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12/16/2011
03:57 PM
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12 Epic Tech Fails Of 2011

From Apotheker to Zuckerberg, tech chiefs had plenty of time on the hot seat this year. Take a look back at the notable product, strategy, and security fails of 2011.




All of the tired mantras about failing (do it often but fast, it builds character) might work well on PowerPoint slides and in lectures to entrepreneurs, but companies and people don't set out to fail, and they don't brag about it when they do fail.

Chronicling the failures of companies is a special art that requires a cold heart and an assassin's dispassion. Or just a pundit's effluence. Somebody's got to be the bad guy, pointing out the foibles and follies of the IT industry, basking in all its ignominy. And it might as well be us.

An aside before we press on: Some readers might wonder why there are no Google technologies on this list. After all, Google killed more products this year (Wave, Buzz, Health, Labs, Gears--and don't get us started on Google Plus) than most companies launch in their lifetimes. But alas, InformationWeek's Tom Claburn covered that ground in Google's Graveyard: Dead Products Of 2011.

HP And Leo Apotheker

Ever since Oracle and its attorneys forced Leo Apotheker into hiding a year ago rather than testify at the Oracle-SAP trial, the ex-SAP-turned-HP CEO has lived under a cloud of scrutiny and doubt. In his short 10 months at the helm of HP, he did very little to erase either. He did pump more money into the company's famous R&D machine, but he also managed to put the company's $41 billion PC business in play--maybe for sale, maybe as a spinoff, but certainly as something not entirely within HP. He doubled down on mobile and then pulled away the company's chips before playing its hand. He spent big money on a big acquisition (content management software vendor Autonomy) that might ultimately pay off, but many of the customers who depend on HP for the core of their data centers were left wondering whether they had been left behind as HP chased something more glittery. People close to the company say Apotheker also brushed aside key executives and left the troops uninspired, at best.

Some insiders close to Apotheker insisted he is brilliant, and so we often gave him the benefit of the doubt. But time and again he disappointed us with his banality, or by taking issue with the premise of a question rather than just providing a truthful answer. He seemed more enthralled with escaping an issue or trying to leave his questioner wounded than with articulating a strategy. Or maybe he just didn't have one.

It's unclear whether Apotheker failed HP more than the company failed itself--mostly by choosing him, but also by letting him rush so quickly into big decisions. HP is the cloud. HP is all-in on mobile. HP is a software company. The PC business is too different from all of our other businesses.

Recently, we asked HP chairman Ray Lane what single thing changed between the company's announcement last summer that it was exploring spinning off its PC unit and new CEO Meg Whitman's decision a month ago to keep it intact. "It was too expensive," Lane replied. "The economics didn't work ... The cost to do the separation, the cost to set up two companies, the cost to each company and especially to HP was too great."

Fair enough, but it's a conclusion HP should have come to behind closed doors, before making such a mess of things. 2011 was a year in which HP clutched defeat from the jaws of victory. --Fritz Nelson


In early 2009, Cisco acquired Pure Digital, maker of the ever-popular Flip video camera, for almost $600 million. The Flip devices had ushered in a new form factor, packaging HD video into a camera the size of a deck of cards.

Cisco saw a chance to put its brand behind a device whose traffic would fill the pipes of an Internet built on Cisco technology. It saw a device into which it could embed its dominant Wi-Fi technology, catering to the YouTube and Facebook generation. And it saw an opportunity to build its brand with consumers instead of remaining a faceless company behind utility infrastructure.

And then in late 2010, with hype normally reserved for a new i-something, Cisco presented us with Umi, a home telepresence system that was sexy good, though flawed from here to Cisco Way. At the time, I wrote: "There's plenty to like here. On the surface, at least, the quality and packaging of the technology are high. But there's also plenty to question, like whether Cisco can capture consumers, the debilitating effect of a closed ecosystem, and the price."

None of it worked out. Cisco's consumer foray became a major distraction for the company, which at the same time was trying to define and own a new generation of data centers behind its Unified Computing and Servers (UCS) architecture, competing with the likes of HP, Brocade, and Dell as it struggled to maintain the profit margins it once commanded. In April, Cisco abandoned its Flip business after only two years. Cisco was slow to re-invent it, or re-invent itself.

Having watched John Chambers create immense value for shareholders and customers over the years, I have little doubt that Cisco will figure out a way to recover, but clearly 2011 wasn't a banner year. --Fritz Nelson

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I have a soft spot in my heart for RIM. As a longtime BlackBerry user, as an industry observer and writer whose audience is enterprise IT, I watched over the years as RIM just kept getting things right. Although 2011 was the year when mobile device management products multiplied like bunnies from a rabbit brothel, RIM has owned MDM for many years. Even now, as RIM moves its management capabilities to the cloud and starts to embrace iPhones and Android devices thanks to its Ubitexx acquisition, the BlackBerry Enterprise Server is still the high-performance, secure device management technology to beat.

