Is the Quick Death of Failed Tech Products a Good Thing?

Joining the ranks of accepted submitters, HumanEmulator writes "The NY Times reports on how the Hollywood summer-movie business model is being applied to tech products: 'Every release needs to be a blockbuster, and the only measure of success is the opening-weekend gross. There is little to no room for the sleeper indie hit that builds good word of mouth to become a solid performer over time.' New products are being pulled from shelves only weeks after a lackluster release. What if the TouchPad, the Microsoft Kin, or even Google Wave had had more time on the market? Is this blockbuster-or-bust model a good thing for consumers, or for the industry in general?"

Comments

It's an investment strategy

[plover]

I knew a guy who started .com companies like popcorn. His business plan was the same for all of them: be successful enough until someone bigger buys you out. His goal was to work for a year at trying to get a thing going, then sell it for a couple million dollars for that short duration that it would be hot. Most of these things were very transient. They were unknown a month ago, on the rise a week ago, popular today, and by next month they probably wouldn't even be a memory.

I think these big companies learned their lessons. They tried over and over to pump money into these little concepts that never had longevity as a part of their plans. They bled red ink.

So if they don't see that initial wave, they're cutting the bleeding off now before they pump additional useless money into a concept that never will make it. It makes financial sense.

Re:It's an investment strategy

[tepples]

Companies deduce from this that future value [of a product] is worth nothing.

So why do they keep pushing for ever-longer terms for the copyright in a product if the value of that copyright is nothing?

Re:It's an investment strategy

[Penguinisto]

That's easy - in case someone else actually does make it into something useful and long-lived. Nobody wanted that generic photo of Obama as candidate until some guy ran it through a photoshop filter, slathering it in red and blue colors... all the sudden it became a hot property. The original photographer, now seeing that there's a chance to make some dosh off of his work, immediately launched a lawsuit.

That said, I think you're conflating creative products (movies, songs, books, etc) with physical products, which generally do not have a copyright. OTOH, they have patents, which, as we've seen lately, can be damned profitable in themselves, even if the original product that used them never really went anywhere.

Re:It's an investment strategy

[tepples]

That's easy - in case someone else actually does make it into something useful and long-lived.

Except I've seen that some companies are often more willing to decline a given use entirely than to offer a licensing arrangement.

I think you're conflating creative products (movies, songs, books, etc) with physical products, which generally do not have a copyright.

Creative products are often sold fixed in a physical product (DVD, CD, printed book, etc).

Re:It's an investment strategy

[tomhudson]

Companies with shareholders are legally required to maximise short term shareholder value.

[citation required]

Counter-citation

Everything Old is New Again: Lessons from Dodge v. Ford Motor Company

M. Todd Henderson

University of Chicago - Law School

December 2007

U of Chicago Law & Economics, Olin Working Paper No. 373

Abstract:
There is much more to Dodge v. Ford Motor Company than meets the eye. Dodge is often misread or mistaught as setting a legal rule of shareholder wealth maximization. This was not and is not the law. Shareholder wealth maximization is a standard of conduct for officers and directors, not a legal mandate. The business judgment rule protects many decisions that deviate from this standard. This is one reading of Dodge. If this is all the case is about, however, it isn't that interesting.

But Dodge is a part of the corporate law canon because it is about much more than this. This essays shows that what the Michigan Supreme Court did was actually an elegant solution to a complex legal and policy issue. The history of case and the parties also shows how many prominent aspects of corporate law and practice have long and under-appreciated histories.

Henry Ford failed twice as an entrepreneur before finding success with the Ford Motor Company. His failures, which he blamed on meddling investors, presaged not only his conflict with the Dodges, but also show the importance of allocating and exercising control rights deftly. The history demonstrates how modern techniques for allocating control rights separately from economic rights would have helped the parties avoid costly and acrimonious litigation. Perhaps most interestingly, however, the back-story of the case shows that it is not clear at all that the parties wanted to avoid litigation. Both the Dodges and Henry Ford used the legal process as a tool in what was at base a business dispute. To paraphrase von Clauswitz, litigation is business by other means. The history of this case provides a prototypical example and also shows an example of how courts can resolve disputes well in these cases.

