6 Digital Product Failures & What We Can Learn From Them

When you think of digital product failures, what comes to mind? It was probably a popular app that fizzled out or a “revolutionary” technology that was dead on arrival.

Digital products come in many sizes, shapes, and flavors. From websites and ebooks to SaaS systems and wearable devices, UX research and design affects online and real-world experiences equally. If one area falls short, it’s only a matter of time before the entire company crumbles.

According to Forbes, 70% of businesses either have a digital transformation strategy in place or are in the process of creating one. But a new cyber focus won't guarantee profitability or longevity — which is the biggest takeaway when observing noteworthy product failures.

As Yoda said in The Last Jedi, “The greatest teacher, failure is.” (Don’t come for us OT and prequel purists.) We follow this advice as UX designers because negative feedback and product failures give us a blueprint for defining best practices.

With Yoda’s nugget of wisdom in mind, let’s look at some infamous digital product failures and see what lessons they impart in this rapidly changing marketplace.

Our Top 6 Digital Product Failures

• Nike fuel band
• Microsoft Zune
• Myspace
• Crypto.com
• Vine
• Quibi
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What Causes Digital Product Failures?

We don’t want to dissuade you from launching your own product, but so many things can go wrong in the design or marketing process. In UX, the littlest design error or server crash can tank conversion flows.

This is why all our creations are thoroughly researched, tested, and QA’d before we launch them. Even then, there’s no long-term guarantee for success. Without a solid ongoing strategy, marketing plan, or sustainable business model, even the hottest products can become flops.
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Typical Factors:

• Lack of funding
• Minimal marketing efforts
• Assumption-based designs
• Premature launch
• Not adapting to market trends
• Edged out by competitors
• Faulty technology
• Failing to engage the target market

Of course, this isn’t the definitive list of all the things that can go wrong in business. Other factors like company acquisitions and legal challenges have the power to kill brands before they can leave a mark on their respective industry. 

Whether these contributors were out of the company's control or not, we can learn a great deal from their shortcomings and prepare ourselves for whatever the unpredictable digital market has in store.

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Revisiting The Top 6 Digital Product Failures Of Yesteryear

Maybe you used these digital product failures back in their heyday and have a nostalgic fondness for them. Or maybe you remember being sorely disappointed that they didn’t live up to the hype.

Whatever your perceptions are, we can still take a page from their book — but not for inspirational purposes.

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Nike Fuel Band

Who needs an Apple Watch or a FitBit when athletic wear behemoths like Nike have their own digital fitness tracker?

The answer is all of us.

Don’t ditch your preferred health devices anytime soon. Even though Nike was one of the first companies to offer fitness wearables with the Fuel Band in 2012, the novelty wore off quickly. They failed to grab a loyal audience and discontinued the product after just five years.
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What Went Wrong?

If you asked Jordan Rice, the former senior director of Nike NXT Smart Systems Engineering, the same question; he’d probably say “Shallowness.”

It’s no secret that health and wellness data are difficult to interpret, hence why we generally let Doctors take our vitals and set milestones for us. The Fuel Band presented users with lots of data about calories burned and steps taken, but its limited features didn’t help them contextualize what those numbers meant in the broad scope of their goals.

As fitness wearables evolved with more powerful sensors and robust data sources, the Fuel Band became obsolete in Nike’s respective markets.

“We tried to put data in the consumer’s hands, but I don’t know that we put depth in that data — a lot of it was data for data’s sake at times,” Rice said during a keynote presentation at Cambridge Consultants’ Innovation Day in 2017.

“I began to ask myself a little bit, how deep is this connection that we’ve actually created? Are people connected to the brand and the products? Is this data actually meaningful to them? [Is there] depth, are they taking any insight away from this, and are we really creating a gimmick?”

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Did Nike Recover?

Nike’s brand is still going strong with athleisure enthusiasts and sneakerheads everywhere. However, with the subsequent failure of their Sportswatch, it’s safe to say that their wearables experiment has pretty much tanked.

