Technological Dead Ends

Sometimes much-hyped, apparently innovative avenues turn out to lead nowhere.


Sometimes something comes along that looks like it is a portent of things to come, but then turns out to be a technological dead end. For example, in the 1990s, it seemed that you couldn’t go to the mailbox or rent a video without getting an AOL CD offering a free trial. They were even in some cereal boxes. It was the era of the 56Kb dialup modem, and AOL’s walled garden was king as everyone went online. Their “you’ve got mail” sound became a standard on TV and a movie was even made with that title. It was brilliant marketing. Instead of paying for TV ads, they sent out literally over a billion CDs over the years. The CDs (actually floppy disks in the beginning) gave you a free trial (“500 hours free”) and then you became a paying customer. In a matter of years, AOL became a $150B company, signing up new users every five or six seconds.

As Steve Case, AOL’s CEO put it:

When we went public in 1992, we had less than 200,000 subscribers. A decade later the number was in the 25 million range.

The CDs didn’t connect you to the internet, since there was no internet at the beginning. It connected you to AOL’s walled garden. When the internet came along, AOL provided ways for you to connect to it, but there was a feeling that you were venturing out into alien territory beyond the curated safety of AOL’s services. When broadband came along too, with Internet Service Providers (ISPs), other companies stepped up to provide places to go. These were known as portals.

Other portals stepped in, competing with AOL on the basis of having more stuff. Yahoo, Excite@home. It looked like the basis for competition was to aggregate more stuff and be the place the users wanted to go. Portals were the future. Whoever had the biggest walled garden with the most people inside the walls would win.

In every industry, companies tried to create portals to get “first-mover advantage” in the industry. For example, in March 2000, EE Times reported:

Cadence Design Systems Inc. today will launch an initiative in Internet design, unveiling what it has dubbed the “Gateway to the New Electronics Supply Chain,” a Web portal built around the exchange of electronic design data among component makers, OEMs, and contract electronics manufacturers. The portal—an independent company that’s part of the iCadence initiative—will link EDA tool and service provider Cadence Design Systems, computer maker Hewlett-Packard, and contract electronics manufacturer Flextronics in a business-to-business trading hub aimed at accelerating the design and procurement of printed-circuit boards.

The new PCB trading portal will be the first of several such portals on the drawing board, according to Cadence. Hubs for system design and a hub linking makers of silicon intellectual property and foundries are also planned.

Yes, Cadence had a major portal for electronic design and manufacturing, with more planned. Of course, Cadence has some portals today for specialized purposes, but that is really the name living on like the Cheshire cat that vanished until all that was left was its smile.

But back in the early 2000s, it turned out that portals were actually another dead end. In fact, in the tech downturn that started a year later, it looked like a lot of things on the internet were dead ends. Portals made it easy to find stuff, but then search engines came along and made it even easier. It turned out that competing on the basis of the biggest portal was another dead end.

When I lived in France, we had a device at home called Minitel. Everyone in France did at the time. The French telephone service (actually the PTT since it was still together with postal mail) decided to provide one to every household in the country, with the financial justification that it would no longer need to print phone books since everyone could use Minitel to find a phone number. The financial justification seemed a bit dubious, to be honest, since phone books don’t cost much to print and distribute, but in another sense it was very forward-thinking. Since everyone in France had Minitel it made sense for every mail-order vendor in France to provide an interface to allow you to order online. There were already some very large mail-order companies in France, such as 3 Suisses and La Redoute, and people switched from ordering over the voice phone to using Minitel. You could buy airline tickets, train tickets, go on a chat line, do online dating, and more. Some services were free to use, others were priced like a normal phone call (mail order, for example), and others were premium services where you paid by the minute and the service provider got much of the payment. By the mid-1980s, about half the usage was chat and games, not counting the calls, about half of them, to the Annuaire Electronique, the white pages directory that had been the original motivation for the service.

Minitel was actually a sort of acronym, for Médium interactif par numérisation d’information téléphonique, the French for interactive medium for digital information by phone. It was black and white, and text-only, very primitive compared to today’s smartphones obviously.

I had another connection with Minitel. It was actually built by Télic, a company based in Strasbourg (they eventually became part of Alcatel, which merged with Lucent, which is now part of Nokia Networks). They decided in 1982, which was very early in the arc of these things, to design their own ASIC chips. They used VLSI Technology to do it, so we had a team of a few Télic engineers onsite at VLSI working on them on the other side of the wall from where I sat.

It seemed as if Minitel was the way of the future. France was a technological leader, and every country would have to do something similar. But, in fact, it was a technological dead end. The internet came along and suddenly Minitel was a hindrance. France actually adopted the internet slower, since people didn’t need to get on. Minitel was eventually turned off in 2012.

In the early 2000s, if you were raising money or in a board meeting for a startup, then every venture capitalist would spend half the meeting typing on their Blackberry keyboard doing email. Today, this seems more familiar since we are all guilty of this to some extent. Back in that era, though, it seemed to be mostly VCs, but absolutely all of them, that were doing email on their phone. And Research in Motion’s (RIM’s) Blackberry was the only device. It was so addictive, even in the pre-social-media era, that it was nicknamed Crackberry.

Like the other examples above, it seemed like the harbinger of things to come. Of course, there would be competition. Probably Microsoft would do something. Some startups. But it seemed like a hand-held email device with its little clicky keyboard would be something we would all have.

I never used a Blackberry but I did get a Samsung Blackjack in about 2006. Small screen. Clicky keyboard. It ran Windows Mobile. It worked fine for email, but was really clunky for internet access. But something happened shortly after the start of 2007. On January 9, Steve Jobs stepped onto the stage at MacWorld and announced the iPhone. Blackberry (and Blackjack) would prove to be more dead ends, a vision for the future that lasted for a while but would turn out to be wrong.

One-by-one those VCs would get rid of their Blackberries and get an iPhone.

Dead Ends
It is hard to tell at the time which innovations will turn out to be the basis for future competition, a segment where it would turn out to be useful to be an early entrant. Or which ones will turn out to be dead ends, where the basis for future competition would turn out to be something else, and the early products would be at best irrelevant and at worst a millstone.

You’ve Got Mail
I wondered if the movie You’ve Got Mail paid AOL for the rights to the phrase…or perhaps AOL paid placement fees. But according to the Washington Post:
AOL and Warner Bros. declined to describe details of their arrangement, but people involved with the film say director-writer Nora Ephron and AOL worked closely together. While no money changed hands, AOL was effectively a “partner” in the filmmaking, they said. Company executives reviewed Ephron’s script and suggested changes to make the e-mail correspondence seem more realistic. The company even persuaded Ephron to change the film’s original title from “You Have Mail” so that it matched the AOL phrase exactly.

Leave a Reply

(Note: This name will be displayed publicly)