CYAN YELLOW MAGENTA BLACK PANTONE 123 CV Chapman “A funny AND grim read that explains why so many of the high-tech sales departments I’ve trained and written about over the years frequently have Merrill R.Chapman homicidal impulses towards their marketing groups. A must read.” Foreword by Eric Sink —Mike Bosworth Author of Solution Selling, Creating Buyers in Difficult Selling Markets and coauthor of Customer Centric Selling In Search of Stupidity In Search OVER 20 YEARS OF HIGH-TECH MARKETING DISASTERS 20 YEARS OF HIGH-TECH OVER n 1982 Tom Peters and Robert Waterman Ikicked off the modern business book era with In Search of Excellence: Lessons from America’s Best-Run Companies. Unfortunately, as time went by it became painfully obvious that many of the companies Peters and Waterman had profiled, particularly the high-tech ones, were something less than excellent. Firms such as Atari, DEC, IBM, Lanier, Wang, Xerox and others either crashed and burned or underwent painful and wrenching traumas you would have expected excellent companies to avoid. What went wrong? Merrill R. (Rick) Chapman believes he has the answer (and the proof is in these pages). He’s observed that high-tech companies periodically meltdown because they fail to learn from the lessons of the past and thus continue to make the same completely avoidable mistakes again and again and again. To help teach you this, In Search of Stupidity takes you on a fascinating journey from yesterday to today as it salvages some of high-tech’s most famous car wrecks. You will be there as MicroPro, once the industry’s largest desktop software company, destroys itself by committing a fundamental positioning mistake. You will live through the experience of the former CEO of once mighty Ashton-Tate running his company onto the rocks of fatally bad PR. You will marvel as Bill Gates manages to destroy more than two decades of magnificent image building in the space of a few brief days. And in this second edition you can read detailed analyses of what they did wrong and learn how you can avoid their tragic fates. In Search of Stupidity: Over 20 Years of High-Tech Marketing Disasters is the indispensable book for anyone who wishes to understand what companies do to fail, what they can do to avoid committing yesterday’s mistakes yet again, and who desperately desires to never ever see their company profiled in a sequel. ISBN 1-59059-721-4 US $24.99 second 52499 RELATED TITLES edition In Search of Stupidity Joel on Software OVER 20 YEARS OF HIGH-TECH MARKETING DISASTERS 1-59059-389-8 Eric Sink on the Business of Software SECOND EDITION 6 89253 59721 7 9 781590 597217 1-59059-623-4 this print for content only—size & color not accurate spine = 1.01" 408 page count 7214FM.qxd 9/7/06 4:04 PM Page i IN SEARCH OF STUPIDITY Over 20 Years of High-Tech Marketing Disasters SECOND EDITION 7214FM.qxd 9/7/06 4:04 PM Page ii 7214FM.qxd 9/7/06 4:04 PM Page iii IN SEARCH OF STUPIDITY Over 20 Years of High-Tech Marketing Disasters SECOND EDITION Merrill R. Chapman 7214FM.qxd 9/7/06 4:04 PM Page iv 7214FM.qxd 9/7/06 4:04 PM Page v To Ruth, Lili, Alfie, Winston, and, of course, Charlie in heaven. 7214FM.qxd 9/7/06 4:04 PM Page vi 7214FM.qxd 9/7/06 4:04 PM Page vii CONTENTS Foreword to the Second Edition. ix Foreword to the First Edition. xiii About the Author . xvii About the Artists . xix Acknowledgments . xxi Preface. xxiii one Introduction . 1 two First Movers, First Mistakes: IBM, Digital Research, Apple, and Microsoft . 15 three A Rather Nutty Tale: IBM and the PC Junior . 37 four Positioning Puzzlers: MicroPro and Microsoft . 51 five We Hate You, We Really Hate You: Ed Esber, Ashton-Tate, and SiebelSystems . 69 six The Idiot Piper: OS/2 and IBM . 89 seven Frenchman Eats Frog, Chokes to Death: Borland and Philippe Kahn . 117 eight Brands for the Burning: Intel, Motorola, and Google . 135 nine From Godzilla to Gecko: The Long, Slow Decline of Novell. 167 7214FM.qxd 9/7/06 4:04 PM Page viii viii Contents ten Ripping PR Yarns: Microsoft and Netscape . 187 eleven Purple Haze All Through My Brain: The Internet and ASP Busts. 217 twelve The Strange Case of Dr. Open and Mr. Proprietary . 247 thirteen On Avoiding Stupidity . 271 fourteen Stupid Analyses. 303 Afterword: Stupid Development Tricks . 339 Glossary of Terms . 349 Selected Bibliography . 359 Index . 