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Way back in 2001, Apple’s Steve Jobs unveiled the first iPod on stage at a televised press event.

Its introduction changed the music industry forever. With its handheld, sleek design and user-friendly UI, the iPod was revolutionary. Once released, stores could barely keep the devices in stock. In the years to come, the iPod and its iconic white earbuds were ubiquitous and instantly recognizable, and its name became synonymous with portable music players.

Of course, this post is not about the iPod. It’s just tough to tell the story of Microsoft’s attempt at a portable media player, Zune, without it. More than anything else, the iPod’s juggernaut success and ability to capture the cultural zeitgeist defined the Zune’s ultimate trajectory and legacy.

The Zune was many things, but for the purposes of this article it’s a cautionary tale for otherwise extremely successful companies that invest heavily in taking down a runaway market leader while not giving potential customers a strong enough incentive to make the switch.

Starting Late Isn’t Great

In 2006 — years after the iPod had already been on the market, and one in which Apple had sold nearly 40 million of the devices — Microsoft waded into the portable music waters by introducing Zune.

With a larger body and screen, array of body color options and three buttons, the original version of the Zune didn’t radically deviate from the iPod’s design at the time, but it was enough to distinguish itself. And the device’s software carried a few surprises, which we’ll get into later.

In Zune’s first week of launch, sales were fairly promising, but not spectacular or unexpected for a big-name software company jumping into the white-hot portable music player space at the time. Despite the late entry, Zune quickly jumped to the number two portable media player on the market, capturing a 9% unit share.

The only problem? Apple’s iPod at the time had secured a 63% unit share, and that was growing.

Killer Features Are Critical

Although many critics seemed to prefer its competitor, Zune had some interesting software features that made it a favorite among a modest but devoted crowd.

With an emphasis on Wi-Fi functionality and the social aspect of music, Microsoft attempted to create a Zune community of sorts, where users could sync devices and even send (or “squirt,” in oddly chosen Microsoft parlance) songs or photos to other Zunes within 30 feet, enabling the receiver to play the media.

But since it was still the extremely early days for digital music (Spotify didn’t even officially launch in the U.S. until 2011), and industry labels hadn’t fully embraced it as a legitimate revenue stream, shared songs would disappear after only three days, which greatly hobbled the usefulness of the squirting feature and rankled some users.

Innovate the Ecosystem

Then there was the disparity in the digital marketplaces from which you purchased media to bring your player to life. Again, Apple was first-to-market and the clear leader.

Early on, Apple’s Jobs had cannily read the public demand for digital songs and the music industry’s piracy struggles with file-sharing sites like Napster and LimeWire. After securing deals with several major record labels, Apple was first to market with the iTunes Store in 2003, providing a legitimate way for consumers to purchase digital music. The service sold 70 million songs in its first year, and has now sold upwards of 10 billion.

Alternately, Microsoft launched MSN Music in 2004 as an alternative to iTunes, only to shut it down in 2006. That was okay, because, at the time, Microsoft also had Zune Marketplace — the digital media store to serve up media for Zunes and PCs. Zune Marketplace functioned in a similar fashion as iTunes, and it did have some distinguishing features.

Its subscription service, for instance, let you pay a monthly, flat fee and download all the music you wanted to your Zune (so long as you kept up the subscription.) In terms of breadth of content, in its early days, Zune Marketplace’s selection was somewhat lacking compared to iTunes— it didn’t have videos or podcasts, for instance — but it did dramatically improve over time.

Messaging Matters

https://www.youtube.com/watch?v=xWnRAmjYmAw&list=PLA384E10057D00FBE&index=1

If you’ve noticed a trend of Microsoft playing catchup to Apple on the digital music front at this point, that’s no accident. And the marketing campaigns for both companies at the time really spelled things out.

Apple’s “silhouette” ad campaign for iPod became an instant and iconic classic, featuring characters dancing against colorful backdrops, with the only splash of color against the dark human figures being the white iPod and earbuds. They were brilliant in their simplicity, had mass appeal and are still widely remembered even 15 years after their introduction.

Alternately, Microsoft favored a different approach, with not as much cohesion or consistency in messaging and style compared to Apple’s campaigns. For instance, some ads portrayed Zune users literally entering their devices and exploring the looking-glass like universe. Other commercials highlighted Zune’s sharing functionality. The problem was none of them really highlighted what was different about Zune.

It’s also worth mentioning that, at the time, Apple was simultaneously running another extremely successful and highly visible campaign, “Get a Mac,” against Microsoft, that would later be named the best of the decade by Adweek.

