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    Corporate Disasters: Marketing and Launch Flops
    Corporate Disasters: Marketing and Launch Flops
    Corporate Disasters: Marketing and Launch Flops
    Ebook155 pages3 hours

    Corporate Disasters: Marketing and Launch Flops

    By Gale and Cengage

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    About this ebook

    Corporate Disasters: What Went Wrong and Why profiles the biggest corporate mistakes or misdeeds throughout history -- covering the people, the times, the decisions made. This volume covers Marketing and Launch Flops. Each essay puts the business and its operators in the context of its own time, explaining the market, social, and technology forces at play, and each explores the key make-or-break decisions that led to disaster.
    LanguageEnglish
    PublisherCengage Learning - Gale
    Release dateNov 3, 2013
    ISBN9781535821193
    Corporate Disasters: Marketing and Launch Flops

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      Corporate Disasters - Gale

      Learning

      Apple Newton Released in the 1990s

      Launched in 1993, the Apple Newton was one of the first personal digital assistants (PDA). Beside its small size, the Newton was revolutionary as a pen-based computing device that used handwriting recognition software. However, the Newton's inaccurate handwriting recognition greatly contributed to poor sales. In 1997 the company decided that all future development should be based on the Mac OS. Thus, development of the MessagePad and Newton OS was discontinued in 1998.

      This case was prepared for classroom discussion rather than to illustrate either effective or ineffective handling of an administrative, ethical, or legal decision by management. Information was gathered from corporate as well as public sources.

      After analyzing this case study, students should be able to do the following:

      Discuss the development of the MessagePad and Newton OS

      Evaluate what factors played into the demise of the MessagePad and Newton OS

      Compare facets of the MessagePad and Newton OS product lifespan with that of the Palm Pilot

      Launched in 1993, the Apple Newton was one of the first personal digital assistants (PDA).¹ The handheld device included features like a contact list, date book, task list, memo pad, and basic calculator. Although Newton was the widely adopted term for the PDA, the actual product name was MessagePad, and Newton was the name of its operating system (OS). Beside its small size, the Newton was revolutionary as a pen-based computing device that used handwriting recognition software. However, the Newton's inaccurate handwriting recognition greatly contributed to poor sales. After Apple Computer cofounder Steve Jobs, who left the company briefly, regained control of Apple Computer in 1997, the company decided that all future development should be based on the Mac OS. Thus, development of the MessagePad and Newton OS was discontinued in 1998.

      The Newton Project Begins

      Steve Jobs cofounded Apple Computer in 1976 and recruited PepsiCo's CEO John Sculley to become president and CEO of Apple in 1983. Jobs continued to spearhead the company's technological vision, which led to the 1984 release of the Macintosh, the first personal computer with a graphical user interface controlled by a mouse. However, Jobs was fired as the head of the Macintosh division by the board just over a year later.

      Jean-Louis Gassée took over product development at Apple and assigned Steve Sakoman to work on a tablet computer. Sakoman named the project Newton and asked Steve Capps, an Apple engineer, to join the project. The goal was to develop a tablet that was half the size of a standard piece of paper. Sakoman was keenly interested in developing a touch screen interface that worked with handwriting recognition software. However, the project specifications grew unfettered into a tablet called Figaro.

      Apple had also revived its plans to build a laptop, but the Mac Portable released in 1989 did little to help Apple's plunging profits, as the release of Microsoft Windows increased competition in the personal computing market. In the midst of layoff announcements, Sculley passed over Gassée and promoted Michael Spindler to COO in 1990. Gassée, resigned and took Sakoman with him to found a new company.

      The Newton Project Is Redefined

      Larry Tesler took over the Newton project after Sakoman left. Michael Tchao had also joined the project as the marketing manager. Soon thereafter, the Newton group became aware of handwriting recognition software called CalliGrapher, which had been developed by ParaGraph International in Moscow, Russia. When ParaGraph cofounder Dr. Stepan Pachikov demonstrated the software to Tesler, Capps, and others on the project, it failed to recognize anything that was written almost completely. However, Tesler was intrigued by the potential of the technology, which attempted to learn the user's handwriting and recognize words using a proprietary database of known words. It also recognized both printed and cursive handwriting. Apple signed an exclusive licensing agreement with ParaGraph to use their software.

      After seeing a demonstration of the Newton, Sculley was most impressed with the Newton Intelligence software, which did much more than learn the user's handwriting; it anticipated the behavior of the user and acted on those assumptions. Sculley moved the project from research to development and set a ship date of April 1992. The plan was to develop a 9 x 12-inch model and a 4.5 x 7-inch model (the Junior) with a wide price differential of US$5,000 and US$500. The Junior would be released first. Another group within Apple began developing the OS and the programming language that would be licensed to software developers. After ARM Holdings plc was selected as the microprocessor manufacturer, Apple bought a 43 percent stake in the British company in September 1990. Sharp Corporation was selected as the manufacturer for Junior, which was renamed MessagePad. Sharp had experience in handheld electronics with its Wizard electronic organizer, which it had been manufacturing since 1988.

      Newton Development Languishes

      While Newton development was underway, Apple released a much-improved laptop in 1991. The PowerBook 100 weighed just 17 pounds and had a 12-hour battery life. Sculley introduced the term and concept of a PDA during his keynote speech at the International Consumer Electronic Show (CES) in Las Vegas, Nevada in January 1992, but Newton's target ship date came and went in April. Sculley, who had planned to announce the new product at the CES in Chicago in May, went ahead with a demonstration at the event. Although the software was still unreliable, the demonstration went well.

