Virulent Word of Mouse

October 12, 2009

The Dangers of Loss of Brand Value

Filed under: Amusing diversions,Capturing and creating value,Short observations — Shane Greenstein @ 5:07 pm

Ah, the joys of watching high tech market disasters.

Here is a quick question for any class on high tech brand management. Which firm lost more brand value in the recent outage of the Danger Sidekick, a wireless device? This is not as straightforward as it looks, since Microsoft owns Danger, but the T-Mobile operates the network.

If you do not know what I am talking about, read about it here… Microsoft bought Danger not too long ago, a strategic acquisition to give them a step into cloud computing applied to wireless devices. Danger has run an interesting experiment in cloud computing. Owners of their Sidekick keep back-ups of their information — contacts, photos, etc — on the cloud, namely, in Danger’s servers, and engineered ways to keep those backups nearly always up to date. If something went wrong with the wireless device — it runs out of battery juice, etc — in principle the user lost nothing, since they could go back to the servers to retrieve everything. That is quite a promise.danger_sidekick_tmobile_z1

That was fine until it was not. To make a long story short, Danger seems not to have kept a proper back-up of its own servers. Everything crashed over the last weekend during an upgrade to the servers, and over the prior week lots of users lost their personal information as their batteries went out, etc., and they could not get copies from the servers. It seems as if Danger/Microsoft did not keep backups of its own servers. There is an irony in here somewhere.

More to the point, such a disaster was utterly preventable. All the firms involved look pretty darn dumb.

So I ask again: which business partner lost the most brand value from this disaster…? There are four choices, and lets label them a, b, c, and d. Call it a multiple choice quiz…

a. Danger had little brand value anyway, so the loss was minimal to them as a firm. However, the CTO and CIO should expect a pink slip soon, and find it difficult to get new employment with as much responsibility.

b. T-Mobile has to handle all the irate customers, so the loss of value to them is significant and long lasting.

c. Microsoft is a firm whose whole business depends on partnering with others who trust them. Accordingly, it really hurts their reputation when they show any hint that they do not know what they are doing. After this incident, who would want to make a deal with Microsoft’s cloud computing division? That is a big loss in brand value.

d. All of the above.

For my money, I chose d….I do not see any winners among the participants in this one. Even if they get most of the data back after several tenses days of hard work (which seems to be happening bit by bit), who would trust any of these firms again?

Like I said…the joys of watching high tech disasters…

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