In the world of big business, success often depends 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 actively change consumers’ lives.
Sometimes, bold innovation pays off in spades. Other times, it results in failure so spectacular, it makes even the world’s biggest companies blush. Take a look at both sides of the coin to see if these companies’ big successes were worth 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 once 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 gizmo, a PDA-like device that used a stylus to take notes and manage contacts and agendas.
As the Newton prepped for release in 1993, Sculley was forced to resign, as his passion project was a key factor in Apple’s third-quarter loss of $183.5 million, Gizmodo reported. All’s well that ends well, though. The Newton line was the object of ridicule for 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
Is anybody shocked by this one? 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 company posted 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 the company’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 (So Far)
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 on the Rift, things aren’t looking so good.
Not only has the headset not quite revolutionized entertainment, 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.
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.
Initially estimated at a price tag of $1 billion back in 2012, Time reported that Facebook actually only paid $715 million when all was said and done. As of April 2017, Instagram had over 700 million users — that’s more than Twitter — and was estimated by Credit Suisse to have earned $570 million in revenue during the first quarter of 2016 alone.
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 appear in 2016, it wasn’t long before Samsung’s brand would explode, too (and not in a good way).
In late 2016, Samsung estimated 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 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, Amazon’s myriad business ventures illustrate one thing: It 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 streaming media services, Amazon Prime has become a sort of massive service umbrella for all things Amazon.
In 2016, the online retailer raked in $6.4 billion from Prime and other subscription services alone. In 2017, Prime Day sales 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.
Did You Know? 10 Features That Make Amazon Prime Worth the Money
Nintendo’s Biggest Flop: Wii U
Nintendo’s most notorious flop was the short-lived 1995 VR 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 smash hit Wii only ended up selling 13.56 million consoles.
The Wii U’s reign saw the Pokémon publishers 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, for instance. Just before the Wii U gave way to the Nintendo Switch, the company reported another $232 million loss in Q1 2016.
Nintendo’s Biggest Moneymakers: Wii and DS
The Wii U’s marketplace failure seems even more monumental when compared to the console and handheld duo of 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 Wii and DS fever in 2007, Nintendo reported consolidated net sales of $8.2 billion.
It’s early yet, but the company’s hybrid Switch console, released in March 2017, is off to a roaring start in the post-Wii U era. By July, it had sold 4.7 million units, boosting Nintendo’s net sales to $1.4 billion for the quarter. Quite a Switch, indeed.
Google’s Biggest Flop: “Moonshots”
Google and its parent company, Alphabet, Inc., have long since transitioned from the makers of the world’s most popular search engine to a high-tech portfolio company with a tendency to shoot for the moon. Hence, its huge spread of research-and-development expenses known as “moonshots.”
In 2014, CNBC reported that Alphabet spent $9.83 billion on R&D — that’s 15 percent of its revenue, compared to the 3 percent that Apple spent that same year. Before Alphabet released its first full financial report in 2015, analysts projected losses of up to $8.98 billion for its side projects, and as much as $850 million on its non-core businesses, according to CNBC. Doesn’t exactly sound like the best business idea.
Google’s Biggest Moneymaker: Also “Moonshots”
It turns out those analysts had reason to be pessimistic — when Alphabet released its 2015 financials, it confirmed that the company had sunk $3.5 billion worth of operating loss into the “other bets” known as moonshots, including stuff like drones, self-driving cars, Nest and Google Fiber. But here’s the upswing: Google’s drive to innovate made it the single-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 it 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 didn’t put money directly into Google’s pockets. However, its bold, progressive moves are more likely to pay off in the long term.