Gone Too Zune

Despite ongoing sluggish sales figures, Microsoft plodded along iterating on the original Zune, attempting to go shot-for-shot with Apple, while introducing features like larger capacity, flash memory and later an HD touch-screen. But it was never enough to dislodge Apple’s firmly held market grip.

In a relatively short amount of time, retailers began ditching Zune, with GameStop announcing it would no longer carry the Microsoft media player just two years after launch. In 2012, Microsoft finally officially pulled the plug on Zune entirely, shifting focus to its Xbox Music service.

By that time though, the portable gadget space had already been completely transformed by the Apple iPhone and, in its wake, the rise of smart phones. Streaming music was also on the rise and sales of MP3s were declining, leading to lower demand for iPods. While there was once a variety of models — like the Classic, Shuffle and Nano — today Apple only sells the iPod Touch.

Now 12 years after Zune, Microsoft has bounced back strong, finding success in a number of other categories, from the Xbox to Outlook to Azure.

Zune itself was not a bad product for its category. Its Wi-Fi and song-sharing capabilities were both ahead of their time, and the software was thoughtfully designed and functional. In fact, there are still some Zune diehards out there heralding its modern value as a bastion away from the hyper-connected devices of today.

The problem was Zune didn’t innovate enough on the stratospheric success of its competitor, which was only gaining steam at the time of its launch. To quote a character from another popular 2000s pop-culture phenomenon, HBO’s The Wire: “If you come at the king, you best not miss.”

The fast-paced nature of consumer electronics leaves little room for error, and yet the majority of engineers in this industry say their projects are constantly running behind schedule. That leads to delayed launches and more opportunities for competitors that have already hit the market. Learn what some are doing to improve their processes and overcome these challenges with the report, “Developing for Success in Consumer Electronics.”

Misfires are tough for companies to endure, but they can also provide excellent lessons for others. What Did We Learn is an ongoing feature series focusing on insights gleaned from unsuccessful companies and products.
Snapchat Spectacles hit the scene with a much-hyped debut back in late 2016. Available initially only in a single, bright-yellow pop-up vending machine on the Venice Beach boardwalk, the days and weeks after launch saw lines around the block of eager Snapchatters looking to, erm, snap, up a pair of their own.
Just a year and change after the viral launch — which saw high demand, and numerous other such vending machines crop up in various US cities — there are reportedly hundreds of thousands of unsold pairs just collecting dust.
The crux of the $129 Bluetooth and Wi-Fi-enabled augmented reality sunglasses — now available for purchase online — is that they are equipped with a pair of camera lenses that let wearers to, with a tap of the left lens, record and post their point of view directly to their Snapchat accounts in up to 10-second video increments.
During the peak of the launch hype, the specs sold extremely well. Pairs were spotted on eBay selling for upwards of $900. If the initial demand was robust, how did a company with more than 187 million daily (very) active users only manage to sell this product to .08% of them?
Failure to Anticipate Demand
A viral launch of a new product for a popular app seems like a sure money-making proposition, but based on sales figures for Spectacles, it looks like only the most ardent Snapchatters came out to buy them before the hype died down.
In October 2017, Snapchat CEO Evan Spiegel said on stage at a Vanity Fair Summit that the company had sold 150,000 pairs of the glasses, which generated slightly more than $8 million in revenue (out of total revenue of $150 million).
That number is a drop in the bucket for a company with such a large userbase, and a sign it vastly overestimated demand for its first-ever hardware product. Spiegel has noted repeatedly that the company has struggled to explain its long-term value proposition to investors, including with Spectacles.
Virality Isn’t Everything
In spite of a splashy launch that garnered a lot of attention, the hype quickly died down and the product failed to gain traction in the long term.
For whatever reason, the company waited a full five months after launch to make Spectacles available online, perhaps trying to squeeze the limited availability/FOMO juice a bit too long.
By the time the specs could be purchased online by a wider consumer base, mixed reviews noting Spectacles’ limited functionality — including not having the ability to take still photos and making it difficult to share video on other social networks — had already taken some of the bloom off the rose.
As The Los Angeles Times noted, “Spectacles aren’t perfect. They make boring wide shots and blurry night recordings. They don’t take stills and don’t zoom. And indoor usage is unlikely because wearing sunglasses inside is weird.”
Some of those critiques may have helped explain why Business Insider reported that Snapchat internal data showed fewer than 50% of buyers continued using the specs a month after purchasing.
Combined with failing to broadly incorporate multiple sales channels early on, this strategy likely cost Spectacles key early momentum.
Not Learning from Previous Product Failures
Google’s high-profile failure with Google Glass — its take on augmented reality glasses — should have been a warning to Snap that the public’s appetite for such a product might not quite be there yet.
Google Glass had considerably more functionality than Spectacles and still failed to catch fire with a wide audience (although it has had something of a revival in the manufacturing space). Still, releasing a product similar to one the public had recently shown an aversion to was a real gamble.
Muddying the Waters on Defining Your Company
Shortly before Spectacles’ launch, in an S.E.C. filing reported on by The Wall Street Journal, Snap declared itself, puzzlingly, a camera company. This was seen as a somewhat odd declaration for a company best known for its photo-sharing app, and for whom Spectacles represented their first real foray doing anything resembling making cameras. The lukewarm reception of the quality and functionality of Spectacles didn’t buttress the company’s claims (or its initial IPO), either.
The launch of Snapchat Spectacles shows that products with an exciting and interesting release aimed at a large, built-in audience are not guaranteed successes. Whether it was Spectacles’ limited utility allure, price tag or launch strategy, the glasses were considered one of the biggest product misses of 2017, forcing Snap to write off $40 million in unsold inventory and excess purchasing commitments.
If done right, Spectacles could have been a valuable revenue stream for the young company, which famously turned down a $30 billion acquisition offer by Google in 2016. Not that Snap has given up on Spectacles just yet.
While there’s no plans to release a new version of the glasses this year, there’s been stories about Spectacles finding alternate uses such as assisting with medical training, so it’s possible we’ve only seen the iteration of Snapchat’s hardware ambitions.
Learn some ways companies developing connected devices and wearables can improve their processes in our report, “Developing for Success in Consumer Electronics.”

