say something

5 Companies That Will Fail This Year

There’s a point in a company’s lifecycle where they hit a wall. New products and innovations are slow to come out and the feeling that they are so big nobody can catch them seems to become a company’s belief. It’s these times when the innovators, the smaller companies, have their window of opportunity to make strides and 2005 saw the beginning of this happening. This is the year though that the big companies stop to take notice and wonder what just happened to their market/mindshare. When I say “fail” I am thinking they won’t disappear (although they might), but fail in the sense of what they are trying to achieve and categories they are trying to keep.

1. Microsoft

Microsoft is so far behind in the innovative desktop wars you have to wonder does it even make any sense to continue on with the development of Vista/Longhorn (of course it does, but you still have to wonder). Every new “feature” that they announce seems to have already been implemented in either OS X or Linux and the UI just seems to be made with prettier graphics.

Linux did a great job of distracting Microsoft while OS X was able to come in and start biting away at the mindshare of the public. With Apple using Intels in their computers now, that provides another blow to Microsoft not because you can easily move over from Windows to Mac OS X on your Intel box (you can’t easily), but the fact that they use the same hardware will put a lot more at ease who are thinking about making the switch. Now we are on an even playing field, which was something Microsoft always had an advantage over the last couple of years so we will see how they respond.

2. Creative

Their Soundblaster cards will dominate the soundcard market for many years to come, but their mp3 players just can’t seem to make a dent in Apple’s marketshare. How much press did Creative receive when their new Zen won Best of Show at CES? None.

The problem here is that no matter what you do you look like an iPod knockoff. You want to design something similar, but anything close looks like a clone. I don’t know what can be done here, but you have to assume the mighty will fall off sooner or later if you stick around long enough so if Creative just can keep a profit on its Portable business then maybe one day they can catch Apple sleeping.

3. Google

With the introduction of the Google Video Store, Google has shown that they are ready to expand their revenue streams into new areas. However, the problem here is that just launching a capable product isn’t going to work when you are competing with companies like Apple. If you compare iTunes to Google Video there really is no comparison. Google stuck with their philosophy of engineers building and designing while Apple continues to innovate and win over customers with design.

For their homepage this philosophy was succesful for Google because their competition was so cluttered, but when entering a different category where the market leader has an easy to use product and the interface is well-designed you have to step it up a bit more than they have the past couple of years.

Look for Yahoo to regain a ton of mindshare this year from Google because they are just as capable of releasing products with the same features, but they seem to have a better understanding of the value aesthetics play in the public’s eye.

Another issue to consider here is whether an app is best suited for a desktop application or web-based.

4. SixApart

The smartest move they ever made was the purchase of LiveJournal because I believe that will be their only saving grace. MovableType seems to be a lost cause (does anybody talk about it anymore?) and with the problems TypePad experienced last year you just get the feeling that someone is going to offer a better product and service that allows you to easily move from 6A’s platform to their’s.

I’m sure there are many out there already, but none of them have really received any hype or publicity. I’m sure many people believe WordPress.com is the best candidate and they probably are if they fix certain issues.

5. Newspapers

I know this isn’t one company per se, but there are just too many newspapers that are going to fall apart this year due to their reluctance to embrace the online medium fast enough. Craigslist takes their classified business, while a company like Newsvine will start to take away their local news business. The New York Times company was fortunate enough to have enough money to make some moves in the online space, but the lesser known outfits that aren’t owned by one of the big dogs will eventually fade into the oblivion.

Design’s Role

I think it’s interesting to note that with the first four companies mentioned the design of their products might be their saving grace. In each of their cases the leader in their category (Microsoft still is the marketshare leader obviously) has a better designed product. I think Creative has the most unfortunate luck since they do release strong products, but they are competing against the best design company in the world right now. Also interesting to see that two of Apple’s competitors are on this list.

Design is a powerful thing.

Tomorrow: 5 companies that will excel this year.

Published by Scrivs on January 18, 2006 in Business, Design • Did you like it? Subscribe! Or Submit it to Blogosphere News!

35 people says things!

  1. I disagree..

    1. That may be true and to me and you we can see that, but to the non pc-savvy. Microsoft have just invented some fantastic features. How many people will buy longhorn of fear of being left behind or their PC suddenly stop working?

    3. Eh, I haven’t looked around iTunes video store but remember the free vids that are there in their tens of thousands (millions maybe?) and so that’s an edge over itunes. I never touch itunes to download anything, just to play my music.

