The history of the original Bell Telephone patent for the telephone is thick with claims, lawsuits and races to the patent office. In the midst of all this, the information giant of the late 19th century had a perishable opportunity to become the information leader for another century. They blew it!
This has to be one of the biggest examples of “Innovators dilemma” in history.
Facing competing patents and an incomplete invention, in 1877, Bell and his supporters offered to sell the Patent for the telephone to Western Union for $100,000. The offer was refused.
In 1876, Alexander Graham Bell and his financial backer, Gardiner G. Hubbard, offered Bell’s brand new patent (No. 174,465) to the Telegraph Company – the ancestor of Western Union. The President of the Telegraph Company, Chauncey M. DePew, appointed a committee to investigate the offer. The committee report has often been quoted. It reads in part:
“The Telephone purports to transmit the speaking voice over telegraph wires. We found that the voice is very weak and indistinct, and grows even weaker when long wires are used between the transmitter and receiver. Technically, we do not see that this device will be ever capable of sending recognizable speech over a distance of several miles.
“Messer Hubbard and Bell want to install one of their “telephone devices” in every city. The idea is idiotic on the face of it. Furthermore, why would any person want to use this ungainly and impractical device when he can send a messenger to the telegraph office and have a clear written message sent to any large city in the United States?
“The electricians of our company have developed all the significant improvements in the telegraph art to date, and we see no reason why a group of outsiders, with extravagant and impractical ideas, should be entertained, when they have not the slightest idea of the true problems involved. Mr. G.G. Hubbard’s fanciful predictions, while they sound rosy, are based on wild-eyed imagination and lack of understanding of the technical and economic facts of the situation, and a posture of ignoring the obvious limitations of his device, which is hardly more than a toy… .
“In view of these facts, we feel that Mr. G.G. Hubbard’s request for $100,000 of the sale of this patent is utterly unreasonable, since this device is inherently of no use to us. We do not recommend its purchase”
Western Union quickly regretted this decision and hired Thomas Edison to invent and patent devices to gain control of telephony. These patent efforts must have made money for lawyers, but in the end Bell prevailed.
William Vanderbilt – the son of Commodore Vanderbilt, controlled Western Union. They made their fortune from the railroads The telegraph’s biggest use was as a mechanism to enable better train scheduling, and secondarily as a general communications device.
William Vanderbilt sold Western Union to fellow railroad tycoon, Jay Gould, in 1880 for $10,000,000. The Great-Great-Grandson of Jay Gould founded Upoc Networks in 1999 and served as CEO through 2004. Entrepreneurial genes must run in that family.
In 2004, I joined Upoc as CTO and was appointed CEO in 2006.
Dada S.P.A, an Italian based company, acquired Upoc. To the best of my knowledge Dada has no connection with railroads, but is a world leader in provider mobile media to cell phones, a distant relative to the original Bell Patent.