10 really bad business / tech predictions

The rationale behind them (and links to primary sources)

A lot of quotes about bad tech predictions don’t have sources backing them. I’ve collected the ones I am able to find evidence for and linked them below. I also included a list of other well-known “bad predictions” which are actually untrue.

One commonality is people just talking their own book. This applies to the following predictions:

• Mid-1970s: Ken Olsen on home computing (DEC was a selling mainframe computers)

• 1992: Andy Grove on mobile computing (Intel was dominant on PC/Data Centers)

• 2003: Steve Jobs on music subscription services (Apple had iTunes)

• 2007: Steve Ballmer on iPhone (Microsoft had its own handset ambitions)

• 2008: Larry Ellison shitting on cloud computing (Oracle dominant in on-prem data centers)

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Rationale for the Bad Predictions

Cars Prediction (1903)

“The automobile is a fad, a novelty. Horses are here to stay.” 

This advice was given by President of Michigan Savings Bank to Horace Rackham, who was Henry Ford’s lawyer and was offered an opportunity to invest in Ford Motor Co.

Rationale? The Bank President was extrapolating from his understanding of the bicycle market. Right before the famous line to Rackham, the Bank President says: “You see all those people on their bicycles riding along the boulevard? There is not as many as there was a year ago. The novelty is wearing off; they are losing interest. That’s just the way it will be with automobiles.” (Quote Investigator)

Internet Prediction (1995)

“I predict the Internet…will soon go spectacularly supernova and in 1996 catastrophically collapse.

Robert Metcalfe (Ethernet inventor) wrote this in Infoworld Magazine (in 1999, he put the column in a blender and "ate" his words at WWW Conference; before eating the goop with a spoon, he confirmed that the ink wasn’t toxic).

Rationale? Metcalfe provided a number reasons for his prediction:

• Internet data links would be overloaded

• The proposed flat-rate business model would not bring in enough money to fund growth

• Investors would not be willing to stomach long-term losses

• The Internet would face significant security issues

(Quote Investigator)

Mobile Computing Prediction (1992)

The idea of a wireless personal communicator in every pocket is "a pipe dream driven by greed."

Andy Grove at the '92 Mobile Conference.

Rationale? Grove’s line is included in a New York Times article titled “The Executive Computer; 'Mother of All Markets' or a 'Pipe Dream Driven by Greed'?”

There is no further context around his quote, but the rest of the article talks about a seeming gold rush for a personal computing device. The technology was vastly underdeveloped, which may be Grove’s reservation (basically, everything is hype). Not sure if his reservation in 1992 is related to Intel completely missing the mobile wave in the iPhone era.

PC Prediction (mid-1970s)

“There is no reason an individual would ever want a computer in their home.”

This quote is attributed to Ken Olsen, founder of Digital Equipment Corporation (DEC), a minicomputer manufacturer.

Rationale? Olsen’s quote is relayed by David H. Ahl, a former DEC employee that worked on a home-computing product for DEC. Apparently, Olsen “refused to support the full development and marketing of the system”. Ahl was not happy about it and — in 1980 — told the story of Olsen shutting down DEC’s home computing efforts in a tech publication. (Quote Investigator)

The Beatles Prediction (1962)

“We don't like their sound, and guitar music is on the way out.”

Decca Records — a UK record label well-reputed for the development of new recording methods — rejected The Beatles following an audition.

Rationale? A few reasons, per Ultimate Classic Rock:

• George Best was the drummer instead of Ringo Starr (fair enough)

• Paul McCartney re-listened to the tape and says “we weren’t that good”

• Unsurprisingly, John Lennon thinks Decca made a mistake: "I wouldn't have turned us down on that. I think it sounded OK. [...] I think Decca expected us to be all polished; we were just doing a demo. They should have seen our potential."

