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How to spot a tech company that's about to lose

Rob Enderle | Sept. 22, 2014
The list of failed tech products and companies is a long one, from A (Apple server) to Z (Microsoft Zune). If you're buying IT products and services, you need to be able to spot potential failures. A firm's unwillingness to do whatever it takes to succeed should be a telltale sign.

Finally, Google + is a decent social networking service, with differentiated features such as Google Hangouts that Facebook lacks. Like Microsoft with Zune, though, Google seems unwilling to invest in Google + at a level that will ensure success, and it's not even trying to migrate Facebook users.  

How to Look for Signs of Failure
Start by understanding a market segment's competitive requirements, now and in the future.

  • If a firm is moving into a highly competitive area, does it have the resources to compete and is it willing to use them?
  • Does the company have what it takes, and is it willing to use it in order to compete? Big companies often have the resources, but won't use them. That creates the same result as if it didn't have the resources in the first place.  
  • Will the company step up and lower the switching cost adequately? Ease of migration is often why a better product doesn't succeed. Your need to migrate, and you may have to be willing to bear excessive costs, but you'll likely be the exception and will therefore stand oud.
  • Can the company fund the effort at scale? I recall Microsoft's Scalability Day a few years ago. The company demonstrated a mainframe-to-Windows NT migration, but the reference account candidly told me he could have bought five mainframes for what it cost for Microsoft to make it happen. That unsustainable level of cost suggested he was going to be relatively unique for years to come. He was.    

Let's apply this model to analytics and mobile, two markets of high interest today. In analytics, it's becoming increasingly clear that intelligence will be a requirement for success. Executives need to use analytics tools, but they aren't expert statisticians. They want a tool that can understand what they want and deliver it; in other words, they want the tool to work for them, not force them to retrain to work with it. That's why so many analytics solutions go unused at the moment: They don't match executives' needs, and artificial intelligence is a bridge too far for most technology firms.  

In the mobile market, meanwhile, there are dominant companies waiting to be displaced. Look at what Samsung did. It outspent Apple and did something others were afraid to do disparage Apple products. Data security may be the next differentiator; it seems a bridge too far for many firms, including Apple, but it particularly critical to IT departments. With phones moving to technologies such as Apple Pay, an unwillingness to assure security could create a Target-like exposure that wipes Apple out of the market. (Or any mobile vendor, for that matter.)

 

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