Worst tech mergers and acquisitions: Caldera and SCO, Microsoft and Danger
A corporate merger, like a marriage, can yield a whole stronger than its parts -- or it can end in utter disaster. In ZDNet's ramp up to Valentine's Day 2016, we countdown the worst corporate romances in IT history.
Corporate mergers - like marriages - can result in the whole being stronger than its parts -- or they can end in utter disaster. The IT industry has suffered its share of disastrous marriages. Here are the worst of the worst.
10. Microsoft & DANGER, Inc.
Danger Inc, formed in the year 2000 by executives from Apple, WebTV and Philips was a company that specialized in software and services for mobile computing devices. The company was best known for a mobile smartphone/messaging device called the T-Mobile Sidekick, which was also branded as the Danger Hiptop.
In 2008, Microsoft purchased the company for an undisclosed amount, but the price was rumored to be around $500 million. Post acquisition, the employees were all absorbed into Microsoft's Mobile Communications Business (MCB) where they went to work on a future mobile phone platform.
While this future device development was underway, in October 2009, Danger incurred a catastrophic data loss resulting in complete business continuity failure at one of its data centers. This data center was hosting personal customer data used by the T-Mobile Sidekick product that eventually took two months to recover from.
The highly publicized fiasco undermined consumer confidence in the product, and it resulted in T-Mobile canceling the Sidekick in the summer of 2010.
And that future mobile phone platform that the Danger developers were working on at Microsoft?
After two years of effort approximately $1B worth of development, it became the Microsoft KIN, and two versions were launched exclusively on Verizon in April of 2010. The devices were utterly savaged by the press for their lack of key features such as Instant Messaging, Calendaring, GPS navigation and memory expansion.
After 48 days on the market, the product was pulled.
Microsoft has since launched a much better mobile device platform in the form of Windows Phone, but the KIN will always be a hard learned lesson for the company.
9. Caldera & SCO
Once a prosperous, medium-sized and laid-back Northern California software company that produced successful and reliable vertical market UNIX operating systems for x86-based servers throughout the 1980s through the early 2000's, the Santa Cruz Operation (SCO) began its demise shortly after being acquired by Caldera, Inc., a Linux vendor based out of Provo, Utah.
Part of the Ray Noorda-backed family of companies known as the Canopy Group, the company re-named itself "The SCO Group" and soon began to find itself in a bit of an identity crisis.
SCO Group's first incoming CEO and former CEO of Caldera Ransom Love wanted to merge Caldera and SCO's Linux and UNIX product lines, and create a best of breed OS. Indeed, that would have been a marriage worth consummating.
SCO had partnered with Intel, IBM and Sequent briefly during the mid-1990s on " Project Monterey", an attempt to unify, merge and port the best aspects of the company's UNIXWare OS and IBM's AIX to the new Intel Itanium as well as IBM's POWER processor.
With the rise in popularity of Linux and 64-bit x86 chips, interest in Itanium waned and the effort to market the completed IA-64 variant was scuttled.
SCO's failure to market the IA-64 version of Monterey resulted in Ransom Love being pushed aside and succeeded by Darl McBride. With McBride at the helm of SCO, the company became entirely focused on litigation as opposed to product development.
SCO not only sued IBM for alleged contributions of Monterey code to the Open Source Linux kernel, but also large customers, end-users and vendors of various Linux OSes, including Red Hat and Novell.
This turned the company into a pariah not only among the legion of Open Source and Linux developers but SCO's own customers and the entire technology industry. The litigation debacle went on for years, chronicled in gory detail on sites such as Groklaw.
SCO's sales of UNIX products went down the toilet, and was forced to lay off virtually all of its employees to focus entirely on its lawsuits.
In 2007, SCO filed for Chapter 11 bankruptcy protection. In 2009, Darl McBride was fired. Early in 2011, UnXis Inc purchased SCO's remaining UNIX software assets.