But Nike’s digital transformation wasn’t all doom and gloom. Once Apple announced its first smartwatch in 2014 (around when the Fuel Band started to go downhill), Nike quickly jumped on board with a running app developed specifically for Apple’s new device.

As of 2023, Nike and Apple are still compadres in digital fitness through the Nike Run Club — a powerful (and free) app for runners to track their calories, distance, and heart rate.

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Key Takeaways

• Translate Your Data: When a user is on a fitness journey (or just wants to monitor their health status), they need to understand what the data means to them.
  
  Are they burning enough calories daily to meet their weight loss goals? Are they taking enough steps to maintain their cardiovascular health? Is their high heart rate contributing to their high blood pressure?
  
  If the fuel band had more relevant features to put its data into context for the users, it would have made the experience more sticky for tracking health long-term.
  
  
• Keep Up With The Tech: Wearables were a new frontier when Nike released the Fuel Band, but they failed to adapt to the technological advancements.
  
  Let’s do a quick side-by-side comparison. When stacked next to the Apple Watch, the screen feels primitive and lacks the customization features of its counterpart. The Apple Watch ticks all the right boxes, feeling sleek and sophisticated while accommodating a workout.
  
  With a few ongoing design tweaks (and maybe some user testing), Nike could have found a way to update the look and feel of their product without sacrificing their brand identity.
  
• Have A Back-Up Plan: Thankfully, the Fuel Band wasn’t the nail in Nike’s coffin. Honestly, could you imagine a world without Jordans?
  
  While we can’t all have Tim Cook on our board of directors, keep your finger on the pulse of the industry at all times. If things go downhill for your company or product, look for avenues to keep your digital presence alive through partnerships.
  
  Even if your product isn’t the game-changer you were hoping for, a partnership can bring in strategic opportunities that allow your company to keep innovating despite setbacks. Who knows, there might be a Nike Run Club waiting in your future!
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Microsoft Zune

“Another one bites the dust…” - Apple, probably.

Seriously, we can’t overstate how much the iPod shook up the MP3 industry. With its sleek design and more storage space than any portable music player before it, other products couldn’t compare. That didn’t stop them from trying though.

Microsoft released the Zune in 2006 to compete with the iPod, boasting a larger screen with the same features and price. On top of that, they created the Zune Marketplace where users could purchase music, similar to the iTunes store.

So, if it functioned as well as the iPod, why was it such a hardcore flop?

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What Went Wrong?

While Apple meticulously planned, designed, and tested every version of the iPod, Zune rushed to keep up with them and always fell short. Zune is the perfect case study for building products around assumptions instead of research and discovery.

The first mistake Microsoft made when creating the Zune was assuming they had a viable market share. After all, Apple was raking in major dough with the iPod. Where could they go wrong? (Spoiler: they went very, VERY wrong.)

The Zune was about the same price as an iPod, but Apple already dominated the industry and lower-priced MP3s were still in circulation. Users couldn’t justify spending the big bucks on a lesser-known product.

The other mistake was that Zune failed to innovate with its features and functionalities. We always say not to try too hard to reinvent the wheel, but there has to be a unique value proposition if you want to emerge as a true competitor.

Besides the Zune-to-Zune song-sharing feature (which wasn’t tested or validated with users), the product was an iPod ripoff. As a result, Microsoft failed to capture even 10% of the marketplace and eventually discontinued the Zune in 2014 — losing almost $3 million in revenue.

When reflecting on the catastrophic failure of Zune, President of Yeti LLC Tony Scherba cited the lack of user research as the source of the digital product failure. He stated: “If it had (done user research), Microsoft would have learned before release that consumers didn’t truly value Zune’s features. The company assumed they did, and that was its downfall.”

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Did Microsoft Recover?

Microsoft’s poor timing was one of the biggest contributing factors to this digital product failure. Just a year after its release, Apple dropped their first iPhone — a smartphone with an MP3 built-in! That should have been the end of Microsoft in the portable tech landscape, right?

Even though Microsoft was late to the smartphone game (again), they launched the Lumia touchscreen phones and tablets in 2011 to phase out the Nokia brand. But since Nokia was an established brand and Lumia wasn’t, customers didn’t take the bait. Microsoft’s mobile business was discontinued in 2017.