Misfires are tough for companies to endure, but they can also provide excellent lessons for others. What Did We Learn is an ongoing feature series focusing on insights gleaned from unsuccessful companies and products.
Juicero was the toast of Silicon Valley investors. Until it wasn’t.
Before its spectacular public relations belly-flop, the juice-pressing machine startup raised north of $134 million from top venture firms. This year, it collapsed under the weight of an unsustainable business model and widespread ridicule in the press, shutting down operations just 16 months after launching.
The company sold pouches of cut-up fruits and vegetables on a mail-order subscription basis to accompany its $699 Wi-Fi enabled juice-presser. These proprietary pouches fit inside the Juicero, and with the push of a button, produced a glass of fresh juice. That is, until it was discovered by Bloomberg that the pouches could be squeezed by hand, producing essentially the same result as the machine itself.
Once word spread that people who bought the Juicero had shelled out nearly $700 for a device that was not actually needed to deliver the juice, sales cratered quickly, ultimately prompting the company to drop the price by $200, then offer full refunds to customers.
Brutal mockery in the press was just one facet of why Juicero failed and follow-on investment dried up. The company was hemorrhaging $4 million per month after its initial infusion of venture capital, with the board determining the business model of shipping refrigerated pouches to customers was too expensive to sustain.
Don’t Over-Promise
As the first version of the Juicero was hitting the streets, founder and healthy living enthusiast Doug Evans launched a media blitz touting the benefits of the Juicero. He spoke glowingly of the device’s innovative nature, at one point comparing the machine to the launch of the Tesla Roadster. Evans’ hubristic overstatement of the machine’s capabilities set the stage for an even bigger fall from grace once it was discovered that the device was all but superfluous.
Niche Markets Can’t Be the Primary Customer
At $699, with juice pouches costing between $4-$10 a pop, the Juicero’s initial target market was primarily the well-heeled Silicon Valley set who wouldn’t blink at spending so much on a juice machine and pouches with which to fill it. While the company eventually planned to pivot to attract a broader base of customers with future cheaper iterations, it never got the chance before the bottom fell out. This doomed the juicer’s early sales to the small number of people who could afford it, costing it precious early momentum.
Underestimating the Cost of Doing Business
Right from the get-go, Juicero was losing money on its machine. Each press cost the company $750 to produce, even before factoring in operational expenses, according to Bloomberg. This meant, in spite of its lofty $699 selling price, the company lost money with each and every unit shipped.
Furthermore, Juicero’s board determined that the cost of shipping refrigerated juice pouches to customers was unsustainable long term. This hobbled the company’s finances, and made it a losing proposition right out of the gate, resulting in the company being desperate for additional capital infusions to keep the doors open.
As investors fled, the company was forced to lay off employees and cut costs, but it still wasn’t enough to stave off failure.
Functionality Should be a Cornerstone
Juicero may have been banking on its subscription-based model to generate most of its profits long term, which could conceivably have been sustainable if the juice press itself wasn’t overpriced for the function it actually performed. If the machine cost $200 from the outset, it would have cast a much wider net for potential customers, who may not have minded as much that they could simply squeeze the pouches themselves.
Pricing the machine so high when all it really did was mechanically squeeze the pouches was a byproduct of bloated manufacturing and design costs. If customers are going to spend big bucks on a product, it had better surpass what a person can do with their bare hands.
Juicero will likely go down in Silicon Valley history as a case study example of how not to launch a product. Its meteoric rise and precipitous fall demonstrates just how quickly things can go awry when a product doesn’t live up to its hype, even with big financial backers and a founder who genuinely believes in what they’re selling.