This essay also shows how practices common today in venture capital transactions, corporate reorganizations, and other areas of corporate law and practice appear vividly in the back-story of this case. Many seemingly new ideas are not, and examining their historical roots can help us better understand them and their place in our modern understanding of corporate law.

Number of Pages in PDF File: 39

Keywords: corporate law

Re:It's an investment strategy

[hairyfeet]

Sadly I can answer that first one, greed, greed to the point of stupidity greed.

I should know because a friend and I had an idea for what I thought would be a neat little product...DOSBox...In a box. It would have been a flash stick with a preset and configured DOSBox loaded up with games, you'd have a shooter stick, a puzzler stick, platformer, variety pack, you get the idea. We were also gonna avoid the games everyone already has ways of running easily, your Wolf3Ds and Dooms and the like and concentrate on the offbeat and the quirky.

So what happened? Simple half the games when we started researching are forever lost in a no man's copyright land where the company has changed hands so many times nobody has clear rights to squat, but the worst was the second category, where we would find games with a clear title and the owners would want more than when it was new because "We might want to do something somewhere sometime with it". We are talking games that could be bought on eBay by the crateload for $5 and the assholes are wanting 30% of the gross!

So if you want to know why the bastard Valenti made sure copyrights were "forever minus a single day" it was so greedy pricks could lock huge chunks of our history up, either behind paywalls or just to let it rot until they could find a way to "maximize the profit potential of the IP" which is of course never.

Our little idea wasn't designed to make iMoney, hell we would have made maybe 3% profit after BOM and throwing some back to the DOSBox guys, we were doing it because we loved classic gaming and wanted to make it easy for the younger generations to try the games. Instead most likely the games will never get re-released on squat, simply because of the greed and endless copyrights. if I there is a hell I wish Valenti a nice spot in it, the sorry piggish fuck.

Re:It's an investment strategy

[gorzek]

You wanted to profit off of other people's games and were then upset that they wouldn't let you--or rather, you were unhappy with the terms under which they would permit it. So, why not sell it without games or with some FOSS games instead?

I hope you hadn't invested much in developing it, considering you hinged its success entirely on what third parties would charge for the games you wanted to include.

Re:It's an investment strategy

[gorzek]

I guess you didn't "get it," either. :)

You don't own the rights to those games. They do. They get to set the price, and by asking for an exorbitant sum, it's just their way of telling you, "Fuck off, we're not interested."

They have no incentive to license an old game at a cheap price to a hobby product, when they're better served holding onto that property so it can be sold en masse for millions of dollars with a bunch of other properties. They're thinking big, you were thinking small.

Did they miss out on some money there? Probably, but I suspect not much. The harsh truth is that it would likely not have been worth the lawyer fees on their side to go through with it unless you were paying a handsome sum.

I don't know why you use China as an example, considering their strategy is to just make poor-quality knockoffs of everything and pay little or no attention to anyone's IP rights. Certainly that's a recipe for innovation and success.

Re:It's an investment strategy

[aix tom]

Of course they not really "own" the game they have a "copyright" on it. "copyright" that was intended to "To promote the Progress of Science and useful Arts", so that IN THE END the product that is created winds up in the thing we call "culture".

If all the Grimms fairy tails had still be copyrighted, and the Grimms descendants hat wanted Disney to pay exorbitant licensing fees, what movies would Disney have made?

Nowadays most stuff that gets created just vanishes into never-to-be-seen-again copyright black holes. AT LEAST "copyright" should be coupled with a "copy obligation", that everybody requesting a single copy should be able to get a single copy at the last suggested retail price from the copyright holder, or you lose the copyright.