    4. This is similiar. Livejournal and Wordpress.com are different completely. I suppose its like Facebook and MySpace. They have different aspects and points of view. Wordpress contains no social networking like Livejournal does. With Friends Only posts, adding people and so on.

    What’s the betting your companys that suceed post will have Apple? :p

    By Zach Inglis on January 18, 2006 12:16 pm

  2. Google won’t fail, they will just move on. The beauty about Google is that they have massive resources and they encourage their developers to expand on personal projects.

    This has resulted in many great projects such as gmail and Google maps and Google local which all started out as developer pet projects… and turned into great successes.

    I think we will see many other “failed” projects (does anyone remember Orkit?) which will just hang around for the people who want to use them… but Google is too big of a player in the online advertising and search market to just die out.

    However, they should pay attention. Yahoo is buying out all of the upstart talent like Fliker and Delicious, while google stays the course with snatching up PHD’s. If they don’t pay attention to the trends, then Yahoo will pass them up on many fronts.

    Personally I would like to see google utilize their user base as a method to rank pages… they are one of the few companies which could implement a taggable search engine for the web at large… but if they don’t pick up the pace, others will jump on that chance.

    Microsoft on the other hand, is just about sunk… They wont die out this year, but in 10 they will only be half of what they are now… Expect FireFox to take over another 10 percent market share from IE this year, and Apple to encroach even farther into the OS territory. Linux will continue it’s server market dominance.

    I believe that the thing which will ultimately kill Microsoft will be the hackers… When we get a 0-Day virus which exploits the next WMF backdoor… one which is destructive and nukes your hard drive… then people will start taking security more seriously when they loose all their data. The consumer will start to look at Apple and Linux as answers to the problem… which has been there for years.

    By Dallas Pool on January 18, 2006 12:19 pm

  3. I don’t exactly see the connection between Google Video (a search engine for videos) and iTunes, but then again I just discovered Google Video a few weeks ago. Google Video is a gathering place for random video clips, a better comparison could be made to Yahoo Video instead of iTunes. Imo, Google Video has already surpassed Yahoo Video in many ways, even though Yahoo’s has been around for quite some time.

    Aside from that, I agree with your list. We all know that Microsoft isn’t going anywhere though, it’s just a little fantasy we all have.

    By Justin Perkins on January 18, 2006 12:20 pm

  4. If Wordpress wants to top Movable Type I think one key factor is make more user friendly to the not so programming savvy.

    One reason I still use Movable Type, their templating system is way easier to catch on to and since it’s not dynamic, I think it’s more flexible than Wordpress.

    Wordpress’s templating system is basically PHP functions. As a web designer, yes I should know some PHP, and I do to an extent. But why move to Wordpress when Movable Type does everything I need and I understand it fully. I even like the interface better.

    I understand the PHP functions probably make it more flexible to the program savvy. To people like Colin who “hacked” it to use it as an CMS for 9rules. But, to the less programming savvy, Movable Type and Textpattern is a better choice.

    So until some Web publishing app comes along that is user friendly and flexible, Movable Type will still be on top. Maybe Expression Engine will be the one to pick up some steam. Maybe Wordpress or Textpattern will, but at this moment I believe not.

    I know, I’m about to start a web publishing war here in the comments, but that’s my opinion.

    By Chris Griffin on January 18, 2006 12:45 pm

  5. While I agree with some of your analysis of these companies, to use the word ‘fail’ is just too general. They might miss certain marks in certain markets, but to say that Google or Microsoft will ‘fail’ is going a bit far.

    For companies that will excel in the coming year… I’m plugging myself in the sheer hopes and passion of what I’m doing, that my new business venture will excel.

    By steve on January 18, 2006 12:45 pm

  6. I also wanted to mention that there is also a big opportunity out there for some web publisher to come out and knock all of the current top runners off the block.

    MT, WP, TXP all have problems. If someone or some company formed that brought all the strong points of each web publisher together they could dominate.

    By Chris Griffin on January 18, 2006 12:56 pm

  7. I disagree completely. Like others said, Microsoft may fail to us, the designers and computer savvy folk, but to the average user Vista will be like a god among other operating systems. Microsoft is always going to be there, that’s just the way it is. With still over 70% of users browsing with IE how do you ever expect Microsoft to fail? You just can’t lose 70% market share in a year, it’s impossible.

    As for SixApart, I agree that nobody really talks about MT, but I think LiveJournal is what’s going to keep them somewhat on top. I’m hoping for some major TypePad updates, and maybe a new version of MT to go with it, just something to get them some press.