A problem now for RIM is that there is formidable competition. A bigger problem is that enterprise IT managers have succumbed to the immovable forces of Apple and Google. The biggest problem is that though RIM's core services remain strong, the other parts of its mobile ecosystem were felled ages ago. I remember two years ago asking a top RIM executive when the company would have a touch experience. He showed me that the trackpad was very much like a touch interface. I sent him back to Canada with a gentle pat on the back.

But just when you thought things couldn't get worse for RIM, they have.

Following a September financial statement that featured a 15% drop in revenue and an anemic 750,000 BlackBerry Playbook tablets sold, analysts and shareholders called for the heads of RIM's co-CEOs, Jim Balsillie and Mike Laziridis, and a complete restructuring of the company. Then, in mid-October, a worldwide BlackBerry network outage left users without service for days. The rock-solid BlackBerry service also was now in question.

Earlier this month, RIM took a $485 million fourth-quarter charge to write down unsold PlayBooks, even after the company's steep discounts. Sales of RIM's newest BlackBerry phones started well, but the company is already warning that revenue will be less than its earlier guidance. Then RIM lost the name of its newly announced operating system, BBX, in a court battle, and to top it all off, two RIM executives got unruly on a recent flight, leading to their arrest and subsequent firing.

Unless RIM can get its mojo back, its remaining customers will trickle away when contracts expire, and its developers--already frustrated and confused--will move on as well. --Fritz Nelson

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A year ago, Apple held more than 95% of the global tablet market, according to a Strategy Analytics study cited by Fierce Wireless. Today, Apple still dominates, even though its market share has declined to 67%. But considering that about 15 vendors--the likes of Samsung, HTC, LG, Vizio, Acer, Asus, RIM, HP, Sony, and Lenovo--comprise that other 33%, Apple remains a one-company army fending off a bunch of also-rans.

That won't last. Even with the iPad 3 on the horizon, Android devices are sure to take even more market share in 2012, especially with Barnes & Noble and Amazon joining the fray. The year 2013 will mark the beginning of Microsoft's ascent with Windows 8. For now, however, Apple is still king. --Fritz Nelson

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Apple has done it again, tarnishing an otherwise successful product launch--iPhone 4S--with another curious failure, from a company hell bent on perfecting the user experience. Last time, it was an antenna problem that caused dropped calls if users held the phone in just the wrong spot. This time, it's sub-par battery life.

Because Apple is Apple, this failure hasn't hurt sales much--the company has sold several million iPhone 4S devices since introducing it in October. It sold more than a million on the first day alone.

Still, the battery problem was almost comically bad. A faster processor, a better camera, a voice-enabled assistant (Siri), and a vastly improved operating system (iOS 5) are hardly worthwhile if users must constantly recharge their phones or buy battery cases that bulk them up. --Fritz Nelson

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In March, AT&T and T-Mobile announced a merger, valued at $39 billion, that would let AT&T overtake Verizon as the No. 1 U.S. mobile carrier, as measured by revenue and subscribers. AT&T said the merger would create jobs, as if it were a private sector stimulus plan. But the Department of Justice, the FCC, Sprint, and pretty much everyone with access to blogging software began to question the deal. The DOJ filed an antitrust suit, and AT&T withdrew its application from the FCC in order to fight the DOJ suit and took a $4 billion charge to mitigate what it will likely have to pay T-Mobile when the deal officially collapses. That's a hefty price to pay for failure. --Fritz Nelson

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Here's a bonus failure. It's easy to sit here and bang away at the missteps of others. It's not so easy to look within, but here goes. For much of this year, we at InformationWeek have been using Jive SBS software as our online story commenting system. The software never quite worked. For us, it required constant system reboots, which often deleted the comments you had posted. For you, it required several painful steps to post a comment, including an absolutely annoying captcha feature, and then it often wasn't clear whether the post had gone through.

We received a lot of reader complaints; many of you just stopped trying to post comments. It took us a while, but we finally got it--we switched our commenting system to Disqus in September and apologized for making the old process miserable. The new system has been running smoothly ever since.

OK, maybe that's not an "epic" fail, but it sure felt like it to us. And thus, we're thankful for your feedback in 2011. It has brought us much success, and we look forward to more in 2012. --Fritz Nelson

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In July, VMware set off some unexpected fireworks when it announced its new vSphere 5.0 product was coming with a pricing change that increased overall licensing costs for large enterprise customers. When InformationWeek surveyed our readers about the VMware pricing change, they spoke clearly. In our survey, 25% called it a major deterrent to adoption, 27% called it somewhat of a deterrent, and 9% called it a deal breaker. After griping like this from customers--and some pundits making comparisons to Microsoft and Oracle licensing pain--VMware modified the policy, within a few weeks.

VMware CEO Paul Maritz learned a thing or two while he was at Microsoft. He loves to use certain catchphrases in his speeches, such as comparing his cloud competitors to Hotel California, where "you can check in, but you can never leave." The company that Gates built also taught him about cash cows and the importance of not being seen as greedier than Larry Ellison.

