Special Report

Worst Product Flops of All Time

10. Arch Deluxe
> Company: McDonald’s
> Year released: 1996
> Revenue yr. released: $9.8 billion

The Arch Deluxe was a quarter-pound burger McDonald’s released in 1996. The Arch Deluxe came with lettuce, onions, tomatoes, ketchup, and a mayonnaise-dijon mustard sauce on a potato bread roll. McDonald’s spent $100 million advertising the burger specifically to adults, considerably more than it had on its other burgers. Instead of showing satisfied adults, billboards and TV ads depicted children disgusted with the new burger. It appears that most adults, however, were not convinced they should want the burger simply because kids didn’t want it. The Arch Deluxe was also more expensive. It cost at least $2.29, compared with the Big Mac, which cost just $1.90 at the time. The burger’s failure was so monumental that McDonald’s completely reversed its strategy of introducing pricier items. In 1997, the company released a 55 cent Big Mac and tried other dramatic price cuts.

9. The Newton MessagePad
> Company: Apple
> Year released: 1993
> Revenue yr. released: $6.3 billion

Apple’s Newton MessagePad was one of the first products to offer basic computing functions in a handheld device. Its technology was revolutionary for its time. The Newton was met with excitement and favorable reviews, noting its futuristic look and processing power. But the Newton failed to catch on, and was eventually discontinued in 1998. Steve Capps, head of product development at the time, explained that the Newton’s handwriting feature doomed the product. Handwriting recognition was meant to be the main selling point, but it didn’t work properly during the initial release. The device was also ridiculed in the news for essentially replacing an inexpensive paper notebook with a $700 computer.

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8. Zune
> Company: Microsoft
> Year released: 2006
> Revenue yr. released: $39.8 billion

Both the Zune and its upgraded sequel the Zune HD ultimately failed to compete with Apple’s already well-established iPod brand. Even without various performance issues plaguing the device — at the beginning of 2009, thousands of Zunes froze due to software glitches — the Zune would have had difficulty competing with the iPod. Shortly before its release, Wired Magazine argued that Microsoft’s PlayForSure digital music format would be clumsy due to unnecessary and poorly implemented security measures. There was also a sentiment among reviewers that the Zune could never be as cool as the iPod. With its initial $9 million ad campaign, according to NPD, Microsoft was able to capture only 10.8% of the relevant segment, versus Apple’s intimidating 86.1% market share as of 2006. After dismal results, Microsoft would nearly double its advertising investment, but without success. As a result, Microsoft’s Entertainment and Devices division lost $1.3 billion in 2006, and then a further $1.9 billion in 2007. Today, Microsoft has virtually abandoned the Zune MP3 player, as well as the Zune brand.

7. New Coke
> Company: Coca-Cola
> Year released: 1985
> Revenue yr. released: $7.4 billion

For developers at Coca-Cola, reformulating the original Coke recipe may have made sense. In the early 1980s, the company’s market share was slipping and enthusiasm for the cola segment in general was also on the decline. Coke’s main competitor, Pepsi, had also successfully changed its formula multiple times to gain market share. In an effort to compete, Coca-Cola made its first recipe change to the original flavor in 99 years. The public backlash was nearly instantaneous. Consumers did not object to the new flavor so much as to the fact that the “classic” version was no longer available. According to the company’s website, protest groups popped up around the country. Seventy seven days later the company brought back the original Coke with the new name, “Coca-Cola Classic.” Despite the fact that the company lost more than $30 million in the new formula’s concentrate, and spent over $4 million on taste testing, the flop may have actually enhanced brand recognition and ultimately paid off in the long run. While soda sales have recently declined in the U.S., Coke led the carbonated beverage segment with a 42% market share as of 2012, according to Beverage Digest.

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6. WOW! chips
> Company: PepsiCo
> Year released: 1998
> Revenue yr. released: $11.5 billion

PepsiCo’s subsidiary Frito-Lay released WOW! chips in an effort to offer healthier and less fattening junk food. By using olestra, a fat substitute designed by Procter & Gamble, WOW! chips contained significantly less fat and calories. Initially, sales were exceptional, reaching $347 million in 1998 and making WOW! the best-selling potato chip brand that year. But olestra also had an unpleasant effect on the body. Diarrhea, incontinence, and cramping, were among the most common grievances, with some cases requiring hospitalization. PepsiCo dedicated a $35 million advertising budget to counteract negative opinion, but sales still declined dramatically in 1999 and 2000. Frito-Lay finally responded by renaming WOW! chips “light” in 2004. The company also avoided calling attention to its continued use of olestra. The absence of a warning label prompted a number of lawsuits. According to the Center for Science in the Public Interest, olestra’s approval for consumption was one of the FDA’s biggest blunders of all time.

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