In the world of big business, success can depend on innovation. From the Model T to the iPhone, it’s often aggressive, mold-breaking new ideas that not only skyrocket companies to the top of the financial heap, but also actively change consumers’ lives.
Sometimes, bold innovation pays off in spades. Other times, a new idea results in failure so spectacular that it makes even the world’s biggest companies blush. And many popular companies have experienced both.
Click through to see these companies’ big successes — plus the ones that totally flopped.
Apple’s Biggest Flop: Apple Newton
In a way, the Apple Newton was the proto-tablet. Former Apple CEO John Sculley told CNET that when the Newton was conceived in the early 1990s, the company spent more than $100 million — that’s about $170 million in today’s money — developing the handheld device, a PDA-like piece of technology that used a stylus to manage information and take notes.
As the Newton prepped for release in 1993, Sculley was forced to resign — his passion project was a key factor in Apple’s third-quarter loss of $183.5 million, Gizmodo reported. The Newton line was an object of ridicule in its few years on the market, but the ARM processor that powered it went on to make Apple a healthy profit in other business ventures.
Apple’s Biggest Moneymaker: iPhone
In 2016, Apple sold its billionth iPhone, prompting CEO Tim Cook to boast that the device was “one of the most important, world-changing and successful products in history.” That same year, the Cupertino, Calif., company posted a fourth-quarter revenue of $46.9 billion and a quarterly net income of $9 billion, with the iPhone product line serving as the company’s biggest driver.
Given Apple’s success, you might be thinking about adding this company’s stock to your portfolio. But first, make sure you understand what it means to invest in a stock like Apple.
Facebook’s Biggest Flop: Oculus Rift
In 2014, Facebook acquired Oculus VR, which CEO Mark Zuckerberg boasted was the current “leader in virtual reality technology.” The Oculus Rift virtual reality headset seemed to have all the hype in the world behind it, and Facebook’s $3 billion acquisition only heightened the noise. Although the dust still hasn’t settled, the early returns aren’t looking so good.
Facebook lost $500 million in 2017 when game development firm ZeniMax sued Oculus for stealing proprietary design information. In March 2017, one month after the lawsuit concluded, Facebook slashed the price of the Rift headset from $600 to $500 and cut the price of its controllers in half to $100, Fortune reported. The payout on that lawsuit has since been halved — $250 million was awarded for breach of contract and copyright infringement, but the other $250 million awarded by jurors was thrown out.
Facebook’s VR bet remains a long-term gamble that could still pay off in a big way. However, in the short term, the company has not seen a return on its money.
Facebook’s Biggest Moneymaker: Instagram
Facebook’s social networking site remains the bread and butter that churns out the bulk of its $9.32 billion in quarterly revenue, but Instagram is likely the company’s smartest acquisition.
Time reported that Facebook paid only $715 million for Instagram — which was estimated to have an initial price tag of $1 billion back in 2012 — when all was said and done. As of June 2018, Instagram hit 1 billion monthly users and has a value of $100 billion, according to Bloomberg.
Samsung’s Biggest Flop: Galaxy Note 7
When reports of the much-anticipated and well-reviewed Samsung Galaxy Note 7 overheating — and sometimes exploding — started to surface in 2016, it wasn’t long before Samsung’s brand would explode, too — and not in a good way.
Samsung estimated in late 2016 that it’d lose about $3.1 billion on the Note 7 recall over a six-month period. That’s on top of the phone’s discontinuation from the product line, which slashed the company’s profits by $2.3 billion, according to Bloomberg.
Samsung’s Biggest Moneymaker: Galaxy S Line
Before things heated up with the Note 7, Samsung’s Galaxy S line of smartphones wasn’t just a major Android success story — it seemed like the biggest threat that the iPhone had ever seen.
By 2015, the Korean company had sold more than 100 million Galaxy S devices over four years, according to Business Insider, which called the Galaxy S line “a flagship series that only Apple could beat.” Those massive sales figures contributed to a full-year revenue of more than $178 billion.
Amazon’s Biggest Flop: Fire Phone
From PayPhrase to Pets.com to Amazon Destinations, the company’s myriad business ventures illustrate one thing: Amazon isn’t afraid to fail. As CEO Jeff Bezos famously told Business Insider, “I’ve made billions of dollars of failures at Amazon.com.”
Although it’s difficult to pinpoint which experiment has been the costliest, the Amazon Fire Phone is certainly the most prolific. Launched in June 2014, the face-tracking smartphone sold only 35,000 units, forcing the company to write off $170 million on unsold Fire Phones. By October of that year, Amazon had about 207,000 unsold phones in stock, according to Business Insider.
