Saturday, August 18, 2012

5 Top Tech Mea Culpas

Saying sorry can be hard to do, particularly in the unforgiving glare of Silicon Valley, but Netflix(NFLX) CEO Reed Hastings' heartfelt apology to customers is just the latest in a long line of tech mea culpas.

In a blog posting on Sunday, Hastings acknowledged that he "messed up" in his handling of new subscription prices, a move which had fueled intense criticism from customers.Netflix's CEO, however, is hardly the first tech chieftain to eat humble pie, following in the footsteps of Cisco(CSCO) boss John Chambers, Microsoft's(MSFT) belligerent-in-chief Steve Ballmer, and Facebook's Mark Zuckerberg. Even Internet giant Google(GOOG) issued a high-profile apology last year as privacy issues swirled around its Buzz social network.Read on for more details on tech titans begging for forgiveness.

Netflix

Netflix supremo Reed Hastings pulled out all the stops late on Sunday, attempting to calm customers (and shareholders) in a blog posting explaining the firm's unpopular price hike and its decision to split its DVD and streaming services into separate businesses."I messed up. I owe everyone an explanation," he wrote. "It is clear from the feedback over the past two months that many members felt we lacked respect and humility in the way we announced the separation of DVD and streaming, and the price changes. That was certainly not our intent, and I offer my sincere apology."Hastings acknowledged that he "slid into arrogance" based on past successes and failed to communicate the reasons behind the pricing and strategic changes. "We realized that streaming and DVD by mail are becoming two quite different businesses, with very different cost structures, different benefits that need to be marketed differently," he noted, by way of explanation. "And we need to let each grow and operate independently."As part of this change, Netflix is renaming its DVD-by-mail program "Qwikster", an offering which also marks the firm's entry into the video game rental market.Shareholders largely shrugged off Hastings' candor as Netlix's shares crept up 0.17% on Monday. Customers were less impressed. The CEO's blog posting has attracted more than 6,000, often scathing, comments from users.

Cisco

With questions being asked about the networking giant's long-term strategy, Cisco CEO John Chambers made a major act of contrition earlier this year, laying the foundations for a slew of changes at the embattled tech heavyweight."Today we face a simple truth: We have disappointed our investors and we have confused our employees," he wrote in the internal memo. "Bottom line, we have lost some of the credibility that is foundational to Cisco's success -- and we must earn it back." The comments precipitated a huge shake-up at Cisco, which involved 6,500 job cuts, a massive internal overhaul and a strategic refocus.These changes are now starting to reap dividends. After a run of quarters marred by weak outlooks, the switch maker put out solid fiscal fourth-quarter results and decent guidance last month. Shares of Cisco, now touted as a turnaround tech stock, have gained more than 7% over the last month.

Google Buzz

Google's(GOOG) infamous second effort at social networking became a privacy nightmare that helped show how inept the search giant was at people skills.In February 2010, Google launched Buzz in response to Facebook's enormous success in linking people and keeping those people on its site for hours a day.Unfortunately, Google failed to consider how guarded people are and automatically set up users' accounts with following lists based on their closest contacts. And if that wasn't enough of an invasion, Google Buzz also auto-shared its users' pictures, profiles and reading lists with others.After four days of blistering blowback from users, Google shut down the automatic oversharing and offered this apology: "We quickly realized that we didn't get everything quite right. We're very sorry for the concern we've caused and have been working hard ever since to improve things based on your feedback. We'll continue to do so," Todd Jackson, the Buzz product manager, wrote on the company blog.

Microsoft Vista

Companies are usually getting beaten up by competitors, but occasionally the biggest punches are self-administered. Windows Vista landed a devastating blow that helped knock Microsoft(MSFT) back on its heels. The ambitious, resource-taxing PC operating system was a complete fiasco for the tech giant.Its predecessor, Windows XP, was a relatively sturdy system and its successor Windows 7 is a winner. But Vista opened a hole in Microsoft that Apple(AAPL) was more than willing to fill.Windows Vista was launched in 2007 and early on it was clear from its heavy hardware requirements and poor reviews that it wasn't destined to be a blockbuster. In fact, most PC users passed on Vista and stuck with XP or bailed altogether on Microsoft and converted to Apple.Three years later, CEO Steve Ballmer finally acknowledged the Vista failure and offered an apology of sorts. Speaking at the company's annual CEO Summit in May 2010, Ballmer bemoaned the setback and all the years lost due to Vista.In a mea culpa that could hardly be more understated Ballmer said: "It was just not executed well."

Facebook

Facebook, no stranger to privacy battles, issued a big apology in 2007 over its controversial 'Beacon' tracking tool. Beacon, which tracked user activity on partner Web sites, provoked a firestorm of criticism from privacy advocates, and prompted a mea culpa from the youthful Facebook CEO."We've made a lot of mistakes building this feature, but we've made even more with how we've handled them," explained Mark Zuckerberg, in a blog posting. "We simply did a bad job with this release, and I apologize for it." Facebook, which saw Beacon as a simple way to let people share information with their friends, goofed by requiring users to opt-out of the system, he said. "The problem with our initial approach -- was that if someone forgot to decline to share something, Beacon still went ahead and shared it with their friends," explained Zuckerberg.The social networker duly overhauled Beacon, requiring users to sign on for the feature, and also added a privacy control to turn Beacon off completely.Still, the Beacon brouhaha rumbled on. Facebook pulled the plug on Beacon less than two years later as part of a $9.5 million settlement in a lawsuit over the divisive program. >To follow the writer on Twitter, go to http://twitter.com/jamesjrogers.>To submit a news tip, send an email to: tips@thestreet.com. >To order reprints of this article, click here: Reprints

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