Internet Prediction (1998)

“The growth of the Internet will slow drastically, as the flaw in ‘Metcalfe’s law' becomes apparent: most people have nothing to say to each other! By 2005, it will become clear that the Internet’s impact on the economy has been no greater than the fax machine’s”

Paul Krugman wrote it -- ironically -- in an article for Red Hering titled "Why Most Economists’ Predictions Are Wrong"

Rationale? Per Snopes, Krugman owned it by saying “I must have tossed it off quickly (at the time I was mainly focused on the Asian financial crisis!), then later conflated it in my memory with the NYT piece. Anyway, I was clearly trying to be provocative, and got it wrong, which happens to all of us sometimes.”

iPhone Prediction (2007)

“There’s no chance that the iPhone is going to get any significant market share. No chance. It’s a $500 subsidized item. They may make a lot of money. But if you actually take a look at the 1.3 billion phones that get sold, I’d prefer to have our software in 60 percent or 70 percent or 80 percent of them, than I would to have 2 percent or 3 percent, which is what Apple might get.”

Former Microsoft CEO Steve Ballmer tells USA Today.

Rationale? Per CNBC, Ballmer attributes his iPhone faux pas by missing Apple’s business model innovation. He told Bloomberg: “I wish I’d thought about the model of subsidizing phones through the operators. And there was business model innovation by Apple to get it essentially built into the monthly cell phone bill.”

Music Subscription Prediction (2003)

“The subscription model of buying music is bankrupt. I think you could make available the Second Coming in a subscription model and it might not be successful."

Steve Jobs in a Rolling Stone interview.

Rationale? Jobs’ view on subscriptions is based on how consumers typically consumed audio up to 2003: “They bought 45s, then they bought LPs, they bought cassettes, they bought 8-tracks, then they bought CDs. They’re going to want to buy downloads.”

The idea of an all-you-can-eat music service was incongruent with music history. Also, the existing subscription services (MusicNet, PressPlay, Rhapsody) weren’t that good and didn’t have full catalogues.

Cloud Computing Prediction (2008)

“The computer industry is the only industry that is more fashion-driven than women's fashion. Maybe I'm an idiot, but I have no idea what anyone is talking about. What is [cloud]? It's complete gibberish. It’s insane.”

Larry Ellison at OracleWorld.

Rationale? This is probably a case of Upton Sinclair’s quote “It is difficult to get a man to understand something, when his salary depends on his not understanding it.”

From the mid-1970s, Oracle was the premier database provider. Cloud computing was a direct thread to its on-premise model. After years of resisting cloud, Oracle is finally cracking the market.

Spam Prediction (2004)

“Two years from now [in 2006], spam will be solved.”

Bill Gates a the World Economic Forum.

Rationale? Gates said that Microsoft was working on 3 different solutions to the problem. Per The Guardian, didn’t elaborate but they probably included some advanced filtering or a economic cost (eg. sending fee) to send emails. Obviously, none of it worked.

*Untrue* Bad Predictions

TV Prediction (1946)

“Television will never hold onto an audience. People will very quickly get bored of staring at a plywood box every night”. — Darryl Zanuck, Head of 20th Century Fox

Debunked: This is a misquotation from a 1951 Wall Street Journal article. It actually mashes together interview quotes from two individuals, neither of which is Zanuck.

Here is the WSJ excerpt: “ ‘Video isn’t able to hold on to the market it captures after the first six months,’ declares a New York movie mogul. ‘People soon get tired of staring at a plywood box every night,’ claims a San Franciscan.” (Quote Investigator)

Computer Memory Prediction (1981)

“No-one will ever need more than 637KB of memory in a computer. 640KB ought to be enough for anybody.” — Bill Gates, CEO Microsoft

Debunked: Gates says the quote is a straight up urban legend “I've said some stupid things and some wrong things, but not that. No one involved in computers would ever say that a certain amount of memory is enough for all time. Meanwhile, I keep bumping into that silly quotation attributed to me that says 640K of memory is enough. There's never a citation; the quotation just floats like a rumor, repeated again and again."

Computing Industry Size Prediction (1981)

“I think there is a world market for maybe five computers.” — Tom Watson, Chairman IBM

Debunked: This quote is taken completely out of context from a 1953 shareholder meeting remark. Watson said this “IBM had developed a paper plan for [new type of data processing machine] and took this paper plan across the country to some 20 concerns that we thought could use such a machine. I would like to tell you that the machine rents for between $12,000 and $18,000 a month, so it was not the type of thing that could be sold from place to place. But, as a result of our trip, on which we expected to get orders for five machines, we came home with orders for 18.”

He was literally trying to sell a new machine and thought he could sell 5 of them, but ended up with 18 orders.