Osborne effect and several other fatal control errors

    Companies of any industry, from the smallest to the largest, regularly make mistakes, and only the size of the enterprises determines the scale of the consequences of these failures. Information technology is a very young field, the age of which is only a few decades, and the high risk of errors, the novelty of many problems and the financial interest in the industry made several unsuccessful solutions a textbook example of poor management, and sometimes the names of their authors remained only in history and management textbooks.

    SCO vs Linux

    The successful Santa Cruz Operation, which Eric Eric Raymond called the "first Unix company," has little to do with what the SCO Group ultimately called itself. Until the beginning of the 2000s, Santa Cruz created a commercially viable Unix for x86 platform servers, but things got worse after the purchase by Caldera Inc., led by Ransom Love, who had hopes to create the best Unix based on the acquired experience.

    The partnership with Intel and IBM in an attempt to implement the Monterey project, the operating system for the Intel Intel Itanium architecture under development and POWER IBM, was unsuccessful: the market rejected the IA-64 in favor of 64-bit x86 architecture options, and the free Linux operating system occupied the Unix niche. In 2002, Ransom left his post to Darle McBride, and part of the Canopy Group renamed itself the SCO Group, and instead of developing new products, the company focused on litigation.

    In court, SCO not only accused IBM of injecting part of the Monterey project code into the open Linux kernel, but also tried to recover damages from smaller players: large buyers, end users and manufacturers of Linux-based systems, including Red Hat and Novell. For this, SCO has become an outcast among the open source software community.

    The lawsuit lasted for years, and SCO quickly lost customers, industry confidence, and even its NASDAQ as not falling below the bottom line of the stock price. The company was a skeleton that dealt only with claims - all other employees were fired. Already in 2007, SCO announced its bankruptcy. In the end, the court decision was not in favor of SCO, and the company's Unix assets were sold.

    AOL / Time Warner

    The growing popularity of the Internet in the United States in the late 90s was spurred by the AOL dial-up giant, whose foundation was a closed ecosystem with content accessible only to subscribers, to make a number of purchases, the most noticeable of which was the 2000 War Time takeover for a huge sum of $ 164 billion .

    Formed by the merger, the monster, led by Steve Case (AOL) and Herald Levin (Time Warner), desperately lasted 9 years. Since 2002, the number of AOL Time Warner subscribers has been steadily declining, with nearly 30 million customers turning into just 5 million already in 2007.

    The market valuation of the company fell from 240 billion to a couple of billion dollars (2011). After taking over the new CEO of Tim Armstrong, AOL Time Warner announced the collapse into two independent companies with the same names, which marked the end of many years of fruitless cooperation. Only recently, AOL began to recover, absorbing several fresh media: About.me, TechCrunch, The Huffington Post and others.

    Yahoo and Microsoft

    In the late 90s, Yahoo changed its tactics of rapid growth to quiet buying companies and deploying their services under their own flag. So on Yahoo appeared financial news, image hosting (Flickr) and sites (Geocities). But in the end, Google and Facebook prevailed, and new acquisitions did not always succeed in monetizing successfully, which dropped the company's revenues.

    Meanwhile, Microsoft was looking for a platform from which the company could have its presence on the Internet, and Yahoo completely fit this definition. In February 2008, intentions were announced to acquire Yahoo for $ 47 billion, but Jerry Young, the co-founder and then-CEO of Yahoo, decided to charge his brainchild and refused to say that the company was underestimated and did not need new co-owners.

    A few weeks later, negotiations finally came to a standstill. Karl Aikan, a shareholder of Yahoo, tried to force Young to make concessions in the presence of Microsoft representatives. Tired of unsuccessful discussions, Ballmer gave orders to start developing his own search engine and web services under the Bing and Windows Live brands.

    In 2008, due to an unsuccessful attempt to merge with Microsoft on Yahoo, a series of layoffs swept and the company's market value began to plummet. In 2011, its value amounted to only 17 billion dollars, almost three times less than what was offered in Redmond.

    In January 2009, Carol Bartz took over as Jerry Young, who, ironically, had a deal with Microsoft about using Bing search for Yahoo services. But Carol was not able to improve the situation, and on September 6 last year, she sent a letter from her iPad to her subordinates, in which she reported that her dismissal required only one bashful phone call. Carol left Yahoo again followed by layoffs, the company broke up with 14% of its employees.

    As it became known recently, the new CEO of Yahoo has become Marissa Mayer. It is unclear whether she will be able to restore the former power of the giant, but one can imagine the pleasure of Ballmer and all of Microsoft with the memories of the refusal of further negotiations in 2008.

    IBM and Microsoft

    Several people at IBM in the late 70s began developing the future legendary 5150 PC machine, for which an operating system had not yet been prepared. Digital Research's CP / M, which was already used on Apple II, Osborne 1, and Kaypro machines, seemed almost the only suitable. In 1980, IBM contacted Gary Kildall, but negotiations on licensing CP / M for the 5150 platform and all future PCs failed, and I had to look for other people.

    Young Bill Gates, Steve Ballmer and Paul Allen, the first employees of freshly created Microsoft, accidentally stumbled upon the tiny company Seattle Computer Products, which had an 86-DOS, x86-compatible operating system with a similar CP / M command interpreter. The operating system was purchased with all rights to endless use for a miserable 75 thousand dollars.

    After negotiations, during which IBM did not really pay attention to non-exclusive licensing terms, MS-DOS, which is an 86-DOS with famously deleted references to Seattle developers, has spread to the future market of tens of millions of machines.