Amazon’s Biggest Success: Amazon Prime
From its free shipping perks to its media streaming services, Amazon Prime has become a massive service umbrella for all things Amazon.
In 2016, the online retailer raked in $6.4 billion from Prime and other subscription services alone. Prime Day sales in 2017 grew by more than 60 percent over 2016, CNBC reported. Amazon estimated that the average Prime member spends $1,300 shopping on Amazon annually, according to Statista.
Nintendo’s Biggest Flop: Wii U
Nintendo’s most notorious flop was the short-lived 1995 virtual reality experiment known as the Virtual Boy, which only sold 770,000 units. But, 2012’s Wii U was its biggest failure on the home console market. Trudging through a confusing concept and lackluster marketing campaign among other issues, the follow-up to the highly successful Wii only ended up selling 13.56 million consoles.
The Wii U’s reign saw the publishers of Pokemon consistently losing money, an exceedingly rare event in the company’s 125-year history. The Kyoto-based game wizards reported an operating loss of $457 million for 2014. Just before the Wii U gave way to the Nintendo Switch, the company reported another $232 million loss in the first quarter of 2016.
Nintendo’s Biggest Moneymakers: Wii and DS
The Wii U’s marketplace failure seems even more monumental when compared to its predecessors. The Wii sold 102 million hardware units and 918 million software units, while the Nintendo DS racked up 154 million hardware units and 949 million software units. At the height of the Wii and DS fever in 2007, Nintendo reported consolidated net sales of $8.2 billion.
It’s still early, but the company’s hybrid Switch console, released in March 2017, is off to a roaring start in the post-Wii U era. As of June 30, 2018, the new console had sold some 20 million units. Quite a switch, indeed.
Google’s Biggest Flop: Google Plus
Google can be forgiven for thinking that it had the ability to challenge Facebook for social media supremacy way back in 2010. After all, the rise and fall of Friendster and MySpace seemed to indicate that people were willing to leave social media platforms for new ones, and Google executives were actually fairly prescient in seeing Facebook’s growth into a major competitor.
That said, Google Plus definitely did not have the desired effect. The platform still exists in that it’s part of your universal login for Google, but most people ignore it while they access their email or calendar — not what the search engine giant was looking for when it first launched the network.
Google’s Biggest Moneymaker: “Moonshots”
When Alphabet released its 2015 financials, it confirmed that the company had sunk $3.5 billion worth of operating loss into other bets known as “moonshots” — or long-term research and development products outside of Google’s core internet business — which includes things like drones, self-driving cars, Nest and Google Fiber. But here’s the upswing: Google’s drive to innovate made it the most valuable brand in the world in 2017, according to Brand Finance.
Sure, Google had a monetary value of $109.5 billion at that time, but it was something else that enabled the company to dethrone Apple, the incumbent since 2011. While Apple failed to provide innovative products, envelope-pushing projects like Google’s moonshots continued to strengthen its brand, according to Brand Finance.
So, risk and innovation haven’t put money directly into Google’s pockets yet, but its bold, progressive moves are paying off in public perception now and could still be incredibly valuable in the long run.
Tesla's Biggest Flop: Possibly Tesla
If you were to judge the success of the company on the value of its stock and Elon Musk’s celebrity alone, there’s not a lot to criticize. However, at some point, the rubber hits the road — pun intended.
Car companies are supposed to do two essential things: make cars and then sell them for a profit. Tesla has, historically, not proven to be particularly good at doing either of those two things. The company has never been profitable, and it managed to produce and sell just over 100,000 cars in 2017.
Although it’s not uncommon for companies to take years to reach profitability — and the company is on pace to shatter last year’s mark for cars produced — it’s still important to note that Tesla’s current stock price gives it a market valuation in excess of $51 billion. That’s more than Ford and just above the value of General Motors Co. — companies that sold 6.6 million and 9.6 million cars in 2017, respectively.
In short, Tesla stock is currently trading like a company that’s producing 50 to 100 times as many cars as it is currently, meaning years could pass before the company’s actual profit and sales figures catch up to its market value.
Tesla's Biggest Moneymaker: Model S
Of course, it’s not as though investors in Tesla aren’t aware of most of those issues and see their investment as sound despite all of it. Why? Because where Tesla has succeeded, it has done so in a big way.
Tesla sold 200,000 units of the Model S — the company’s pricey sedan — in 2017 at a gross margin of 25 percent, which means that Tesla needs to sell fewer cars to keep pace with the competition profitwise. If Tesla can replicate the small-scale success of previous models on a larger scale with newer models, the company might turn the corner.
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Joel Anderson contributed to the reporting for this article.
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