Over the past decade or so, I’ve been witness to a number of technology companies hitting major roadblocks, while others have skyrocketed to new heights. What went wrong with those companies? And what product categories or competitors led to their demise or struggles? We take a look at some of the most notable ones, including both manufacturers and retailers.
BlackBerry: Most recently in the headlines, the Canadian company has finally reached a breaking point, with Fairfax Financial Holdings about to purchase it for $4.7 billion. Similar to Kodak’s situation in the camera business, and Palm in the smartphone/PDA world, BlackBerry has simply been unable to keep up with innovation. At a time when the large touch screen was taking over, BlackBerry held firm with its physical QWERTY keyboard design. When smartphones were moving from the business side and into consumer’s hands, BlackBerry was slow to target that market, and when it did with devices like the Pearl, it missed the mark when it came to intuitiveness, fun, and the growing trend toward apps. And as instant messaging continued to rise, and consumers praised Blackberry for its BBM service, the company refused to license it out, leaving the door wide open for competing, multi-platform services to swoop in. Before BlackBerry knew it, its share had dwindled while Apple, and new platform Google, managed to push it right out of the way.
Kodak: This may not necessarily have been a product of Kodak failing to innovate as much as it was a product of every Tom, Dick, and Harry getting into the imaging business once digital became mainstream. All of a sudden, players like Sony, HP, Casio, and the like were making cameras to compete with the market leader. Today’s generation likely doesn’t understand what a “Kodak moment” is anymore. And while many players have left the consumer digital camera market altogether (HP and Minolta, just to name a few), while other players surpassed Kodak in innovation (Nikon, Canon, Olympus), the entire market itself is seeing new competition from the likes of smartphone cameras today. Meanwhile, earlier this month, Kodak re-emerged from bankruptcy protection, which it filed for in January 2012, to serve business markets exclusively. The company sold a number of its patents to a group of tech companies that include some of the top-performers today, like Amazon.com, Apple, Facebook, Google, and Samsung.
Palm: It’s a really sad story for the company that essentially invented the PDA (Personal Digital Assistant), the device that eventually morphed into the smartphone as we know it today. The company simply failed to innovate during a time when competitors were rapidly developing new types of products and technologies in this space. Even HP couldn’t manage to breathe new life into the brand. HP bought Palm for US$1.2 billion in 2010, creating the webOS platform that was to be used across dual-branded HP Palm devices, only to confirm plans to discontinue the platform a year later. The future of webOS and what was once Palm remains up in the air, as HP may still license the technology out. But Palm as the brand we once knew is long gone.
Coby: As a staple brand in the affordable electronics landscape, Coby hit a snag when some of its key categories, like portable DVD players and digital photo frames, were all but annihilated by devices like the tablet. Coby had gotten into the TV biz as well, but massive competition that saw high-end brands selling for ultra low prices, and squeezed margins, left Coby in trouble on that side as well. Last month, fears were realized as it was confirmed that all Coby assets were acquired by restructuring and investment firm Gordon Brothers Group. The future of the company remains uncertain.
Nokia: While the company is still in good shape, continuing to lead the market for mobile phones, especially in Europe, the recent acquisition of its handset business by Microsoft for US$7.2 billion has some folks puzzled. Indeed, it’s an interesting move by Microsoft to help ramp up its presence in the growing smartphone market. And for Nokia, major mistakes in supporting the Symbian OS instead of Android, admitted by the company CEO Stephen Elop in an open letter to employees, left it teetering on the edge of extinction. Before the acquisition, Nokia recently shifted its support to Microsoft devices, making it the top maker of devices based on the Windows Phone OS. But will the move help Nokia maintain, and grow, its position? That’s all now in Microsoft’s hands.
Motorola: Another unfortunate story in the mobile world is Motorola, which in fact did invent the cellular phone, through Dr. Martin Cooper and his team of engineers that worked for the company back in 1973. And Motorola was on a positive track in the new smartphone landscape with the original RAZR phone, which launched to rave reviews. However, the company seemed to have lost its way, fading to the background as players like Samsung, LG, and HTC emerged as top providers in the Android space. Last year, Motorola’s Mobility Division was acquired by Google. I had the chance to interview Dr. Cooper earlier this year, and asked his thoughts on Motorola’s position and what went wrong. “Clearly, Motorola lost its way because when I was there, we were the leaders,” he said. “The RAZR was probably the best-selling cell ever when it was released. The Board of Directors decided maybe that Chris Calvin wasn’t good enough, so they brought in a guy named Ed Zander and in two years, he virtually destroyed the company.” Whatever the reason, Motorola is clearly not the force in the touch screen smartphone world it was with the flip and brick phones back in the day.
