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These tech giants had a valuable market locked down. Then they screwed up.
Seeing a fallen statue of a long-dead king is a good reminder that glory and power, which seem eternal in the moment, are always transitory. And the tech industry is littered with companies and products that dominated the marketplace only to fall to competitors or changing tastes after only a few years (or maybe even months). Join us on a tour of seemingly unassailable tech empires that crumbled with remarkable speed.
In the 1970s, Wang Laboratories reinvented the very act of writing by mass-marketing standalone word processors that stored text on tape and allowed pages to be edited without laborious reprinting. By the 1980s, Wang's word processing focused Office Information System was in place in 80 percent of the world's large corporations. But company founder An Wang was so focused on his rivalry with IBM that he refused to explore the possibility of IBM-compatible PCs -- and within a few years, more general-purpose machines had driven Wang's word processors from the market they once dominated. The company went bankrupt in 1992.
For the first generation of Web users outside academia in the mid-1990s, Netscape Navigator was the Web. In 1996, depending on which report you believed, Netscape was the browser of choice for 70 to 80 percent of Web surfers. But that advantage would be wiped out remarkably quickly. You had to pay to put Navigator on corporate-owned computers; IE was free to everybody, and Microsoft's work to integrate the browser into its omnipresent OS helped launch it to glory. Navigator lost the lead to IE by 1998; by 2002, its percentage of market share was in single digits.
Flickr's tagline -- "almost certainly the best online photo management and sharing application in the world" -- was entirely accurate in the early '00s when the site launched. Yahoo has been universally blamed for buying the site and then letting it slip into irrelevance, but anyone would've struggled to keep the site on top as all the problems it solved -- file storage, photo album creation, connecting with friends -- were taken on by more general purpose sites. It is inexcusable that Flickr lost the quick-phone-photo market to Instagram, though, and it's unclear if even new Yahoo CEO Marissa Mayer can breathe life into the site.
In 1981, IBM jumped into the burgeoning microcomputer market with the PC, and found success beyond even what the company's own executives expected; by 1983, they had grabbed a quarter of the market and were beating Apple handily. But the seeds of the PC's defeat were part of its very design: To get it to market quickly, IBM had built it almost entirely out of off-the-shelf parts; its only proprietary aspect, its BIOS, was easily reverse-engineered by rivals who soon began peddling PC clones. The company was full of hubris before the release of the PCjr, but that machine's lack of full PC compatibility showed IBM's misunderstanding of the very market it had created.
In the glory days of MS-DOS, the word processor to beat was WordPerfect, which spent the '80s leagues ahead of its competition, and managed to pack user-friendliness and power into a text-based environment. But like an animal precisely evolved for its environment, it failed to survive when the climate changed; it took years for a stable Windows version of WordPerfect to appear, and when it did, many of its most beloved keyboard shortcuts were overridden by Windows defaults. Some suspect Microsoft used hidden APIs to give its own soon-dominant Word an unfair advantage. Today WordPerfect limps on in niche markets, like law offices, while Word rules as a de facto standard.
At the turn of the century, Sun Microsystems and its stock price were flying high. All the disparate products that Sun had put together over the years made it a dot-com darling: everybody wanted to power their new Websites with Java applications, SPARC servers, and Solaris. What nobody realized was that everyone was buying this stuff with fake bubble money, and when the bubble burst, they soon discovered they could run x86 Linux servers at a fraction of the cost, and Java, in which Sun had invested so many resources, was free to download. Oracle snapped up the diminished company at a fire sale price in 2009.
Here's how unprepared RIM was for the advent of the iPhone: the day after Steve Jobs revealed the first model on stage in 2007, RIM engineers insisted that he was lying about its capabilities, because no phone could do all that with any kind of useful battery life. They were wrong, of course, but the mistake reflected the obsessions that had kept the BlackBerry on top for years: minimizing power and data usage. With advances in battery tech and 3G networks coming online, these suddenly seemed less relevant, and RIM's hegemony collapsed before it could update its aging operating system. Oh, and it turned out people were OK typing on an on-screen keyboard, too.
Myspace exploded out of the social media gates in the early '00s, blowing past pioneer Friendster and getting a half-billion dollar payday when it was bought by News Corp. What went wrong after that? Just about everything, co-founder Chris DeWolfe later admitted. The ColdFusion codebase, which had made it easy to get the site up and running at first, made it difficult to expand or improve quickly. By joining a mature company rather than taking VC money, Myspace suddenly had to turn a profit, and ended up overdosing on janky looking ads. And a largely baseless panic about sexual predators sent users running into the arms of Facebook.
The secret to the Atari 2600's success was its slow start. The public was burnt out on Pong, which caused Atari's ROM-cartridge-based competitors to leave the market. When people finally figured out they could buy multiple games for the console -- and that one of them was 1980's smash hit Space Invaders -- the 2600 shot to glory and huge market share. It didn't last. Atari's best programmers left due to low pay; other consoles were able to reverse-engineer the system and offer compatibility; and Pac-Man and E.T. proved to be huge flops. Atari could've licensed the Nintendo Entertainment System for the U.S. market, but they passed, giving up their last chance for industry relevance.
Sony invented the Walkman and made millions off of it. So why didn't it also invent the iPod, the Walkman's obvious successor? The question gets to the heart of Sony's eclipse as a electronics superpower. Was it because Japan had an appliance-centric rather than a PC-centric culture? Maybe, but the real answer is probably more pedestrian: Building a digital Walkman would've involved cooperation between the company's content, engineering, and design silos, and that just wasn't in the corporate culture in the early '00s. So Sony missed the boat.
Emerging Leaders 2020