Study Guide

Case Studies

• Vaporware has been used in the computer industry for years. IBM was often accused of preannouncing new mainframes to keep buyers from turning to rivals. But vaporware wasn't called such until the 1980s, with the advent of the microcomputer. In t he early 1980s, Ann Winblad, now a San Francisco-area venture capitalist, visited Microsoft headquarters and demanded to know whether it was really planning to develop a piece of Unix software it was promising her Minneapolis company. Getting no answer fr om executives, she says, she asked an engineer, who whispered in her ear, "Vaporware. We're not doing it." After hearing the word for the first time, Ms. Winblad was credited with popularizing it. 
• In 1988, acting to head off a Microsoft product announcement, Lotus Development Corp. said it planned a version of its flagship 1-2-3 spreadsheet for Apple's Macintosh. At the time, Lotus dominated the spreadsheet market. But insiders say that L otus didn't even have specifications for the product and acted to counter Microsoft's announcement of a new version of its competing product. In fact, Lotus 1-2-3 for the Macintosh didn't ship for another three years. Lotus says the product delay wasn't i ntended to stall Microsoft sales. 
• The most famous vaporware product of its time, according to Ziff-Davis, is FullWrite, released in 1988, almost two years after it was announced by its original developer. Users of Lotus~ cc:Mail program have been waiting almost three years for the new and improved mail server for that product. 
• First, NEC Home Electronics (USA) was charged with falsely claiming that the memory capacity of one of its microprocessors could be easily expanded in the future with anticipated memory boards under development. 
• Subsequently, the FTC charged Coleco Industries, Inc. with falsely claiming that its "My Talking Computer" had certain features when, in fact, the company did not plan to produce the modules necessary to deliver these features for 12-18 months a fter the claims were made and had already determined to abandon plans for one of the advertised modules. 
• The FTC in 1975 settled a case against Xerox, however, with a prohibition of any product announcements more than three months in advance; there was no court decision. 
• The Gang of Three brought up another preannouncement suit, but it wasn't really a vaporware case. AT&T considered establishing a digital data network (DDN), but decided not to do so. Datran then publicly proposed a DDN service. AT&T responded wi th a crash DDN program and preannounced it by two years. This discouraged investors from financing Datran and led to its demise. The government sued AT&T for monopolization, alleging that this episode was part of a continuing monopolistic program of AT&T to prevent other companies from competing with it. The court held that the total pattern of conduct would show monopolization unless AT&T rebutted the evidence with contrary proof. While the US- AT&T case involves preannouncements, it is not clear that any deliberate falsity (vaporware) was involved--alth ough two years is rather longish for a preannouncement. Also, the DDN preannouncement was only one of many other exclusionary tactics that AT&T used. Thus, the court did not say that the Datran episode, by itself, showed monopolization.