendor computing environments in Fortune 500 companies. Jason is currently a Partner Technology Strategist with Microsoft Corp. His expressed views do not necessarily represent those of his employer.

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  • So, what goes down as the all time worst?

    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
    • RE: Ten catastrophes: All-time worst tech industry executive decisions

      @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
      • It gets worse than that...

        @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
        cosuna
    • RE: Ten catastrophes: All-time worst tech industry executive decisions

      @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.
      bannedagain
      • 'Allowing' was different, though: Apple paid with its shares, and Microsoft

        @bannedagain: ... paid nothing.
        DDERSSS
      • RE: Ten catastrophes: All-time worst tech industry executive decisions

        @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.
        jcruns26
      • RE: Ten catastrophes: All-time worst tech industry executive decisions

        @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.
        dsf3g
      • RE: Ten catastrophes: All-time worst tech industry executive decisions

        @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.
        rm.hutchings@...
      • RE: Ten catastrophes: All-time worst tech industry executive decisions

        @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).
        Fri13
      • RE: Ten catastrophes: All-time worst tech industry executive decisions

        @bannedagain
        Maybe it was the best decision for us - users. Ideas are not worth much without implementation.
        paul2011
    • RE: Ten catastrophes: All-time worst tech industry executive decisions

      @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
      • RE: Ten catastrophes: All-time worst tech industry executive decisions

        @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.
        jperlow
      • RE: Ten catastrophes: All-time worst tech industry executive decisions

        @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.
        UnCommonCents
    • Microsoft's decision to make Ballmer CEO

      @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
      HollywoodDog
      • HollywoodDog

        @HollywoodDog

        HollywoodDog 1995: John Travolta
        HollywoodDog 2011: Gilbert Godfried.

        Oh, that's not tech related. Wow, just like you. ;)
        William Farrell
      • HA!

        @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.
        HollywoodDog
      • RE: Ten catastrophes: All-time worst tech industry executive decisions

        @HollywoodDog

        Didn't Richard Gere get a hampster shoved up his butt?

        hmm... nice ambition
        UrNotPayingAttention
    • RE: Ten catastrophes: All-time worst tech industry executive decisions

      @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!
      adolimpio
      • RE: Ten catastrophes: All-time worst tech industry executive decisions

        @adolimpio I think ncr had some horrible blunders too but don't recall them.
        LarsDennert
      • RE: Ten catastrophes: All-time worst tech industry executive decisions

        @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.
        kc63092@...