    Finally, I thinkg 2006 is going to be the year where Google and Yahoo! really get into their battle. They’ll be purchasing a ton of startups, and right now I can’t tell who’ll come out on top, but Yahoo! does, as you mentioned, seem to have a good idea of what users want.

    By Zeerus on January 18, 2006 1:48 pm

  8. It will be about ten years before Apple builds a product that can be used in industry. Where M$ misses in aesthetics, they more than make up for in power, flexibility, extensibility, etc. A large percentage of M$ market share in operating systems comes from business. Apple may make inroads in the consumer market, but no large company would ever consider using the product considering their many holes in important product lines, along with Apple’s disregard for backwards compatability. In the long run, if Vista is successful in large companies, that success will translate into consumer success as many people use their home computers for work. You are a little nieve in your assumptions.

    By Matthew Smith on January 18, 2006 2:28 pm

  9. Why do I get the sense that this list is purposefully provocative not because they are particularly likely but because they may bring some free publicity to whtiespace and 9rules?

    Of course, you did try to define “fail” downwards to give yourself a bit of a cushion. But a headline of “5 Companies That Will Fall Short of Their Goals This Year”, while a better description of what you’re describing, would garner far fewer trackbacks.

    By Ernie on January 18, 2006 3:07 pm

  10. That’s what I get for going out for an extended lunch break.

    Ernie: If I were going for just hits and crazy traffic I would go after Apple, Yahoo (and Google even more), WordPress and somebody else. Sure I write things hoping that I get trackbacked and whatnot and shouldn’t the headline entice people to click over from their RSS feed?

    Matthew: You are completely right about MS business coming from businesses and not really people going to the store buying Windows. Also the fact that PC manufacturers are almost required to buy a license ensures the health of Windows. Two major points that were foolishly overlooked. However, I still stand by the fact that I believe they will lose mindshare no matter what happens.

    Chris: I think there will always be room for someone to leap ahead in the blogging/CMS space. There are just too many users with too many different needs for it not to happen.

    Justin: I made the Google Video/iTunes connection based purely on the fact they are selling episodes of network television shows.

    By Scrivs on January 18, 2006 3:19 pm

  11. Oh and if trackbacks were my goal I failed miserably since I have 0 ;-).

    By Scrivs on January 18, 2006 3:21 pm

  12. Why would Microsoft loose mindshare by copying OS X? The majority of users wouldn’t notice that they did, and the last time they allegedly copied the Mac, I think their business did pretty well afterwards.

    By Weiran Zhang on January 18, 2006 3:35 pm

  13. MS may have its business coming from business but don’t forget one thing: Macs are increasingly popular between geeks and early adopters.
    And these guys do set a tone at some places…

    By Rimantas on January 18, 2006 5:10 pm

  14. > I made the Google Video/iTunes connection based purely on the fact they are selling episodes of network television shows.

    Duh, that just shows how much I pay attention. I usually do a search faster than I have time to read the home page of Google Video.

    While Apple has the upper hand in the battle at the current time (lots of people are already running iTunes), I think Google can get greater coverage in no time at all and then take the lead in that race. All they have to do is link to their video page if your search has the keyword “video” in it. Just like they do when they recognize an address and link to Maps and Local. Instant millions of hits vs. how many people are running the latest version of iTunes with video playback.

    By Justin Perkins on January 18, 2006 5:19 pm

  15. 1 - With Microsoft, long waits, dropped features, non-innovative software, etc. are par for the course. That hasn’t stopped the majority of the PC market from switching over to Apple or Linux, and most businesses will stick with Microsoft as well. Apple, although a possible contender (versus the 500lb gorilla), will never be a big hit with a variety of PC users (like gamers), and will never make a dent in the server and business markets. Linux, which is, for most, the server OS of choice, still hasn’t broken into the desktop market, and will never be the OS for the same groups that steer away from Apple products. Vista (after the waits), will probably become the dominant OS of the PC world, and will end up moving bunches of people using OS X and Linux back to Windows, because it’ll be neat or something.

    You have to understand that just because you see OS X and Linux as superior products (and yes, I use both), that doesn’t mean Microsoft is going anywhere, or going to fail. Microsoft barely does anything for XP, and guess what kind of marketshare it has? IE still has the largest marketshare even though it’s abominable. Think about how many people will ditch Firefox in favour of IE7.