    Digital Research could meet and be softer in conditions, IBM could tighten conditions and buy completely MS-DOS or even both companies. But history does not tolerate a subjunctive mood, and it was from this point that the success of the Redmond company began, which, turning into a giant itself, in the 90s drove IBM out of the market for its own PC platform. CP / M never became popular. Digital Research tried to produce its own DOS clone - DR-DOS, which, despite several advantages over the Microsoft product, also failed. The DR-DOS operating system was later sold to Novell, then Caldera, then it became the property of the already mentioned SCO.

    Steve Jobs's resignation

    Steve Jobs, because of his eccentric and even violent character, was always very uncomfortable to work with, and gradually Steve’s relationship with the Macintosh team he led in the early 80s and Apple’s board of directors got worse. In light of the growth of the company to work as an executive director in 1983, Jobs lured John Scully from PepsiCo, where he held the same position.

    In 1984, Apple released the first Macintosh, replacing the successful Apple II and turning out to be not so popular Apple III. The fierce competition between IBM, Compaq and other giants selling PCs and their clones heated the inner world of Steve, who perceived the company's problems as personal. The board of directors requested Scully to restrict Jobs in his costly and dubious endeavors, which irritated Steve. In 1985, Jobs tried to oust Scully and take office, arguing that John was the wrong person to run the company, but unexpectedly for Steve, the board took Scully's side and fired one of Apple's founding fathers.

    The 11-year period that the company did not exist under the direction of Steve is almost always considered her worst years. As the CEO, several people were replaced, but without the visionary leadership of Jobs, they had no chance to improve Apple's position. By the mid-90s, the company was in a deplorable state, and the Macintosh operating system was significantly behind in development from its direct competitors.

    In 1996, Apple acquired Steve's new and successful company NeXT, which has not gone into oblivion: the NeXTSTEP operating system later became what we call OS X. Already in 1997, Steve, previously having consultant status with Apple, took over as CEO and in the year 2000 removed the prefix "temporary" from his post. Steve immediately closed many unpromising products; In subsequent years, the company branched out with the introduction and improvement of other digital devices. With the release of iMac, iPod, iPhone, iPad for Apple, the most successful period began.

    Windows Vista

    No one ever expected Windows XP to last that long. Even before its release, work began on a new project, codenamed Longhorn. The first successor demonstration took place in 2003 at a Microsoft conference.

    In August 2004, due to dissatisfaction with the size and functionality, the Longhorn project was started from the beginning. The future Windows Vista had simple tasks: to improve the security of the operating system and support for 64-bit systems, to refresh the user interface. It took more than five years of development, and the result was not satisfactory.

    Sales of Windows Vista began in January 2007, and the new operating system immediately received negative ratings. Users were dissatisfied with the high system requirements, the incompatibility of many popular programs and the inconvenience of User Account Control, which constantly asked too many obsessive questions. Of course, the subsequent Service Pack solved many problems, but the reputation was already undermined.

    The much more successful Windows 7 was still able to force many conservative XP users to change the operating system, but who knows how much Microsoft cost such a big blunder and how many users went to the Apple platform.

    Osborne Computer Corporation

    After the successful sale of a company to publish books and manuals on computers, Adam Osborne decided to create an inexpensive personal computer. Without further ado, the British called the new company and his computer his own name. Weighing 10.7 kilograms and amazing survivability, the Osborne 1 was CP / M 2.2 oriented and had a tiny monochrome 5-inch screen, 64 kilobytes of RAM, a Zilog Z80 processor with a frequency of 4 megahertz, two floppy drives and cost only $ 1,795 , while it came with programs for one and a half thousand dollars.

    For eight months, Osborne Computer Corporation sold 11 thousand computers, another 50 thousand were pre-ordered - and this despite the high marriage. At the peak, 10 thousand computers were sold per month, although it was initially estimated that so much will be sold for the entire period of Osborne 1. The growth of the company is difficult to realize: in just a year the company grew from 2 people to 3 thousand, and revenue amounted to 73 million. dollars. The head of the company, returning from a business trip to an exhibition lasting a week, had difficulty navigating in office premises. By October 1982, 500 copies of Osborne 1 were produced daily. OSC seemed destined for success.

    In early 1983, OSC was about to launch the Osborne Executive, the more advanced successor to the Osborne 1. Osborne Executive had twice as much RAM and a larger screen, and was still distributed along with a set of necessary software, but it cost almost 2.5 thousand. dollars. Osborne's next steps are being taught in business schools today as an example of mistakes that cannot be repeated. Wanting to push through a more expensive computer, in the rooms of the hotel with tightly closed doors, Adam Osbourne showed reporters a new car and talked about prices and technical specifications.

    Although, as promised, nothing appeared before the middle of April, the suppliers found out about the announcement and immediately canceled all orders for Osborne 1. On April 17, Osborne showed Osborne Executive dealers for a week and emphasized that the new microcomputer It is not a competitor to the old, but it did not have any effect. In July, Osborne 1 cost $ 1.295, in August the price was lowered to 995, but that also did not help.

    Sales fell to almost zero, the company suffered losses far above expectations, and on September 13th, 1983 OSC announced bankruptcy. Later there were attempts to release Osborne Vixen, which again were unsuccessful. Today, Osborne Computer Corporation is remembered only in the context of its failure.

    Sometimes another cause of OSC death is called: a more advanced Kaypro computer, which was cheaper, or an incomprehensible decision by management because of the availability of motherboards of the old model for 150 thousand dollars to spend 2 million to complete them in the finished product, when the production of newer machines had already begun .

    Nevertheless, today it is the Osborne effect that is to blame for the fact that companies severely restrict the dissemination of information about new developments and characteristics of future models, and people learn about new devices in our digital age from such an old-fashioned tool as rumors.

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