The fortunes of technology companies rise and fall with their ability to innovate and capture the attention of increasingly busy customers. Past success is no guarantee that a device or software will continue to bring in revenue. In 2011, a number of high-profile technology companies endured bruises from their own gadgets. The new year offers the possibility of a fresh start for device makers, but customers may be wary that they could be burned by gadgets again.
Flip Video: These once popular pocket camcorders learned their fate in April, when Cisco Systems Inc. (Nasdaq: CSCO) announced it would halt production and exit certain aspects of its consumer division. Cisco acquired Pure Digital, the creator of Flip Video, in 2009 in a $590 million stock deal. The purchase was part of Cisco's push to capture more consumer business. But by 2011, the company had had its fill of competing with rival devices.
Flip Video camcorders were designed for ease of use, with one big red button controlling many of its functions, but that did not keep it from being trumped by multirole gadgets. "There's a struggle between devices that have fixed functions and devices that are multifunction," says IEEE senior member Tom Coughlin, founder of the data storage consulting firm Coughlin Associates. "With video capability built into a lot of phones, why carry an extra device?"
BlackBerry PlayBook: BlackBerry (Nasdaq: RIMM; Toronto: RIM), the maker of BlackBerry devices, took a few punches in 2011. A widespread service outage in October left many BlackBerry users across the US and abroad staring at communication devices that could not connect for about a day or even longer. The company's challenges mounted on other fronts, as well. In December, RIM said a big pile of BlackBerry PlayBooks remained unsold, forcing the company to take a $485 million inventory adjustment charge for its fiscal third quarter.
RIM claims it is still committed to the tablet market, but it said it needed to get aggressive with promotional pricing of the PlayBook to win more customers. The tablet wars are brutal. Apple Inc. (Nasdaq: AAPL) and its lineup of iPads are still gloating over would-be rivals. RIM was not alone in its need to regroup and rethink its strategy.
HP webOS devices: Hewlett-Packard Co. (NYSE: HPQ) also got aggressive clearing its inventory of TouchPad tablets, bringing prices as low as $99. The TouchPad, which runs on the webOS platform, became available in July. But in August, HP decided to pull the plug on the tablet and smartphones that run on the webOS platform. The company said the devices did not meet milestones and financial targets. With prices at fire sale levels, the TouchPad sold out quickly but is not expected to return to production.
The end of production for webOS-based devices dims the legacy of Palm Inc., the creator of the webOS software, smartphones such as the Pre, and other mobile devices. When it acquired Palm in 2010 for $1.2 billion in cash, HP said the acquisition would give it a leg up in the smartphone and mobile device market with products built to use the webOS platform. In February 2011, HP retired the Palm brand.
There may be some life left in webOS; HP said it would make the underlying code available to the open-source community. That may mean further development for the software platform but not for the related hardware, at least from HP.
Logitech Revue: The computer peripheral maker Logitech Ltd. was rather candid about the shortcomings of its Revue media receiver. The device, which uses the Google TV software platform, connects to televisions and offers users access to streaming video from Netflix Inc. (Nasdaq: NFLX), YouTube, and other sources, as well as a smattering of Android apps.
Logitech ended production of the Revue in November and called the device a beta product. The company said the Revue issues, as well as other troubles, cost it more than $100 million in operating profits over the preceding 15 months. Logitech said it does not plan to replace the Revue with another device.
The Revue faced an uphill battle almost from the start. It was the only standalone device on the market to offer Google TV. Sony (NYSE: SNE) incorporated the software platform directly into certain models of its televisions, and makers of some Blu-ray players offered access to Google TV. And it is hard to sell a one-trick product that gets trumped by devices that offer more functionality.
I agree but there's always +/- for everything. I'm on the + side for now. I'm just waiting for when you can slip a flash drive onto your finger like a ring.
Scott, I think the integration of OTT functionality is a great move on the part of Microsoft. The next generation of Xbox is right around the corner and I think it will offer even more OTT options for enhanced video and web integration. I am willing to bet that the next Xbox will be more of a central hub for home entertainment than just a game console with some expanded video offerings.
After Microsoft put out the software development kit for the Kinect and encouraged its use, there has been a lot of buzz about the device taking off as a platform for a new wave of technology.
It may be too soon to call it comparable to the rush of developers who create apps for mobile devices but I think we have only seen the initial stages of its possibilities.
They used Microsoft's Kinect sensor— originally designed for motion tracking in video games — as a cheap but powerful sensor to track the motions of amputees or people with joint replacements. By combining the Kinect with computer vision algorithms, the team's project aims to help prosthetic makers design more efficient body replacements.
It really shows the potential of the technology, doesn't it?
Xbox is a cool product. And Kinect is a great addition. It took Microsoft a long time but I think it's a good franchise. Now they just need to figure out what to do with MSN.
Any thoughts on the Xbox? We have been using it for OTT video and it's great, if only because that is an additional functionality that comes with the box.
I like the Revue, its a good OTT video player, in the current market it makes more sense to intergrate the Google TV platform directly into a TV but I thought the Revue was a great product for people who do not have a TV that is internet ready. I still have mine hooked up to one of my TVs.
I agree I don't see what the subsitute is for flash when you need to grab a file and run with your laptop, or go somewhere and work where they may not be connectivity.
While I like the multifunctionality of my smartphone, it also makes me nervous. Invariably the phone will break or get lost. Then what? Nice to have some options in place.
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