Maritz's team took a black eye for this episode from some of its customers running the fastest with virtualization, though by the time he gathered the faithful for the VMworld conference later in the summer, the bruised customer feelings had mostly healed. (See what else InformationWeek's Charles Babcock thinks VMware did right and wrong in 2011.) --Laurianne McLaughlin

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In the wake of protests in January 2011, Egypt's government, led by President Hosni Mubarak, decided to just say no to Twitter and Facebook for its citizens--then turned off Internet access entirely for almost a week with the help of the country's four ISPs.

As InformationWeek's Mathew Schwartz reported, the Organization for Economic Cooperation and Development, a think-tank based in Paris, estimates that the blackout cost Egypt's economy about $90 million, or $18 million per day, comprising 3% to 4% of the country's economic output. Mubarak was forced out in February after several weeks of violent protests and is awaiting trial on a variety of charges.

The "Arab Spring" of protests was one reason that Time just declared The Protester its person of the year, 2011. --Laurianne McLaughlin

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Just when Facebook CEO Mark Zuckerberg started to look grown up, meeting President Barack Obama and even donning a suit for the occasion, his company made another privacy gaffe. In June, Facebook quietly rolled out a facial recognition feature change that made it easier for people to tag friends in photos, or tag large batches of photos at once. More than a year after a much-analyzed privacy revamp in May 2010, Facebook seemed not to have learned its privacy lesson.

In November, Facebook settled charges with the Federal Trade Commission that it had not done a sufficient job of protecting consumer privacy--a settlement that included fines and agreeing to 20 years of privacy audits.

Facebook promised users, as part of that settlement, that future privacy settings tweaks would have an opt-in approach. Status: Users will have to wait and see.

Want to poke your own fun at Zuck? "The Social Network" (two-disc collector's edition!) movie can be yours now for a mere $10.49 from Amazon.com. --Laurianne McLaughlin

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As so often happens in the tech world, Carrier IQ came out of obscurity seemingly overnight--but not in a good way. In early December, the company suddenly found itself competing on the front page of Google News along with Lindsey Lohan as a recipient of the splashiest headlines.

The company's smartphone monitoring software, which stored Web browsing information and related data in the name of improving wireless network performance, came under fire for being hard to find--and even harder to remove. Carrier IQ first threatened to sue a security researcher about his initial findings on the software utility, then softened its tone. As of Dec. 14, Carrier IQ had released a 19-page report, detailing what data it tracks, and said that it didn't share that data with police or entities such as the FBI.

InformationWeek's Jonathan Feldman dubbed the Carrier IQ episode "the Jerry Sandusky of mobility, an insane breach of trust," for enterprise IT, and called on device makers to adopt Apple's no-crapware approach.

Looks like Carrier IQ execs won't be having a very merry holiday---but a lucky public relations firm or two might make a mint in 2012 trying to restore the company's image. --Laurianne McLaughlin

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There are fails in the public sector, too, and one was when the National Cancer Institute discovered that it had a problem on its hands to the tune of $350 million for an ambitious project. In March, the NCI's board of scientific advisers issued a report that said the CaBIG cancer research grid project was riddled with problems, InformationWeek's John Foley reported.

The CaBIG (Cancer Biomedical Informatics Grid) project aimed to provide shared computing power for biomedical research, plus produce software and formats to help scientists at NCI-funded cancer centers share results. But the advisers found too few cancer centers were using the resources, and that the effort had mushroomed into an unwieldy "software enterprise" of more than 70 applications, Foley reported. The board called for a halt on new development and a thorough audit, among other changes. File under: Software project scope gone wrong. --Laurianne McLaughlin

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RSA, makers of the SecurID two-factor authentication technology that is core to the security strategies of hundreds of enterprises, found out in March that even core security technologies can be compromised. As Dark Reading's Tim Wilson says of the attack, "the very foundation of tokens and authentication is shaken, not to mention one of the oldest and most respected security companies." RSA found itself in the position of explaining to customers that a strong security organization can be taken down by a sophisticated attack. In October, RSA chief Arthur Coviello pinned blame for the advanced persistent threat attack on a nation state, without naming names. Even now, security experts continue to speculate just what SecurID data was nabbed, because parent company EMC has not disclosed full details.

On the flipside of the coin, Sony's less sophisticated security strategy was defeated with ease, beginning in April, Wilson notes. Breaches affected millions of customers' personal data and touched the PlayStation Network, the Qriocity streaming video and music service, and SonyPitcures.com.

Sony was hacked "multiple times from multiple vectors by multiple attackers, and it didn't even seem to be difficult. Even the attacker commented on it," Wilson said. In September, Sony hired its first chief information security officer, former Homeland Security official and Microsoft exec Philip Reitinger, as InformationWeek's J. Nicholas Hoover reported. --Laurianne McLaughlin

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