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What does this phrase mean? I think of maybe something is going to be really famous in the future, but now it's just not so popular. And it's on its way out. Is that correct?

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Sergey, you have it backwards. It means something LOSING it's current fame. Soon, it will be "out" - meaning "out of fashion." Note that in English, "in" and "out" can specifically mean "in fashion" and "out of fashion." Example, "The Beatles are out at the moment," "Led Zepplin is in just now." –  Joe Blow Jun 14 '11 at 11:16
    
But it's also true that "out" can mean "out there on the world stage" in some circumstances, which might be behind Sergey's misunderstanding. –  Colin Fine Jun 14 '11 at 11:35
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No, it's actually kind of backwards from what you suggest, but you are right that it has to do with fame or popularity of something.

Specifically, the phrase is a reference to trends. When something is "trending down" or "losing popularity," it is said to be "on its way out." If it is a product, maybe it is still available in stores, but it isn't the most popular or talked about item and is losing momentum against some new trend.

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It's got to do with fame and popularity.

When something is "on its way out", it is alluding to the fact that something has had its time in the spotlight, but it is now 'leaving the stage', or "on its way out"

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