Where did it all go wrong? IT's biggest downfalls

With media empires crumbling and the world economy on the brink of collapse, we look at our industry's most memorable demises

The (on-and-on-and-)ongoing hackgate saga and the resulting closure of News of the World has, if nothing else, shown us that even the biggest players in any market can come a cropper.

The widespread illegality and immorality of our nation's press (present company excluded) may have been of some concern. Perhaps far more alarming, however, is the fact that the US is just a few days away from defaulting on its trillions of dollars' worth of debt.

The markets are already be getting a little edgy and the knock-on effects of the world's largest economy losing its triple-A credit rating are likely to be felt in a big way across the world. We certainly live in uncertain times.

Oh, and, closer to home, our continental cousins appear to be falling rapidly to a kind of economic chickenpox as the European economy teeters on the brink of implosion. Happy days.

In this spirit of crumbling empires, we've decided to take a look at the biggest, most inglorious downfalls in the history of the IT industry. Why not take your mind off the impending collapse of the world economy by reading about the misfortunes of others?

We've tried to select the biggest, most significant and most shocking falls from grace. You can vote for what you think is the ultimate collapse in our poll. But if you think we've missed off an absolutely mega meltdown, give us your thoughts by leaving a comment below.

5. The netbook
Perhaps it's a little early to call the extinction of the netbook just yet, but few technologies have become yesterday's news quite so quickly.

Beginning in the latter half of 2008, analysts, vendors and the media (maybe even this esteemed organ) spent more than a year lavishing an astonishing amount of attention on the humble device. Predictions for market growth ranged from the sublime to the ridiculous.

"There'll be 50 million units sold in a year," said one onlooker. "They'll represent 30 per cent of all notebook sales," said another.

The hype carried on until about April 2010. Which, coincidentally enough, is when a quaint little product called the iPad was released.

What happened next?
Towards the end of last year, netbook sales fell off a cliff, and, in a recent CRN video roundtable, everyone present sombrely agreed that the tablet is effectively the "death knell for the netbook". They won't disappear from the shelves just yet, but, after an Icarus-like rise to prominence, this technology seems to have fallen to earth just as quickly as the mythical Greek.

4. Lernout & Hauspie
Founded in 1987, over the next 13 years, this speech recognition company became the biggest thing to come out of Belgium since... the last big thing.

In the latter half of the 90s, the rampantly acquisitive outfit grew sales more than tenfold, and investors loved it for it. The firm's market capitalisation soared to the $6bn mark in July 2000 but, before the summer was out, stories of financial impropriety had emerged.

It transpired that L&H had been cooking the books, and all was far from the rosy image that had been presented to the world. In April 2001, eponymous founders Jo Lernout and Pol Hauspie resigned, but this couldn't prevent their company going bankrupt six months later.

What happened next?
Lernout and Hauspie's fraud trial finally began last year, ending with each of them being sentenced to a five-year spell behind bars. Meanwhile, the technology they helped create has continued enjoying success, albeit somewhat more quietly than it once did. It is now incorporated into a number of Microsoft products.

3. Labour's big-ticket IT projects
The last government's approach to technology was vaguely reminiscent of an episode of MTV Cribs, characterised as it was by the haphazard acquisition of an eye-wateringly expensive array of shiny new kit.

The channel may have picked up some tasty bits of business over the course of the last decade, but the gravy train began to come off the rails as a slew of grandiose schemes went way over time and budget. An investigation last year by The Independent found that Labour had blown some £26bn on its 10 most expensive IT projects.

The biggest of the lot - the overarching National Programme for IT for the NHS - was eventually scaled back by then chancellor Alistair Darling, and the current coalition government has continued cutting costs from the ailing plan. It has also acted very quickly to scrap the enormous Building Schools for the Future project and the £5bn failure that was the ID cards scheme.

What happened next?
The channel will certainly feel the pinch from this one, with early estimates suggesting the BSF cancellation could leave a £4bn-sized hole in the industry's collective pocket. Meanwhile, a major report published this week urges the current government to spend less money on IT, work more efficiently, and diversify its supplier base. All of which are strangely familiar themes for any long-standing market watcher. Perhaps the more things change, the more they stay the same.

2. Sanjay Kumar
The former chief executive of CA is another case on our list to enjoy a meteoric rise to supremacy, only to fall foul of an even quicker descent to ignominy.

Arriving in the US to escape mounting tensions in his native Sri Lanka in his teens, he was a c-level exec at a blue-chip technology company little more than 15 years later. Kumar took on the top job at CA in 2000 and, in his first couple of years, gained rave reviews for rejuvenating the vendor's business model and bringing in subscription-based licensing models.

But rumours of questionable accounting practices began to mount and, in 2004, the scale of the billion-dollar 35-day month fraud came to light. Kumar was forced to resign and was indicted the following year. In 2006, he was sentenced to a 12-year prison stretch and ordered to pay more than $800m in costs and fines.

What happened next?
Having finally begun his sentence in 2007, Kumar remains in jail to this day, and an appeal to reduce his sentence last year fell flat. When he finally gets out, the authorities will garnish 20 per cent of his salary to pay off the mammoth costs. Something tells me it may take a while: it's doubtful he'll be making CEO money again any time soon.

1. Nortel
At the risk of resorting to cliché: the bigger they are, the harder they fall. In its heyday, there weren't too many bigger than Nortel. In its final days, there can't be many that have fallen quite so hard.

By the mid-90s, the Canadian company had been around, in one guise or another, for 100 years and was a $15bn operation. A series of blockbusting acquisitions - including a $9.1bn deal for Bay Networks - helped the firm double in size by 2000, when sales reached $30bn.

This was also the year, during the meaty part of the tech boom, when the vendor's market capitalisation rose to a scarcely believable $250bn. What could possibly go wrong?

Over the next 10 years, the firm's decline was drawn-out, bitty, undignified and, ultimately, inevitable. During the late 90s and early 00s, Nortel suffered from a chronic inability to turn a profit. In 2007, an SEC investigation accused Nortel of cooking the books between 2000 and 2003. The vendor settled a trio of lawsuits relating to the charges for a sum total of more than $2.5bn.

By the following year, sales stood at about $10bn, a third of what they had been just eight years previously. Worse still, net losses spiralled to an astonishing $5.8bn. It came as little surprise when Nortel filed for Chapter 11 bankruptcy protection in January 2009.

What happened next?
During 2009, most of Nortel's operating units were sold off one by one. The two biggest - focused on wireless and enterprise comms - were sold to Ericsson and Avaya, respectively, for a combined total of more than $2bn.

And the clearance sale continues: a clutch of patents was sold last month for $4.5bn to a syndicate containing Apple, EMC, Ericsson, Microsoft, RIM and Sony. Amidst all this, Nortel continues to trade, posting quarterly sales of a comparatively modest $20m in Q1 2011 - and a net loss of $105m.