361 7214FM.qxd 9/7/06 4:04 PM Page ix FOREWORD TO THE SECOND EDITION I love this book. When telling stories about some of the finest fiascos in our industry, the author offers unique insight and humor. The result is a book that is both readable and worth reading. That’s a powerful com- bination that I find increasingly uncommon. I was a fan of the first edition of In Search of Stupidity, and I am honored to be writing this foreword for the second edition. I am particularly fond of the title of this book. Taken completely out of context, it suggests that if you want to find stupidity in our industry, you have to search for it. I envision a typical person who wanders acci- dentally into the Software and Computers section of his local bookstore. He sees this book on the shelf and believes that stupidity in high tech is difficult to find. Aw, never mind that. People are not so easily fooled. Anybody who reads the newspaper can easily look at our industry and see that stupid- ity is like beer at an NFL game: Half the people have got plenty of it, and they keep spilling it on the other half. As of August 2006, here is what the average person knows about the world of high-tech products: • The FBI just spent $170 million on a software project that completely failed and delivered nothing useful. Most of us would have been willing to deliver them nothing useful for a mere $85 million or so. • We each get 50 e-mails a week from eBay, none of which actually came from eBay. So we find somebody who knows about computers and ask why, and he starts spewing stuff that sounds like Star Trek technobabble. 7214FM.qxd 9/7/06 4:04 PM Page x x In Search of Stupidity: Over 20 Years of High-Tech Marketing Disasters • The movie industry wants us to buy all our DVDs again so we can see them in “high definition,” but it can’t decide which new format it wants to support. Either way, this comes in the nick of time, because as we all know, the central problem with DVD technology is the atrocious picture quality. • The time between the initial release of Windows XP and Windows Vista is roughly the life span of a dog, and apparently the main new feature is that it will be harder to use digital music and video content. Oh yeah, and it looks prettier. The world of high tech is fouled up beyond all recognition, and every- body knows it. But everybody loves reading about it. When it comes to failed soft- ware projects or dumb marketing mistakes, the mainstream news media is eager to print anything they can get their hands on. Nobody writes stories about software projects or marketing efforts that succeed. The funny part is that most of the stupidity never makes it into print. Those of us in the industry know that things are actually even stupider than the perspective in the press. For example, most people know that whenever Microsoft announces a new product, it gives it a really boring name that nobody can remember. But those of us in the industry know that the boring name was immediately preceded by a “code name” that was memorable or even clever. It’s almost like Microsoft has a depart- ment whose mission is to make sure their public image always looks lame and pedestrian compared to Apple. And let’s not forget that stupidity can show up in success as well as failure. Do you know the inside story of the Motorola RAZR? In the original plan, the powers-that-be at Motorola were convinced that the RAZR would be a “boutique phone,” a niche product that would appeal to only a small segment of the market. It ordered enough com- ponents to make 50,000 of them. In the first quarter of production, the wireless companies placed orders for more than a million units. Motorola had the most popular cell phone on the market, and it was completely unprepared for it. It took them a year to get production capacity up to meet the demand. Today, Motorola is shipping RAZR phones at a pace that is equivalent to selling 50,000 of them every day before lunch. 7214FM.qxd 9/7/06 4:05 PM Page xi Foreword to the Second Edition xi In the news media, on the message boards, and here in this book, stories about product disasters in our industry are a lot of fun to read. That’s why the first edition of this book was great, and this one is even better. I applaud the author for the changes he has made in the sec- ond revision, giving more specific attention to the matter of learning from the marketing mistakes made by others. I imagine lots of people will enjoy that kind of thing.