Misfires are tough for companies to endure, but they can also provide excellent lessons for others. What Did We Learn is a new, ongoing feature series focusing on insights gleaned from unsuccessful companies and products.

An amazing product launch video works miracles. Not only does it succinctly demonstrate value to your target audience, but it also has the potential to drive buzz at levels you hadn’t thought possible.

The 2015 launch video for the Lily drone, which amassed millions of views, was one such example. The video showcased how easy it would be to use the Lily drone to capture just about any outdoor activity on video. Backed by thumping electronic music, we see Lily drones being used by everyone from a snowboarder recording his run down a slope, to some kayakers tossing it in a creek to demonstrate its waterproof functionality, to a woman using it to document a family moment on a mountain top.

The video helped the Lily drone, created by Lily Robotics, become a media sensation (The Wall Street Journal included the drone in its 2016 article titled, “The Tech That Will Change Your Life in 2016”) and accumulate millions of dollars in start-up capital and preorders.

At the time, the thought of a drone that was so seemingly accessible and user-friendly — to the point that it automatically launches and starts recording video when just tossed into the air —was revolutionary. Unfortunately, in retrospect, this craze was the high-water mark for the drone’s creators, Lily Robotics.

In the ensuing two years since the launch video, everything came crashing down for the company in a tailspin of product delays, bankruptcy, and legal trouble. For a product that looked to do for drones what GoPro did for mountable cameras, it was extremely disappointing turn of events, but one that has a bit of twist ending.

Here are some lessons to be learned from the rise and fall of Lily Robotics.

Promote Honestly
The original Lily drone launch video looked amazing, but you can make a lot of products appear incredible when you’re not relying on actual working functionality. In January, the San Francisco District Attorney’s office sued Lily Robotics, based on the launch video and its failure to ship any products. The SF District Attorney’s office discovered, according to SF Gate, that the video was created with the help of a “much more expensive, professional camera drone that requires two people to operate.” In fact, a production team member who was hired to work on the video told the District Attorney’s office that he wasn’t sure any of the footage was from the Lily drone, according to Wired.

Watch The Money
Initially selling for $499, the buzz around the launch video lead to a jaw-dropping $34 million in Lily drone presales. The problem was, according to Wired, before the window for preorders had even closed, Lily Robotics had already started to spiral. It had taken $14 million from investors to cover the costs of hardware construction, but that wasn’t nearly enough. Even still, the company leased a swanky San Francisco office and hired several employees.

Control Production
Maybe you’re wondering what happened with all those preorders? Well, they were never fulfilled, as Lily Robotics kept delaying the release of the drone. According to Wired, the person in charge of the software development team decided to revamp the drone’s software — which had originally been built with open-source. After that, technical problems caused the delivery date to change from 2016 to 2017, and then, well, never. Competitors popped up, customers were offered refunds, and that was it. On Jan. 12, 2017, Lily Robotics shut down permanently before shipping even one completed drone, reported Recode.

Brand Recognition Matters
While Lily Robotics, the company, is finished, the idea of a drone called “Lily” is very much alive. That’s because a company called Mota Group recently bought the “Lily” brand name, as well as some other brand assets, according to Droning On.

Mota’s “Lily Next-Gen” is not the original Lily. It’s been fully re-designed with several tweaks. For instance, the new model doesn’t have waterproof functionality, but it does weigh significantly less. As for price point, the new Lily Next-Gen is offered at a promotional price of $499-$799, depending on the package you select, with an expected retail price of somewhere between $600 and $900 (as compared to a retail price of $999 for the original Lily).

Lily Robotics is a strange case. Despite the overall failure, one could argue the crazy hype it produced counted for something in the end. After all, the “Lily” brand name lives on. Of course, the ultimate success of the brand will still depend on how well the new Lily Next-Gen sells, and the innovations Mota makes with it.

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