It was a valiant effort, but alas, the Apple vs Android debate rages on without a mention of Microsoft. The company still lives on through the Office suite, Surface devices, and Xbox, but we can assume Microsoft smartphones are dead (for now).

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Key Takeaways

• Research Matters: Not only did Apple beat Microsoft to the MP3 market with the iPod, but they built their product strategy around immersive user research. The iPod designers were passionate music fans — but to create a product for music lovers on the go, they went to great lengths to observe potential users in their natural environments.
  
  This information is critical in product design, development, and marketing decisions. Microsoft should have followed Apple's lead when constructing the Zune and sought to gather user feedback throughout development continuously.

• Don’t Copy: They say imitation is the sincerest form of flattery, but not when you’re trying to sway users away from their preferred digital product. When you're up against a tech giant like Apple, you must give your audience a reason to switch.
  
  Digital products give you space to experiment with technological capabilities, so it feels like a wasted opportunity to peddle a carbon copy of an already successful product. If Microsoft had done a more in-depth competitive analysis, they could have discovered a stronger value proposition for Zune.
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Myspace

Spike up your scene hair and alert your top eight friends…We’re throwing back to the early 2000s with this one!

Myspace, one of the first social media platforms, was a MASSIVE hit when it launched. With robust profile personalizations and new avenues for gaining an online following, it paved the way for digital connections, music subcultures, and the age of the influencer way before Instagram.

Speaking of other platforms, Myspace was easily usurped when Facebook and Twitter came around with simplified platforms. If users craved the personalization Myspace offered, then why did it fail?

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What Went Wrong?

While many tech-savvy users cited their personalization features as a big draw, the lack of consistency between pages created confusion in accessing basic features like user profiles and messaging portals for the average user. 

The customizations caused crashes because they were not compatible across browsers, creating more avoidable frustrations in the user experience. 

The complicated UX resulted in a product that was confusing, frustrating, and difficult to use — leading to low adoption rates. It also showed competitors its weaknesses, allowing them to improve the structure and nudge Myspace out of the limelight.

Had Myspace prioritized an intuitive experience over flashy profiles and interactions (or followed Facebook and Twitter with the streamlined UI), we’d probably be following Tom Anderson as closely as we follow Mark Zuckerberg or Jack Dorsey.

(Yes, we know Elon Musk runs Twitter now. But Jack Dorsey got the ball rolling, and we have to give credit where credit’s due.)
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Did Myspace Recover?

Until the last few years, Myspace has been a nostalgic footnote in the digital age. The hip teens and twenty-somethings who created the first profiles are all grown up now — and who doesn’t want to go back to the age when our only responsibility was updating our profile song?

But as Myspace’s former co-owner Justin Timberlake once said: “What goes around, goes around, goes around, comes all the way back around.” As social media becomes more commercialized and inundated with ads, users fondly remember the platform’s alternative roots and (in some circles) crave a comeback!

We saw this nostalgia in full force when an 18-year-old from Germany replicated the code to Myspace’s website and branded it SpaceHey. This rootsy and spirited “rebrand” launched in late 2020 and garnered an impressive 750,000 users as of August 2023.
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Though SpaceHey isn’t an official Myspace project, it launched a thousand think pieces from digital publications about the merits of resurrecting the platform in the age of TikTok. While it’s too soon to tell if the real Myspace will return, we have a few notes for its future resurgence.

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Key Takeaways

• Embrace Iteration: Before it became the social media juggernaut of the early 2010s, Facebook had a slow start polishing its platform. It went through several iterations before it caught on, adopting several new features and redesigns from 2005-2010. Even now, Facebook goes through new iterations and user flows to maintain its relevancy.
  
  If Myspace does make a comeback, they’ll have to keep a close eye on their competition and remain open to incorporating new layouts and technologies. Remember, the final product is rarely perfect, and optimization is the key to staying ahead of the curve.

