Top 3 Tech Brand Product Failures of 2011

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Posted Jan 03, 2012
Susan Gunelius

For every successful brand story there are hundreds of failures, and 2011 brought failures to many high profile tech brands. Some companies will come back from these failures with just a few bumps and bruises, but others might not ever recover. Only time will tell what the fate of these brands and companies will be. For now, we can take a look at what went wrong with tech brand product failures in 2011.

2011 failure

New product development and brand extensions require strategic planning, market research, and some good old fashioned intuition when risk-taking is involved. However, a few things never seem to change.

First, when consumers feel emotionally involved with a brand or product and are loyal to that brand or product, companies have to tread lightly when making changes to that brand or product.

Second, it's always important to ensure there is consumer demand for a new product or brand extension prior to roll out.

Third, if a brand is late in entering an established or maturing market, the company behind the brand needs to be sure that the products it launches are superior or sufficiently differentiated from the market leaders to ensure a certain level of sales success.

Each of the top three tech brand product failures of 2011 that are described below failed because one or more of the three facts listed above were forgotten or ignored.

1. Netflix and Qwikster

netflix rip

It's impossible to write an article about the worst brand, product, or company failures in any industry during 2011 without including Netflix and the disastrous Qwikster launch. During the summer of 2011, Netflix increased prices significantly, which led directly to an exodus by consumers. However, it wasn't until Netflix kicked its popular DVD-by-mail business to the curb and rebranded it as Qwikster that consumers got really mad.

In September, Netflix separated its DVD-by-mail business, which had been its bread and butter since the company began, from its streaming video business -- a business that is still in an early growth stage with limited offerings. The two products would be accessible by separate websites and billed separately to consumers. The streaming business would keep the Netflix brand name and the company's flagship product would be renamed Qwikster.

Between significant price increases and the emotional blow consumers felt when they heard the news of the Qwikster launch, Netflix customers left in droves. Netflix lost close to 1 million customers throughout the second half of 2011 because the company failed to appreciate how strong brand loyalty is. Furthermore, with other movie-viewing options popping up at affordable prices, the Netflix and Qwikster price increases were too high for consumers to bear.

2. Research in Motion and the PlayBook

rim playbook

When entering a mature market (or even a market in the growth stage where a clear leader exists), your product needs to be better than the existing products that consumers are already familiar with and loyal to. Alternately, your product must offer features and benefits that make it clearly different from existing products. By offering added-value, you can steal some market share from the market leader and other competitors.

On the other hand, if you enter a mature market (or a growth market with an established leader) with an inferior product, you're doomed to failure. That's a lesson that Research in Motion should have known. When the PlayBook tablet debuted in 2011, there was little incentive for anyone to buy it. The iPad was better. Furthermore, the BlackBerry App World had very few apps in comparison to the Apple App Store or Android Marketplace. Why would anyone choose the PlayBook or switch from an iPad or Android tablet when the PlayBook was so inferior?

It's important to point out that it's not impossible to enter a mature market successfully. Amazon did it with the Kindle Fire.

3. AT&T, HTC, and the HTC Status

htc status facebook

Remember the HTC Status? No? You're not alone.

The HTC Status was dubbed "the Facebook phone" and was the first smartphone to fully integrate a dedicated Facebook share button. AT&T and HTC believed the HTC Status would be snapped up by young people who spend hours on Facebook each day. However, both companies failed to realize that it's easy to access Facebook from most mobile devices today. There is little incentive to switch to an HTC Status.

The HTC Status launched with a marketing campaign that hyped its primary differentiator -- the Facebook share button. However, when launching a new product in a mature market, the differentiator has to be a big one or no one will be motivated to switch. AT&T and HTC forgot the same lesson that Research in Motion did but in slightly different ways. While Research in Motion failed by trying to play catch up and falling very short, AT&T and HTC failed by trying to capitalize on a differentiator that no one cared about.

The commonality between all of these tech brand product failures during 2011 is a lack of market research or a lack of listening to the facts and insights that research data revealed. Of course, there is more to business decision-making and new product development than research, but certainly, some of these red flags should have been raised during the research phase. Even a quick consumer panel survey would have revealed that a dedicated Facebook share button would not be enough to drive significant sales of the HTC Status. It's difficult to imagine that research wouldn't have at least tipped someone off to problems early in the development phase.

Images: stock.xchng, Flickr, Flickr, Flickr

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