The Failure of Fax: When a Vision Is Not Enough

The Failure of Fax: When a Vision Is Not Enough Jonathan Coopersmith TexasA&M University In the lastdecade, fax machineshave revolutionized communications. We have becomeused to and dependentupon instantaneousinformation. Many peoplecannot conceive how theyworked without a fax machine.The question, however,arises: If the conceptis so good,why did nearlya centuryand a half elapsefrom the first patent in 1843 until rapid commercialdiffusion in the 1980s? In actuality,attempts to commercializefacsimile technology extend back to the 1860s[5]. Its promotersspanned the spectrumfrom individualinventors, suchas Thomas Edison and Arthur Korn, to massivecorporations, such as Xerox and AT&T. Their most common feature until the mid-1980s was failure. The few successesoccurred not in generalcommunications but in dedicatedniche marketsand, evenhere, failuresflourished. Perhaps the questionshould be: In view of the dismalhistory of failures,why did so manypeople and companies pressahead? What motivatedindividuals and ill-msto commitresources to createnew marketsand technology,given the dauntinghistory that lay behind them? Failure,the lack of technicaland commercial success for a productin the marketplace,is endemicto innovativetechnologies. Failure is worthyof study if only to betterunderstand success. Historians of businessand technology acceptthis, but tend to focusmore on success. This lack of coveragedistorts our knowledgeof the businessprocess because failure is an integral,if not dominant, theme in the existenceof companies. Much scholarlywriting about failure concernshow entrepreneursovercame obstacles -- whethertechnical, economic, social,or political-- to succeed.The roadsnot takenor only partiallytraveled rarely are explored in depth [39]. Often a strong Whiggish whiff of technologicalor economicdeterminism can be detected. Whenlooking at failure,the rangeof potentialcauses is so wide that any easyanswers should be suspect.Failures occur for a multitudeof reasons, includingthe product,its institutionalframework, the market, or factorsbeyond immediatecontrol, such as monetarypolicy or war. Failure for one productor technologydoes not necessarilyimply successfor another,but competitionis probablythe mostimportant single factor to consider.Competition includes the battlefor resources,usually inside a finn or consortium,to developand bring a productto market,as well as amongproducts for the samemarket. BUSINESS AND ECONOMIC HISTORY, VolumeTwenty-three. no. 1, Fall 1994. Copyright¸ 1994 by the BusinessHistory Conference. ISSN 0849-6825. 272 273 Equally importantis the comparisonbetween the reality and the expectationsof entrepreneurs,customers, and other interestedparties. New technologiesare often greetedand promotedwith great enthusiasm. This enthusiasmcan become the prevailing wisdom, which can be quitemisplaced. One reason for such enthusiasm is the need to create a network of involved and committedsupporters. Creating such a successful,durable network is extremely difficult [4; 19]. Lack of supporterscan kill an innovation,but the oppositeproblem, too muchunqualified support, can produce technological or institutional"inertia," whereina technologyor groupremains basically unaffected by forcesexternal to its institutionalsetting. This inertia may enure the short-termexistence of the technologyor group,but its blindnessto changesmay ultimatelydegrade or destroyit [24]. The numerousunsuccessful attempts to develop and diffuse fax technologyover several decades provide an opportunity to studythe shaping and reshapingof a technologywhose potential, until recently,always exceeded its promise. This paperwill examinefour episodesin the historyof facsimile technology:public picture telegraphy service in GreatBritain in the 1920s-30s, the radio-broadcastfacsimile newspaper of the 1930s-40s,Western Union projectsfrom the 1930sthrough the 1980s,and Federal Express' Zapmail in the 1980s. Theseare advancedfailures, cases where the sponsorsconsidered the technologysufficiently developed to taketo market. Picture Telegraphy Spurredby wartimeadvances in electronics,the 1920smarked a flowering of attemptsto transmitphotographs by wire andwireless. Led by Franceand Germany, the major European PTI's (Post, Telegraph and Telephone administrations)established picture telegraphy services starting in themid-1920s. The British Post Office, with somereluctance, started its servicein 1930. The forcesfavoring picture telegraphy included the companies promoting their wirephotoequipment, the PTTs usingthe equipmentwhich neededa networkof compatiblesystems to increasethe attractivenessof their investment, the actualusers, and post office employees enthusiastic about its potential. The engineeringdepartment saw in fax a possiblefuture meansof