Re:It's an investment strategy

[hairyfeet]

Bimbo Newton Crosby, nice to see that SOMEONE gets it. The IPs we were looking at weren't the Wolf3Ds or anything that could currently be bought or even played on a modern system without DOSBox, we're talking the weird and cheesy stuff that sold on Shareware discs back in the day. in fact that was what gave me the idea, to create a modern shareware style device so that those that don't remember what that was like could get a taste.

But when we actually tried to sit down and talk to these people, people that were making ZERO PROFIT on the IP, and had NO interest from anybody? Most wanted $75k+ upfront and 30% of the gross AND many wanted rights to anything We did. yeah go fuck yourselves.

The bitch is i could have outsourced it to China and probably have them selling on Chinamart RIGHT THIS MINUTE and not have to give a shit. It is THIS which is why China will win, because it is EASY to simply ignore the copyright bullshit and IMPOSSIBLE to play by the rules.

Sadly as you said like the movies that are disappearing now (you know about that right? tons of movies from the 30s and 40s are rotting in the vaults because the studios can't figure out how to "monetize the IP" and won't give up the rights either) the vast majority of these games will go right into the black hole, never to be played or enjoyed. simply because copyrights are so rigged that every corp thinks their shit don't stink and they can get AAA prices for nothing.

Re:It's an investment strategy

[Hognoxious]

They have no incentive to license an old game at a cheap price to a hobby product, when they're better served holding onto that property so it can be sold en masse for millions of dollars with a bunch of other properties.

One teeny weeny problem. It can't be "sold en masse for millions of dollars yada yada", because it isn't worth anything close to that.

They're thinking big, you were thinking small.

No. They were thinking greedy, he was thinking realistic, and you think you're a lot smarter than you are.

Re:It's an investment strategy

[wisty]

Isn't that the story of Ali Baba and the 40 thieves? Ali Baba finds the thieves cave, and a reasonable amount of their loot. His brother comes in, and takes so much loot that the thieves are able to catch and slaughter him. The moral - if you try to make out like a bandit, you might get your ass handed to you.

The problem with the publishers is, they think their baby worth more than any reasonable market value.

People who kill tech products are often making the same mistake - they overcapitalize (because their idea is worth bazillions), then have to shoot the white elephant they ended up raising.

Google Wave does some cool(ish) stuff. But they made it too big, too fast, and found it couldn't support the development budget they had allocated to it. And I bet shrinking the budget wasn't an option, because everything became big, slow, scalable, and impossible to manage with a small team.

Re:It's an investment strategy

[hairyfeet]

THANK YOU it is good to see someone understand. Some of these games? BAD, we are talking MST3K bad. That was part of my desire, because in the days of shareware you got the good, the bad, and the cheesy, all on one disk. the only real difference between what we had and the shareware of old is instead of "300 games for $5!" like in the old days we were gonna try to do it by genre, puzzle, horror, shooters, etc. Hell I even offered to do like Shareware and link to their site so they could try to upselll them or sell other properties!

But sadly trying to "deal" with these MBA shitbrains I saw why China WILL win, it is because for them it is either "insane iMoney" or nothing, so they get nothing. look at HP getting rid of their PC line which makes damned good money, but because it is ONLY 6% or 7% profit that simply isn't good enough. Its not iMoney! They must make "More monies growing per quarter nom nom nom" or to them its completely shit. Lenovo and the other Chinese companies will be more than happy to take that 6% profits and if their IP reindeer games get in the way? China will tell them to play a nice game of hide and go fuck yourselves. like I said if I'd have outsourced I could have it on Chinamart right next to those Nintendo emulators with 300+ games.

But instead its just one more American idea and business that simply won't get made thanks to the copyrights and patents minefield. That is taxes that won't get paid, jobs that won't be filled, and for those greedy pigs ZERO PROFITS because they sure as fuck aren't gonna sink a dime of THEIR money and at the prices they want a single shit game would cost more than your average AAA game. Meanwhile if I was willing to just deal with China? I could have kept the money and told them to take a flying fuck. if this isn't proof copyrights are broken I don't know what is. Copyrights destroy markets and innovation, simple as that.