• Keep The Focus On The Users: When conceptualizing a design, you should seek to understand the needs and motivations of users and design the product around their instinctive behaviors. We think SpaceHey is pretty successful in this category, tapping into the nostalgia of its audience and bringing back the features they loved.
  
  But the user experience isn’t just about design, features, or functionalities — it’s also about the environment you cultivate! In the Vice article we linked above, the users interviewed cite the focus on art and music as a major plus for SpaceHey’s identity.
  
  By conducting user research, creating personas, and testing prototypes, you can uncover these nuances and design validated solutions to ensure positive digital experiences and ongoing product value.

• Optimize For Mobile: Most people still used flip phones when Myspace was a big deal. For those who don’t remember, mobile internet access was non-existent around that time. So, while mobile optimization wasn’t the reason for the platform’s downfall, it’s something to pay close attention to if Myspace comes back.
  
  Whether we like it or not, social media platforms NEED mobile optimization if they’re going to succeed. If users are adamant about keeping the vintage look and feel with the same high-level customizations, Myspace will need to spend extra time ensuring the UI is responsive across devices.
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Crypto.com

Let’s ask the question that absolutely no one on the face of the earth has been asking themselves for the last year or two…Is cryptocurrency finally dying off? If people were already apprehensive about investing in this non-tangible currency beforehand, the Crypto.com hacks didn’t help.

As the market grew between 2020-2022, many investors started managing their assets on online platforms. But as we know, with sensitive information like finances, privacy and security should never be skimped on.

Crypto.com made the fatal mistake of not considering these factors when developing the platform — resulting in data breaches, loss of customer trust, and negative publicity for the company.

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What Went Wrong?

Crypto.com became the number one target of attacks due to the large amounts of money being transferred. Because the platform lacked data encryption and password managers, hackers easily bypassed the two-factor authentication and gained access to online wallets.

About $18 million worth of Bitcoin was stolen from 500 users, resulting in a PR firestorm where the company had to reimburse the stolen assets. Even though they performed a systems audit and improved the organization’s security posture after the fact, the damage was done.

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Did Crypto.com Recover?

A digital business can bounce back from a security breach, but on such a large scale with a massive sum of money stolen, user trust (the thing all financial management platforms should prioritize) was dead from then on.

Crypto.com officially closed its U.S. Institutional Services in June of 2023 as a result of government regulators filing lawsuits against Binance and Coinbase. While the company claimed the closure was due to the current market landscape and limited demand for their services, we aren’t wrong to assume the hacks played some role.

While the retail trading app still exists, the current regulatory environment for bitcoin trading, coupled with the crowded marketplace for digital management apps paints a grim picture for the future of Crypto.com.

Since the closure was recent, it might be too soon to tell if Crypto.com will survive or not. The lawsuits are from U.S. regulators — so it could still thrive with its international customers. But we can use the hacks as a cautionary tale about the importance users place on security and privacy.

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Key Takeaways

• Conduct Frequent Security Assessments: Every digital company should ensure its products are designed with security and privacy in mind. That includes performing regular maintenance to guarantee sensitive data is properly encrypted.
  
  When you protect your user’s information, you protect your business assets. Data protection, encryption software, and regular product maintenance are worth the investment. Keep in mind that softwares can change between versions and leave data vulnerable, so frequent audits are a must.

• Be Transparent About Data Collection: After Facebook’s data mining scandal in 2018, users are far more cautious with their online privacy. You must be forthcoming about how you’re using their data to improve the user experience and build trust.
  
  Make sure your privacy policies are easy for the user to find and understand, and notify users of third-party cookies to obtain consent. Additionally, companies should educate users about the measures they have in place to protect their data. Give them that extra reassurance that their data is in good, trustworthy hands.

• Don’t Trade Quality For Fad-Chasing: This isn’t particularly directed at Crypto.com, but it’s important to remember when you’re creating a product to capitalize on a digital trend. Timeliness is crucial, but quality matters more at the end of the day (looking at you, Zune).
  
  Yes, the competition is stiff in the crypto management market. But if users prioritize safety and intuitive features, focus on making those aspects the best they can be. Never rush to put out your product, especially one that handles finances or healthcare information.