    2 - Another pro-Apple, anti-* claim. I have a few (that were free, including a 60gb photo and a 4gb nano), but I wouldn’t have bought one. Yeah, iPods are outselling other portables, that hasn’t stopped the zillion other companies from making mp3 players, and companies like Sony are still selling big in flash-based portables in Asia. The reason why Creative didn’t get mention outside the pro-Creative community is because no one really cares. Kind of like Linux and OS vs. Windows.

    3 - Apparently Yahoo is befalling the same fate as Google, according to Wall Street. Google has been releasing some stupid things lately, but I doubt the areas they occupy (search, email, maps, etc.) will be failing anytime soon.

    4 - Agreed.

    5 - Newspapers won’t go anywhere for a while, even though they’re relatively expensive and entirely technologically outdated.

    Actually, I’m pretty sure this entire article was just a troll. New low, 9rules, new low.

    By Bob Jules on January 18, 2006 10:33 pm

  16. Actually, I’m pretty sure this entire article was just a troll. New low, 9rules, new low.

    Eh?

    By Scrivs on January 18, 2006 10:40 pm

  17. Newspaper subscriptions have been dropping for years now, and pretty soon, they’ll start dropping even quicker. Even though I hate to think of it, I think that newspapers might go the way of the dojo in about 15-20 years.

    By Mike Rundle on January 19, 2006 12:38 am

  18. Troll?

    It’s January 2006, he was merely presenting companies that he felt would fail/fall short in this coming year.

    Not sure saying it’s a troll is accurate.

    By Bryan on January 19, 2006 9:59 am

  19. Are you really that serious with this post Paul? It seems like you’ve only glanced at the real issues with all of these companies and written this up without really thinking about it.

    There are plenty more things wrong with Google other than the fact that they use engineers for design (which I’m not sure is even entirely true) - where’s the write up on how GOOG’s market price is completely blown out of proportion and the fact that they basically only have one revenue stream which is quickly being nibbled at by hundreds of competitors?

    Oh, and since when did Microsoft need innovation to win the Desktop wars? Nothing is going to touch Windows in the business desktop space no matter how impressive simply because compatibility and existing training/expertise matters more than having an OpenGL interface or some other, dare I say it, gimmick feature.

    Something I’ve noticed in so many of your articles is the onus you place on design to make a product or business successful. While this is true to some extent, perhaps you should consider the merits of other aspects of business a little more - for example, if MIke up and left 9rules tomorrow, where would you be? Is the popularity of this blog, and 9rules in general primarily based on the fact that the designs are top notch?

    By Jake Tracey on January 19, 2006 5:10 pm

  20. Scrivs is just doing what he does best - spouting a lot and getting lots of attention. Is it a troll? Depends on your perspective. Personally I think most of the statements made in his article are fairly erroneous and would agree that the title is misleading. I wouldn’t have clicked if the title was more reflective of actaul content, and didn’t use the rather extreme term ‘fail’ (regardless of later disclaimer).

    By mahalie on January 19, 2006 5:14 pm

  21. Microsoft is not going to die–it has huge pockets, giant reserves, and partnerships with thousands of PC makers. It’s releasing a new OS soon that will compete with Apple and OSX, and add enough power consuming eye candy that we’ll all be buying it and 3d cards…

    By Elliott Back on January 19, 2006 6:08 pm

  22. MovableType seems to be a lost cause (does anybody talk about it anymore?)

    I’d say thats a positive thing in this case (the nobody talking about it). Most of the press Wordpress seemed to get this year was negative pseudo scandalous stuff. Nobody talks about MovableType because it works well and its in the background just doing its job on tons of blogs with tons of page views.

    By benny on January 19, 2006 6:26 pm

  23. Good responses all. I have to head out, but I will make sure to address every single one of them.

    By Scrivs on January 19, 2006 9:02 pm

  24. Google has not in fact surpassed Y! in video. Most results on google seem a little random. Fact: Albeit we haven’t touched their main search; Y! ‘does’ have more results on video than google.

    In other words, they still have some catching up to do in that department.

    Scrivs, I love it! Microsoft, Google, SixApart… You picked three out of my top five!

    By Dustin Diaz on January 20, 2006 3:09 am

  25. Another company that will fail will be podshow.com.

    I still see no real product offering (anything benefitial for me as a user) from them except a bunch of terrible sites crosslinked to each other in a very inaccessible way. Podshow.com itself is an absolute mess (e.g. category header graphics which make you want to click but you can’t). It would be pretty trivial to clean up their mess in a 37signals way and actualy make it usable.