Re:It's an investment strategy

[hairyfeet]

Nooo, it is proof of their pure MBA driven greed. Are you saying HP doesn't know how to make deals? Because they are getting rid of a consistent money earner because it ONLY gets 6% profit. That ain't iMoney! Dealing with them I could tell EXACTLY what was going on. They would tell me to get back to them in a day or two, they would go to WSJ or some other site and find how much the biggest sellers on the app store were making and then ask for 30% above THAT. After all if anyone at all asked for our IP it must be uber valuable, right?

That is why I'm seriously thinking about seeing how much it'd cost just to do the whole thing in China. I could get the code written and have a prototype made here and then have it cranked out in China and sell it on Chinamart and places like that. Because dealing with IP holders I've found the sheer unstoppable greed of the MBA dipshits simply makes dealing with the minefield not worth it. Then I can tell them to play hide and go fuck themselves like the Chinese do. It simply isn't worth doing anything in America if it involves IP anymore.

Depends

[geoffrobinson]

If there was a multi-multi-million dollar ad campaign and there's no interest, you at least need to regroup.

Winners never quit and quitters never win, but if you neither quit nor win you are just a fool.

Products need more time....

[Chanc_Gorkon]

48-49 days does NOT make a developer community. The Kin was an exception as there was no development community but HP did WebOS no favors. People aren't going to buy the damn thing if they can't get or program apps. This all started when Palm was REALLY LATE with the SDK. HP did it no favors, but it was right on the cusp of something that could have been cool.

Leo Apotheker was and IS the WRONG person to lead HP. HP hasn't ever been about the high end servers for years. Sure, people bough Superdomes but IBM had far eclipsed HP in the amount of servers it sold. Sun did too (but still failed). Leo is going down the wrong path. HP made great calculators, printers and computers and was KNOWN for them. They made servers too but when was the last time you heard them talk about that? They had HPUX and Tru64. Did nothing with either.

This is a sad sad road that HP went down and it might ultimately kill HP.

An excellent way to ensure poor sales

[petes_PoV]

New products are being pulled from shelves only weeks after a lackluster release

So now people will think: I'm not going to buy this new product in case they pull it, and I can't get support any more - or a software update - or a bug-fix.

Once this becomes the established pattern, everyone will defer their purchases until at least version 2 (as most wise buyers do these days, anyway) just to see if the product has got a future. If products get pulled because nobody buys them - because they're all waiting to see if anyone *else* buys it, then the whole industry is in a downward spiral. The only way out would be to start applying serious bribes to reviewrs, if that doesn't already happen.

Bad products

[nine-times]

The problem with the examples given (TouchPad, the Microsoft Kin, and Google Wave) is that they were ultimately not great products. Not only should they have been yanked, but they really shouldn't have been offered in the first place. I say that not having actually used the TouchPad, but having had experience with WebOS and being generally unimpressed.

And... well... it's not necessarily so much that they're bad products, but that they're marketed poorly. Most of you will misunderstand and think that I mean that they weren't advertised well, but marketing is a different thing. A large part of marketing is determining that there is a market, determining what that market wants/needs, and then building/adjusting a product to meet those wants/needs. None of that was done very well with any of these products.

The Kin, for example, was a semi-smart phone released into a world where people generally either want smartphones or they want dumb-phones, and even the people who want dumb-phones are dying out. Since the smart phones have been so successful, there is a big demand and development community for smartphone apps, and there's a limit to how many incompatible platforms are going to be supported. As a result, the whole world is being divided into iOS and Android, and if you want to compete, you have to offer something compelling enough to displace one of the two big guys. The TouchPad suffered from the same thing: it was developed for a market that didn't exist. The world is all Android and iOS, and there isn't really a market for a 3rd platform at the same price point with no compelling advantages.

Google Wave had a different problem: it never defined what problem it was trying to solve. Was it a collaborative document editor, a replacement for email, or a weird IM client? I used Google Wave for several months, and I still don't know. They also launched a communications platform on an invite-only basis, which meant that you didn't have anyone to communicate with. By the time they had a wide release, everyone had already given up.