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Vine

The concept of quick-bite content wasn’t completely novel in the early 2010s. If you think about it, some of the earliest viral YouTube videos were only a few seconds long. Vine built its entire identity around this idea, allowing people to create short 6-second clips that cater to our waning attention spans.

Vine was purchased by Twitter in 2012 and quickly became the most downloaded video-sharing app on the market. Users were flocking to the platform to watch viral videos and (hopefully) launch themselves into internet fame with a low-effort yet hilarious clip.

Ask any millennial to reference an internet video. They’ll either quote something from the early days of YouTube or throw in a classic Vine. But how did a platform that gave us so many legendary moments die out so quickly?

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What Went Wrong?

Vine’s 6-second video technology meant anyone could become a content creator. But with other video-sharing platforms emerging, Twitter failed to capitalize on Vine’s early success with future iterations — ultimately leading to its downfall.

The problem here came from Twitter overestimating the value of their property due to its exponential growth in a short period. But with our limited attention spans, it was way too easy for users to get distracted by a shiny new platform.

The newfound popularity of Instagram and Snapchat sent Twitter into panic mode, fearing that strategizing with Vine would make their platform irrelevant. Instead, they shifted their focus to their 30-second video feature.

This lack of product strategy, internal creative differences, and virtually no ad revenue spelled disaster for Vine. Its top creators also needed a way of content monetization, leading to them abandoning the platform in droves before it eventually shut down in 2016.

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Did Vine Recover?

Though Vine died out eight years ago, the memes it popularized still live on through YouTube and TikTok compilations. They could make a comeback, right?

Well, yes and no. The nostalgia’s strong enough to draw some curiosity, but could it reasonably compete with TikTok?

When Elon Musk officially acquired Twitter in 2022, one of the first ideas he explored was reviving Vine. Through a poll posted on Halloween last year, nearly 70% of users responded favorably — indicating some market demand.

However, a one-off poll isn’t the same as thorough research and competitive analysis. And we know that users rejected Vine as a Twitter-only feature (look up the Vine Camera debacle for more information). If Musk is serious about a renaissance, he should play his cards carefully.

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Key Takeaways

• Strategy Never Ends: Vine quickly gained notoriety through viral videos brimming with personality and celebrity-generated content. But after all the glitz and glamour wore off, competing platforms lured users away with similar functionalities, but more substantial value.
  
  When you capture an audience’s imagination like Vine did in the early 2010s, give them incentives to stick around long-term. If the platform had implemented some better video editing technology, sounds, or filters, it could have competed with Snapchat and (eventually) TikTok.

• Pay Your Creators: While paying people for short snippets of content with minimal production value doesn’t seem like the most lucrative practice, it’s worth it for the amount of traffic and ad revenue you can bring to your product.
  
  We see the power of influencer marketing in our everyday lives. With the attention Vine got from established entertainers and rising internet stars, they should have leveraged a partnership program with these users to help them produce original content — bringing their online followers back to the platform.

• Acquisition ≠ Success: When Twitter bought the platform from its founders for a whopping $30 billion, they probably thought Vine was set for life. Unfortunately, not all acquisitions are made equal.
  
  When you’re making a deal to sell your property, discuss product strategy and long-term vision before you surrender the rights. Now, all the work Dom Hofmann, Rus Yusupov, and Colin Kroll put into their idea is down the toilet — which can’t be revived by the original team again due to legal limitations.
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Quibi

Besides Crypto.com, this is one of the more recent digital product failures. But it’s hard to remember the last time a product launch was this disastrous.

Lauded as a revolutionary new way to consume content on the go, Quibi was a new streaming service created by former Disney chairperson and DreamWorks CEO Jeffrey Katzenberg. With a creative mind like Katzenberg leading the project and the arsenal of Hollywood stars creating original content for the platform, it should’ve been a slam dunk…right?

Yeah, no. Quibi crashed and burned less than a year after its launch. How do you manage that with so much star power and nearly $2 billion in funding?