      The press was initially enthusiastic about the Newton, but opinions began to change as no product was forthcoming. July 1993 was set as the new release date, and the International CES in Las Vegas on January 8, 1993, as the next public showing. The demonstration of handwriting recognition, faxing, and shape recognition went off without a hitch; however, the attempt to send a note from one Newton to another using the infrared feature failed on stage. Tchao and Capps rushed over to the assembled reporters after the demonstration and were able to complete a successful impromptu demonstration of the infrared capability.

      The Centrum für Büroautomation, Informationstechnologie und Telekommunikation (CeBIT) in Germany, the largest international computer exposition, was the next scheduled demonstration of the Newton. The handwriting recognition failed to work until a second unit was used. The Newton software was moved into beta testing, a move that seemed premature since the code was still unstable and prone to crashing. At the beginning of May 1993, there were 3,700 known bugs to fix in under a month. At the end of the month, Apple was forced to send beta-quality software to Sharp so production of 4,000 MessagePads could begin.

      Newton's Rocky Release in 1993

      While the Newton group was facing its uphill battle, Apple was in the midst of a personal computer price war, as a number of companies began manufacturing personal computers. Sculley resigned on June 7, 1993, after Apple announced a third-quarter loss of US$183.5 million. Michael Spindler was promoted to president and CEO, but the Newton project had lost an important ally.

      In addition to Newton's technological problems, there was new competition in the PDA market. At CES in Chicago, attendees were already walking around with AT&T's EO Personal Communicator, which had been released earlier in the year. Casio and Tandy announced the release of their Zoomer PDA during the show. Both the Newton and Zoomer were priced at US$800. The Zoomer lacked handwriting recognition but featured e-mail. The more advanced EO, which incorporated a cellular phone, cost about US$2,500.

      On July 30, Tchao demonstrated the Newton on the television program Good Morning America, including sending a fax. It was officially released on August 2 at MacWorld Boston. Upgrades from the base model offered faxing or the ability to synchronize data with a computer. Although the product name was officially MessagePad, the What is Newton? television advertising campaign contributed to the public’s widespread adoption of Newton as the product name.

      The Newton had a 4.75-inch liquid crystal display (LCD) monochrome screen, and the infrared feature could transmit data (notes, contact info, or appointments) to another Newton up to three feet away. The Newton Intelligence software automated repetitive tasks, such as formatting a fax cover letter for a specific person, simply by writing certain commands. In addition to the organizer features, Newton could store 200 notes (up to 50 characters each) and 35 screens of text or drawings. It offered built-in support for Apple printers, but printing to other printers required purchasing the optional Printer Pack. Newton shipped with a game that taught the Newton to recognize the particular user's handwriting.

      Handwriting Recognition Is the Most Glaring Problem

      In addition to lacking the ability to exchange e-mail, the Newton had many flaws. As there was no on-screen keyboard, the stylus pen was the only way to enter data. The Newton's dimensions of 7.25 inches by 4.5 inches were a bit wide for many people to hold easily. Apple's claim of 32 hours of usage on four AAA batteries was about one-third that of the Zoomer, and an optional rechargeable battery cost an additional US$25.

      For the most part, these problems were considered minor inconveniences. However, the inaccuracy of the handwriting recognition software, the most touted feature, unleashed a storm of criticism in the media. The software did not have character recognition, only word recognition, and the word recognition was limited to a database of 10,000 words.

      Improvements in Next-Generation Newtons

      In March 1994 Apple shipped the next-generation MessagePad 100 and MessagePad 110. The price had dropped considerably to US$500 and US$600, respectively. The 110 doubled the memory to one megabyte (MB) and used four AA batteries to double the battery life. It was a half-inch narrower, due to an internalized pen holder. The models shipped with a more stable version of Newton OS that improved handwriting recognition. Character recognition had been added and the database was expanded to 13,000 words.

      Enhancements were also made to the MessagePad's functionality. The new models offered the ability to exchange e-mail between Newtons using NewtonMail. However, exchanging e-mail with a computer user or faxing required a modem. An optional Messaging Card was available that enabled the MessagePad to send and receive data wirelessly. A flip cover was added to protect the display and address the problem of cracked screens with the original MessagePad,.

      In 1995 Apple released the improved MessagePad 120. It shipped with Newton 2.0, which featured an on-screen keyboard and better handwriting recognition. This version of the print recognition software had been developed in-house by Apple's ATG. The MessagePad also shipped with Newton Internet Enabler software.

      In February 1996 Spindler was replaced as president and CEO by Gilbert Amelio, an Apple board member and former CEO of National Semiconductor Corporation. At year-end, Apple acquired NeXT, Inc., the computer and software company Jobs had founded after departing fromApple in XXXX. This brought Jobs back into Apple's fold as an advisor. Amelio was fired in July of the following year, and Jobs agreed to take on the role of interim CEO.

      Competition from the New Pilot PDA

      Continuing its strategy of releasing a new Newton approximately every year, Apple launched the MessagePad 130 with a backlit display in March 1996. This was an exciting improvement, but increased competition arrived with U.S. Robotics Corporation'

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