In each case, I wouldn't say it's an issue of the developer/manufacturer giving up too soon. The problem is that they didn't give up soon enough.

Pokemon

[sakdoctor]

As someone from the pokemon generation, I actually do expect to catch 'em all.

Re:Fishing.

[idontgno]

Well, since you seem to want a fishing analogy, not many anglers just drop the lure into the water and reel in if there's no immediate hit. (Discounting working a lure that needs to be reeled in just to play it. I'm thinking like fly fishers or maybe good ol' fashion bobber and sinker fishing.)

Anyway, some of these product introductions is like making one cast and then giving up on the entire pond after 15 seconds.

Huh?

[LWATCDR]

Example of products that where not smash hits and are still moving forward.
1. Bing. It is still has a small market share but Microsoft keeps putting resources into it and it is growing.
2. XBox. The first XBox didn't make a profit but the 360 looks like it finally has.
3. Windows Phone 7 "I don't think this is ever going to be more than a poor 3rd place myself but they are till pushing it".
4. Android. Remember the G1. It didn't sell that well and was only on TMobile in the US.
5. PS3 After the mad launch rush it sales just slowed. The Wii was the big hit and the 360 was out first and sold well. Sales of the PS3 are still improving even now.

Of the other products mentioned well let's take a look at them
The Kin. It wasn't WP7 it had no real apps, it was tied to an expensive data plan. Yes it stank out of the box. Microsoft really did a good job killing Danger after they spend a pile of money to buy them.
Google Wave. I tried to find a use for the tech but I just couldn't It was kind of neat but didn't have a good use case for a lot of people.
Touchpad. This one was murdered in it's crib. HP bought Palm and then the CEO was kicked out in a scandal. His replacement had no interest in the consumer market. Palm had three products in the works and those where the Pre III, the TouchPad, and the Veer. HP dragged their feet on those and took a year to get them out the door! What??? WebOS is actually are really good OS but HP again shipped it on old hardware! Of course the new CEO is also going to spin of the PC division as well. Of course you have to love HP not wanting to risk the long term investment in Palm so instead they took a 12 billon dollar stock hit.

touchpad firesale hopefully good for webos

[SCHecklerX]

The touchpad was simply overpriced. If HP had sold it for, say $150 for 16GB, and $200 for 32GB, it may have sold better to begin with. The crazy rate that everyone sold out of all stock means that there are now a whole lot of WebOS tablets in people's hands now. App developers saw a huge spike in downloads after the sale. Getting WebOS out there, people will see what it is like and perhaps not settle for the inferior interfaces of Android and iOS.

HP's own tablet making may be dead. WebOS isn't quite done yet. Wouldn't it be cool if Dell got into the tablet business and licensed WebOS for them...

Re:touchpad firesale hopefully good for webos

[Chanc_Gorkon]

No it was priced right according to iSuppli who did the teardown. If HP sold it at $150 there would have been a loss on each device sold.

http://www.isuppli.com/Teardowns/News/Pages/HP-TouchPad-Carries-$318-Bill-of-Materials.aspx

They probably COULD have saved money somewhere, but they already chintzed on the plastic in the back.

The real problem is there were no apps. There was no real push by Palm OR HP on gaining developers. At least not one like there should have been. Plus the SDK was REALLY late. By that time, Palm was already dead in the water, HP picked them up and did NOTHING with them.

And the underappreciated 3DS

[BigCatRik]

The 3DS is a great gaming device (I've played at least 5 games for over 20 hours each) and will get better as more games are released. The previous generation of consoles took up to a year or longer to establish themselves but the doomsayers came out in droves when the 3DS *only* sold 3.6 million within its first few months (and in a non-holiday time frame) instead of the 4 million that Nintendo was hoping for. Luckily, instead of pulling it off the shelves, Nintendo has cut the price (leading to a massive sales surge) and pumped up the publicity for the new games with their major names that are due shortly.