'Oops, I was wrong' - the great telephone blunder
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By Nam Sang-so
Western Union president William Orton balked when Alexander Graham Bell offered him the chance to buy the patent for his telephone for $100,000. Orton’s decision in 1877 is known as one of the most foolish decisions in business history.
Two years later, Orton told colleagues that if he could get Bell’s patent for $25 million, he would consider it a bargain. But it was too late. By then Bell, having established the Bell Telephone Company, no longer wanted to sell the patent. By 1886, more than 150,000 people in the U.S. owned telephones, which emerged as one of the most successful products ever. In 1879 Bell Telephone acquired Edison’s patents for the carbon microphone from Western Union.
This made the telephone practical for longer distances and it was no longer necessary to shout to be heard at the receiving end. Then on January 25, 1915, Alexander Graham Bell and Thomas Watson talked to each other over a 5,472 kilometer wire between New York and San Francisco. The Bell Telephone Company subsequently formed and evolved into the American Telephone & Telegraph Company (AT&T), which would become the world’s largest telephone company.
Why did Orton make such a silly decision? Most Western Union decision makers, including Orton, had a fixed idea that the telephone had so many defects that it would not be suitable for business. They argued that no evidence of conversations would be left and it was difficult to talk in and hear through. On the occasion of the U.S. centennial day held in Philadelphia in 1876, Bell Telephone displayed its new telephones. A thousand people passed through just glancing at the phones and only 10 tried to listen. Who could blame William Orton’s decision?
Western Union, being the exclusive telegraphic company at the time, had been elated with self-conceit. The "telegraph” is a device for transmitting and receiving messages over long distances by Morse code ― a series of on-off tones or lights composed of a series of dots and dashes. The international standard emergency signal SOS composes of three dots for S and three dashes for O and again three dots for S. Naval battle ships still use cryptographic Morse code for visual signals between ships to avoid wiretapping on radio transmission. It was a big business and would never fail, Orton believed.
Now mobile phones, cellular phones or smartphones make and receive telephone calls over a radio link. In addition to telephony, modern mobile phones also support a wide variety of other services such as text messaging, email, Internet access, gaming and photography, etc.
After becoming the worlds’ largest telephone company, AT&T suffered from inertia just like Western Union and lost its top status in the industry to Samsung Electronics Co. Nowadays the Korean technology giant is going through tough times, especially in the handset and TV sectors, under pressure from Chinese rivals.
It is well known that Samsung prides itself on hiring qualified engineers to foster an innovative work environment to tap into new strategies. Now it is Samsung’s turn to escape its inertia and find a new course of business. We cannot wait to see the result.
The writer is a retired architect/project analyst. His email address is sangsonam@gmail.com.