Microsoft: A series of blunders have left Microsoft in flux. While the company is still a massive entity within the technology world, enjoying continued profitability, a series of recent blows have left many wondering whether it will be in the same dominant position for the next generation. The latest Windows operating system has not been as well received as would have hoped, plagued in part by dwindling PC sales overall. Meanwhile, Microsoft’s performance in the smartphone business has arguably only been as good as it has been because of BlackBerry’s dismal performance. At E3, Microsoft left show-goers angry when it announced restrictions on games for the new Xbox One console, only to reverse many of the announcements after the backlash. And the latest ad campaign attempting to knock the iPad over Windows-based tablets is laughable. Current CEO Steve Ballmer has confirmed that he’ll head to retirement within a year. And now, it has been reported that a group of investors are pushing to oust Bill Gates as well, feeling his position as Chairman, and place in the decision-making process for a replacement CEO, may be stifling innovation for the company. What will Microsoft’s future be?
Ritz Camera Centres: Call this another victim of the smartphone revolution. This iconic U.S. based photography retail chain filed for bankruptcy protection in 2009, after an amazing 91 years in operation. The company operated 800 stores in 40 states under the Wolf Camera, Kits Cameras and Inkley’s names. Clearly, once again, the bite smartphones took out of the entry level camera business, along with a maturing camera market, led to its demise.
Borders: After four decades in operation, Amazon, eBay, and the rise in e-readers and tablets seemed to be the final nail in the coffin for Borders Group, which filed by bankruptcy protection in 2011. Not surprisingly, the company cited the state of the economy, along with the “rapidly changing retailing environment for books and related products” as contributing factors. The plan was to close 30% of its 600+ stores. But ultimately, Borders was unable to emerge from the dark, and its trademarks and customer list were sold to competitor Barnes & Noble near the end of the year. Perhaps Borders didn’t shift its focus when needed to things like e-readers, Blu-ray movies, and other products to offset declines in book sales. Here in Canada, Indigo for example, which operates Chapters book stores, now have a profitable business in children’s toys and other gift knick knacks and products.
Circuit City: Despite its best efforts, this U.S. retailer was unable to compete with the likes of Best Buy, Target, and Walmart, and eventually went bust. Circuit City stores closed their doors in 2009, though the acquired The Source by Circuit City locations in Canada remained open, eventually rebranded as just The Source, and purchased by Bell. Interestingly, Circuit City was the second-largest consumer electronics retailer in the U.S., next to Best Buy, with 567 stores across the country. But Best Buy’s dominance was just too much to handle. The brand was purchased by Systemax, Inc., and products continued to sell online for a short time. But late last year, the Website was merged with TigerDirect.
Blockbuster: A clear victim of the move toward downloadable and streaming movies (hello, Netflix, iTunes), not to mention the rise in movie piracy, Blockbuster was bought out by DISH Network in 2011 for US$320 million following its filing for bankruptcy protection in the U.S. in 2010. In 2004, at its peak, Blockbuster had an impressive 60,000 employees and upwards of 9,000 stores. Ever since the acquisition, however, DISH has been closing stores consistently, with just 350 locations left as at August 2013. In 2011, Blockbuster closed down all of its stores in Canada. Blockbuster failed to realize that consumers were moving rapidly away from the physical DVD rental business, and no amount of special offers, from extended return times, to loyalty programs, was going to change that. The Blockbuster model really had no hope of survival in today’s world. Though maybe a store selling merchandise linked to Netflix exclusive series’ like House of Cards, the new Arrested Development installments, and Orange is the New Black, might just be an option…
Sam The Record Man: It was a sad day in Canada in 2007 when iconic downtown Toronto retailer Sam the Record Man closed its doors. iTunes and illegally downloaded music contributed to the demise of the once destination location for music lovers. Meanwhile, the legacy remains as controversy arised this month over the fate of the iconic black vinyl record-shaped signs that used to sit above the store. Nearby Ryerson University agreed to refurbish it in 2008, but is now trying to back out of that deal. Whether the sign is fixed or not, the business model as it once was is certainly long gone.
It’s interesting to note is that many of the struggles here can be pointed back to product categories that Apple has innovated in or, in some cases, created in the mainstream. The iPod all but killed the CD business. The smartphone and tablet, with the iPhone and iPad as leading options, dug deep into the computing, entry-level digital camera, digital photo frame, portable DVD player, and portable music player markets, cannibalizing many of the categories altogether, and leaving others just barely surviving. And iTunes led to legally downloadable music becoming the way of the future, thus cutting into CD sales, and contributing to the demise of iconic shops like Sam The Record Man, and a&B sound.
This isn’t, of course, to place blame on Apple for the inability of these companies to be ahead of the trends. It’s up to every company to make its own decisions and seal its own fate. It does, however, show Apple’s role in many of the trends of the last decade that have drastically transformed once dominant business models.
Many of the product categories that used to thrive a decade ago have now been replaced by two main ones: the smartphone and the tablet. This goes for everything from music and photos, right up to networking, computing, and even home automation. It’s not surprisingly that cutting down 10 profitable product categories to two, with only a clear few dominant players, spells trouble for the industry overall. But they have also opened up a wealth of other product categories and revenue streams to enjoy; from mobile applications, to innovative accessories and peripherals, and other enhanced devices to work in tandem with them.
It’s important to note that those who wish to stay on board must be continually informed and innovate alongside the technology trends. Because waiting until after might just be too late.