6 tech companies that were on top of the world and lost it all

Sniff! Sniff! I smell failure. Tech failure! I smell — sniff, sniff — the picture fading at Kodak. BlackBerry fans ready to don black. Acer about to be broken. Motorola's cellphone business filled with static. Digg digging its own grave. Netflix jettisoning its DVD business from the streaming ship.

While this picture is admittedly overly grim, I know a little about tech flameouts — I was part of two of them. One was as an owner/founder of E/Town, a one-time competitor with CNET, but which died from a number of ills on Valentine's Day 2001; another was as sports editor (a former life) for WOW!, Compuserve's ill-advised Prodigy-like online family service, in 1996. (More on Prodigy in a bit.)

In the meantime, you could fill Arlington many times over with the number of companies that have flopped spectacularly, many way too soon. I'm not going to examine the whys, though one could easily fire off a half dozen common causes for tech company collapses:

  • over-expansion too soon
  • misguided "improvements" or changes
  • founder CEOs ill-equipped to manage a large company
  • an established company unable to adapt to new technologies or too big to compete with agile new competitors
  • a product produced either before its time or too late
  • the loss of a charismatic founder

Here are some sad stories of a few of my own "favorite" — used bittersweet — tech flops whose demises I've covered in the past.




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1. Pets.com (February 1999 to November 2000)

The poster child of tech flops, the failure of this over-blown pets supply website was at least entertaining. Pets.com typified the twisted logic of the first spate of online retailers. They sold goods below cost to build a customer base and market share. How'd they make money? Volume! But that adorable sock puppet garnered more attention than the pedantic pet products it was hawking.

In fact, the sock puppet survived Pets.com's getting put to sleep. It's now the promotional puppet of car loan site BarNone, ironically "Everyone deserves a second chance!"




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2. Polaroid (1937 to October 2001)

My first camera was a $20 Polaroid Swinger. ("Meet the Swinger!" was one of the catchiest commercial themes of all time) If memory serves, I got for my bar-mitzvah in 1968 (he said dating himself).

Polaroid's instant pictures (you didn't really have to shake them, as OutKast insists, to develop them) were used by kids like me, cool teens at parties and high-fallutin' fashion photogs as test shots. But digital cameras robbed Polaroids of their instant gratification and the name was sold to a company that now makes digital cameras (oh, the irony!) and 3D glasses.

Polaroid may soon be joined in tech eternity by its former competitor Kodak, which may be consumed by the very product it invented (more irony) — the digital camera.

Image via Stuff Middle East




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3. Prodigy (1994 to 2006)

At its height in 2000, Prodigy was the fourth-largest online service behind AOL, MSN and EarthLink, with 3.1 million subscribers. But the walled online gardens of the original Big Three (with AOL and CompuServe) online services were becoming passé, replaced by free open-access Web browsers. AOL and, to a lesser extent, CompuServe, managed to survive this paradigm shift. Prodigy did not.

The brand is now owned by AT&T, and its www.prodigy.com URL directs you to an AT&T Yahoo! page.

Image via Vintage Computing and Gaming




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4. Commodore Computer (1954 to April 1994)

Here's a company that produced the single most popular computer of all-time — the Commodore 64, which sold a reported 22 million units in the early 1980s, yet blew up like an atom bomb, but more publicly. After a tussle with his board of directors, company founder Jack Tramiel left the company in 1984 and bought Atari, taking lots of Commodore's brains and business with him.

Without its flamboyant leader, and trying to sell computers a generation behind its competitors at Apple and IBM clone makers, Commodore foundered and sank.

Image via Analog Memories




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5. RCA (1919 to 1986)

This is the Titanic of all tech company collapses. Imagine a company the size and breadth of Apple, ABC/Disney, Sony and Lockheed Martin combined. RCA, which essentially invented and ruled the record, radio, television and video recording businesses, fearlessly and ruthlessly bestrode the tech and content landscape like Klaatu. Then, RCA's legendary founder David Sarnoff died in 1971.

After a decade of diminishing influence and inventiveness (JVC actually invented and supplied the VHS VCRs RCA introduced to the American market in 1977), the company introduced a disc successor to the VCR. No, not laserdisc, which its competitors were perfecting. Something called CED (Capacitance Electronic Disc, pictured), an optical a disc that you played like a record, complete with a needle that carved away bits of the disc and its resolution with each play.

Less than three years and an estimated half-billion dollars later, RCA killed CED and, essentially, itself.

Image via Wikipedia




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6. Iridium (November 1998 to August 1999)

I want to leave you with on an upbeat note. Iridium actually isn't dead; it rose like a phoenix after a spectacular flameout. Iridium is a satellite phone company. When it was founded in the late 1990s, largely from funding from Motorola, the idea was a phone you could use everywhere, especially where you couldn't get cell signal, which, at the time, was plenty of places. Except launching satellites was expensive — and so was the Iridium service and its phones. Handsets were more than $1,000 and service was $1.50-$3/minute. Yikes. Consumers, obviously, stayed clear.

But Iridium's problem wasn't the service — it's who it was aimed at. The company went bankruptcy in 1999. Shortly after in December of 2000, a group of investors bought and re-formed Iridium to market its satellite phones to folks who could afford them — the military and the commercial market. This strategy worked. Earlier this month, Iridium passed the half a million subscriber barrier.

So for all those companies facing failure, there is always hope if you can adjust and adapt. Otherwise — sniff, sniff — whew! As Lynyrd Skynyrd once sang, the smell of death is all around you.

Image: "Spirit of Iridium" by Robert McCall

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CORRECTION(S): We originally had the Black Eyed Peas up there instead of OutKast in regards to the shaking of Polaroids. Also, Commodore declared bankruptcy in 1994, which the article stated, but a subheading got it wrong. This has been fixed.