transmittingregular telegrams. Institutional and national pride also played a role. Failureto providesuch service would have opened the path for a privatefirm, "a coursewhich seemed open to severalobjections, one being that the agency most active in the matter was under American control." The most visible advocateswere the newspapers,which envisionedand realizedcompetitive advantagesin their battlesfor circulation[3, 3888 and 2553]. The mostserious argument against a picturetelegraphy service was the competingtechnology of air mail, which offereda lessrapid but still quick transmissionof photographs.Inside the PostOffice, picture telegraphy had to contendwith tight financesand the fear that it would harm the profitsof ordinarytelegrams. The conceptitself proved awkward at times. As a decade of operationsdemonstrated, few peopleand businessesneeded very rapid transmissionat a very high price when alternativeforms of communication 274 offeredrelatively quick service at lesscost. A phototelegramto Germanycost from oneto threepounds: An airmailletter cost four pencean ounce,or twice the costper word in a telegram. The Post Office decided in summer 1929 to open a public picture telegraphyservice and purchase a Siemens-Karolusset. The Treasuryapproved the 6000 poundpurchase but warnedthat establishmentof a permanentservice would dependon its remunerativeness.Service officially beganon January7, 1930. Fromtransmission only with Berlin,the service quickly expanded to nine countries[3, 2874A, 3444 and4639]. Transmittinga 3 x 5 inchphotograph only took twenty minutes; however, the total time from acceptanceto deliveryaveraged two hours. The difference includedpreparation, waiting for an open line, and ensuringa connection. Unpredictabletransmission delays continuallyfrustrated users. Fax needed higherquality circuits than voice for accuratetransmission, so pictures often had to wait until a suitable trunk circuit became available. The new servicequickly ran into the all too commonproblem of overestimatingdemand and underestimating expenses. Traffic overthe decade averagedone to two transmissionsdaily compared with the sixneeded to cover costs.The serviceusually recouped only a sixthof its expenditures,leaving the PostOffice to swallowmost of the 3000-3500pound annual costs as well asthe original cost of the equipment. Nonetheless,postal officials strongly recommendedthat the Treasurycontinue to subsidizepicture telegraphy due "to the scientificimportance of the systemand its vogue abroad"as well as its "importantfuture possibilities." The Treasurydid [3, 3888]. Despiteefforts to promoteother uses, picture telegraphy's overwhelming marketwas newspaper pictures. Of the 157 picturetelegrams transmitted from Britain in 1931-32, pressagencies and newspaperssent 142 or 90% of all the photos[3, 5441]. Ironically,those papers that had campaigned in the late 1920s for a postalpicture telegraphy service had, by late 1930, purchasedtheir own machines.The majorusers decided that their volume justified owning their own machines, which permitted direct transmissioninto their photographic departments.In 1936, British newspapersowned 27 Siemens-Karolusand 10 Belin picturetelegraphy sets compared to the one setowned by the PostOffice [3, 3888 and 4877; 17]. Improvedairmail servicefrom the continentto Britain furtherlimited the potentialmarket for the expensivepicture telegraphy. Postal surveys of potential users found that "cheaperand sufficientlyrapid Air Mail Services"and newspaperownership of fax machineshad destroyedmost of their potential clients [3, 3405 and 3888]. The total numberof transmittedphotographs, both privateand public, grew from 387 in 1931-32 to 796 in 1938-39, and averagednearly 600 photographsannually. For specialoccasions, such as a Royal weddingor the 1936 Olympic games,the PTTs arrangedfor extra equipmentand close internationalcoordination to minimizedelays [3, 3888 and5211]. Engulfedby World War II, publicpicture telegraphy died almostwithout notice. The Post Office suspendedpublic service in May, 1940,owing to a lack of countrieswith which to correspond. 275 For the Post Office, picture telegraphy was a financial failure. Technicallyand politically, the systemworked and maintained British standing amongEuropean PTTs. Neithera largemarket nor the replacementof ordinary telegramsemerged. Yet a market did evolve in newspaperphotographs; however,the majorcustomers, the newspapers,decided to cut outthe middleman and transmitdirectly amongthemselves. A similar evolutionoccurred in the UnitedStates where AT&T, afterseveral years of operatingits picture telegraphy service,sold the serviceto AssociatedPress in 1933to createAP Wirephoto. Althoughthe Post Office knew its picturetelegraphy operated at a largeloss, it madeno effort

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