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What Went Wrong?

Honestly, it might be quicker to talk about what didn’t go wrong:

1. A Reno 911 reboot (which went to The Roku Channel after Quibi went under).
2. An original series called “Survive” starring Sophie Turner, who always deserves more work.

That’s about it. But because there’s a lot to learn from digital product failures like this, we’re diving into it anyway.

As a mobile-first platform with short-form content designed to be watched during your morning commute or at the gym, timing was an issue. Quibi officially launched in April 2020, right around the start of the COVID-19 lockdowns. As you can guess, this rendered the whole purpose of the product pretty well useless.

“But people could’ve stayed home and watched on their phones, right?” Absolutely! The circumstances surrounding the pandemic were 100% out of Quibi’s control. But instead of regrouping and adapting to the situation, they released the product as-is with some deeply flawed functionalities.

The biggest complaint that users had was that the platform wasn’t mobile-first, it was mobile-only. You couldn’t live cast the programs on your TV, severely limiting its usage scenarios and running counterintuitive to the binge-watching experience.

It wasn’t just the restricted functionalities of the service that hindered Quibi; it was the content itself. About half of the $2 billion budget went to securing big-named actors for original programming, and the rest went to releasing shows that wound up shelved by their respective studios (and probably for a good reason).

But really, even in 2020, did we need ANOTHER streaming service? Were people willing to shill another $5/month for a Punk’d reboot? The whole project reeked of poor planning and no understanding of how users consume mobile content.

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Did Quibi Recover?

While Quibi’s meme-worthy implosion was recent (shutting down for good in late 2020), there have been no rumblings about a comeback. It’s safe to say Katzenberg and co-founder Meg Whitman have shelved it indefinitely.

But that’s not to say mobile-only content streaming couldn’t work. After all, users devote hours to their TikTok wormholes — where 3-5 minute videos rake in millions of views and shares. Where do they succeed where Quibi failed?

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Key Takeaways

• Pay Attention To Market Viability: We live in very different times since the advent of streaming. Netflix proposed a cheaper solution to cable TV, but now the market is so inundated with streaming services that watching all your favorite programs across them costs as much as your old cable package.
  
  With any new streaming service released in 2023, positioning is everything (mobile or otherwise). What does your platform offer that your competitor doesn’t? Why is a subscription to your service worth the five bucks?

• Prioritize Content, Not Celebrities: Look, we’re not above celebrity culture. It’s an effective marketing tactic that can introduce your product to a new audience. But even our favorites can produce some serious stinkers.
  
  These days, streaming services live and die by their original content. A well-known celebrity or IP provides recognition, but users need to be confident in the material they’ll be seeing long-term to convince them to keep their subscription.

• Understand Your Technology: Katzenberg gave us some pretty modern stories from his time at Disney and DreamWorks, but Quibi was his “Ok boomer” moment. It’s pretty clear neither he nor Whitman understood why we’re on our phones all the time.
  
  Yes, the portrait-to-landscape transition made for a more pleasing viewing experience. But TikTok and Instagram have that social component, driving the FOMO that keeps us swiping away. With digital products, everything’s connected (the technology, content, and interactivity). If one (or in this case, all three) areas are lacking, you have a sure-fire recipe for a failure.
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So, What's The Point Of All Of This?

The more we learn from the wrongdoings of other companies, the better our products will be in the future!

As a digital design firm, we care about creating memorable experiences and pushing the boundaries of what we can do with technology. However, these things take time, trials, and (occasionally) errors.

Like most of our blogs, our aim is not to offend — it’s to educate! Actually, we went pretty hard on Quibi. But Jeffery Katzenberg is probably keeping busy with a new business venture, so we hope he doesn’t mind.

These digital product failures show us the vital role strategy and UX design play in the success of digital products and businesses. Instead of beginning a new venture blindly, we can look to these cautionary tales to guide us and help us protect our brand.

Conceptualizing a new product is an exciting time for a company. If you want extra reassurance that you’re taking the right precautions, our strategic and user-focused design process will help you hit all the right notes with your target audience. Start a project with us today!