    If you look at their “news” section mostly see Adam Curry mentioned - so is this a personal site or do they actualy have anything to offer except burning VC money? And on and on.

    I’ll be happy if they prove me wrong and they don’t fail though. They’d certanily deserve it not to fail.

    By Stefan Seiz on January 20, 2006 5:29 pm

  26. With a definition of failure as vague as you are giving, you’re hardly going out on a limb. Your predictions are either so vague as to be useless (SixApart) or arguable without more specifics (Google).

    Making a controversial claim is only the first part of making a good blog argument…

    By Chris L on January 21, 2006 3:05 am

  27. Great to see a brilliant content here. It’s always interesting to see different viewpoints.

    By christ on January 21, 2006 8:09 am

  28. #6 “I also wanted to mention that there is also a big opportunity out there”

    Have you guys seen KolaBlog? It’s Awesome!!
    Check it out at: http://www.kolablog.com

    By Sammy on January 23, 2006 10:32 am

  29. HP. They will have issues this year due to severe financial setbacks. After the recent ousting of Carly Fiornia to the tune of $25 million, and the luring onboard of former NCR CEO Mark Hurd to the tune of $22 million, I was impacted along with many thousand other employees who had vision. That’s just my prediction; I could be wrong.

    -he who stacks pork

    By Leopold Porkstacker on January 23, 2006 1:51 pm

  30. I always say I won’t get trolled into these things, but…

    I definitely think that we at Six Apart are hoping to fail in the same grand manner that companies like Google and Microsoft have. :)

    And I’d say that *all* the people on our platforms don’t talk about the tools that much — mostly because they’re busy talking about their lives, or their work, or the business at hand, not the technology. As I understand it, most Microsoft Word documents don’t mention the word processor, and most Gmail messages don’t mention the email client.

    Somehow, those businesses are able to eke out a living.

    By Anil Dash on January 23, 2006 4:11 pm

  31. Hi, thanks for your article 1st as a writer I know it takes time and effort.

    But I am guessing you use apple computers? Or at the very least wish you did? Just guessing as I do not know you, but are you aware you mentioned Apple as the reason for 3 companies impending failure?

    Not logical or true.

    My 2 cents.

    By Danjo on January 24, 2006 8:23 am

  32. Is design a silver bullet? Of course it isn’t but great design is more than aesthetics. Is the iPod a pretty player with a clunky interface? Nope. That’s how I see Google Video could improve by design.

    As for talking about the tools, nobody talks about Word anymore because it has become the de facto standard of word processing. Blogging software doesn’t have that yet so yes I think it’s important that people talk about the tools. I see WordPress users talking about the tools all the time (this site uses mt so don’t call me a fanboy please).

    Goolge and Microsoft can fail in certain categories simply because they own in so many others. How many categories does 6A dominate?

    By Scrivs on January 24, 2006 3:41 pm

  33. I think creative will fail in more than just their mp3 players. The add-in sound card is all but dead. Creative is the only major player in the consumer sound market. With the quality of onboard sound getting better and better there is really no need to purchase a separate card.

    By Jeff Adams on January 26, 2006 11:55 pm

  34. 1. Nope. MS is going no where but up. With Live Office coming out and their interest in small business application suites, I expect that they will forward this year. And don’t forget MSN is finally making money. As far as the OS goes, I agree with the other guy. People on PC’s see those “new” features as new. After all how many people using PC’s ever get a chance to use OSx?

    2. Creative. I somewhat agree, although they are killing the Shuffle with the Nomad MuVo. The Zen (nor anyone else) can seem to crack the iPod’s stranglehold.

    3. I don’t know if you can compare iTunes and Google video. gVideo works more like Froogle than iTunes. But I do agree Yahoo is doing a much better job than Google when it comes to releasing products. Google still gets all the attention though.

    4. I agree.

    5. Hmmm. Yes and No. I think some companies can and will make the shift. But I see a lot more failing. But maybe not this year, it will probably take a lot more. For example, local town/county papers seem to be doing well. However the trend over the past 2o years or so has been consolidation in the media content business. Look for this just to continue…

    Company to watch: Apple. I see Jobs as either keeping the feeling alive or squashing it. No medium switch for that man! But Apple has to get away from being overly propiatary. Sony tell you all about that.

    That’s my two cents…

    By John Labriola on January 30, 2006 11:16 am

  35. Home Based JobAt Home Business

    By Home Based Job on February 23, 2006 5:10 am

  36. Subscribe to comments via RSS!

    What do you think?