TweetFollow Us on Twitter

May 86 History
Volume Number:2
Issue Number:5
Column Tag:Historical Computing

Historical Computing

By Dick Heiser, Industry Pioneer

PROBLEMS WITH SILVER LININGS

Today, Thursday sixth, is a rest day. I'm sitting on the lawn at Glen Helen Park, near Devore, California. This is where Steve Wozniak organized the US Festival. It's a beautiful, green, bowl-shaped area beside two lakes. When it's not a rest day, I'm marching in The Great Peace March from Los Angeles to Washington, D.C. This is still our first week, and today is our first rest day. Glen Helen Park is just as ideal for our camping as it was for the US Festival, maybe better. We have a lot of organizing to do yet, so there are lots of loose ends.

The computers, including a Macintosh, share an RV with the Pro-Peace radio station, WQO, 1630AM. The Mac showed up at the last minute, and has proven invaluable. It's being used for daily schedules, bulletins, letters, etc. It has also taken over route planning from my IBM PC, which has been having keyboard problems. Why did I bring an IBM PC if I am such a Mac enthusiast? I'm saving my Mac for after the march, and sacrificing my IBM to the rigors of camping life. Sure enough, I dropped the IBM's keyboard the very first day. I've taken the keyboard apart, popped-off non-functional keys and fixed them by blowing hard. I've glued the broken foot back on. At Radio Shack, I found out the difference between a capacitor and a varistor. They fixed our uninterruptible power supply for free. It was a nice example of community support for The Great Peace March. On the way back to camp, I thought of a neat way to prevent the burnout from repeating. Fixing "handyman" problems feels good. It reminds me of the early days at my computer store.

LITTLE PROBLEMS

Operating a store is just a process of solving lots of little problems. Cash flow, for example, is a strange little problem. It seems like a big problem when you don't have enough cash, but it's also a guiding hand from mother nature to keep mistakes small enough to recover from them. With enough cash, I could have plunged deeply into the wrong projects, and would have gone out of business. The funny thing about cash requirements, is that they go up if business goes up, and go up if business goes down. When sales increase, I re-order big quantities, and need lots of cash for C.O.D. shipments. When business slackens, the credit bills become due, and fixed expenses eat-up cash as well. My advice to entrepreneurs: Get Don Lancaster's book The Incredible secret Money Machine and read it carefully.

Inventory space was another problem. I'm glad I resisted the urge to get proper inventory shelves. We piddled along for seven years with a few cardboard boxes stacked on edge. Not having enough space for inventory kept us lean. That's very important in the computer business where inventory can cost a thousand dollars per cubic foot! Nowadays stores seem to have more resourses. but it was a struggle for us to do $80,000 in monthly turnover with $100,000 worth of inventory.

Another little problem was limiting what we carried. We sold ultraviolet lamps to erase your EPROMS, anti-static carpets to protect your keyboard, cables, connectors, etc. Where could we draw the line? Everything is connected. Somebody needs every possible item - that's why it exists. We refused to sell general electronic parts, and sent prospects elsewhere for bookkeeping software, for example. Some items that customers needed badly, we found hard to sell: Metal cases for keyboards were a huge hassle. A local fellow tried to make them, but couldn't control schedules or quality. Used Teletypes (the Volkswagens of the computer industry) were hard to find, and Teletype dealers were a surly lot. In the beginning, nobody knew what a computer store should sell, so every store decided for itself.

BIG PROBLEM: PROFIT MARGINS

The personal computer industry has always had trouble with profit margins. Because we started with mail order products, the discounts available to dealers started out very low.

My first negotiations with MITS were based on a set of simple pencil-and-paper spreadsheets. I prepared three plans: Optimistic, Pessimistic, and Best-Guess. Since this was a completely new kind of business, it's not surprising that all the estimates were wildly off. I had calculated sales at $450.00 per computer instead of the $2000.00 per computer that would have been a better guess. On the basis of my plan, MITS offered to supply kits on an OEM discount schedule. Original Equipment Manufactures sell products to a reseller (now called a Value Added Reseller or VAR), at a discount that depends on quantity. To avoid being fooled by big promises of future quantities, these deals usually begin with very modest discounts that only get good when the significant volume is actually achieved.This would have made it hard to start a business with limited capital, because profits would be postponed along with the discounts. My first order to MITS was at only a 15% discount from list prices; not enough.

MITS increased the discount, and created a dealer plan when they realized stores like mine would be good for them. They wanted me to succeed. So I placed another order, at 25% off, and we went on to do a lot of business together. Discounts remained at 20% to 25% off list until Apple came along. All dealers complained about these unrealistically low profit margins.

When Apple offered 35% discounts to dealers, I shuddered. It was too good to be true. Sure enough, price wars between Apple Dealers shaved the gross profit margin to 10% - 15%, and I found it harder to make money in the later big business years than in the early years when all the dealers were griping about short margins. Nowadays, dealers are going down the tubes (or, as the Germans have it, "Rorchenhin Unterdurchgang"), trying to do business at 5% - 10% margins, even without paying hackers to provide answers and training. I call this a "Big Proglem" because I don't have an answer yet. The Law of Survival is a good way to separate the weak from the strong, but I've seen too many tough-guy discounters in my neighborhood, Olympic Sales and Computique, have reorganized under Chapter XI. Survival of the fittest, yes, but there should be more to fitness than just price.

BIG PROBLEM: EXCLUSIVE DEALERSHIPS

This almost ruined me. MITS refused to allow dealers to carry competing products. They believed it was an illegal demand, but they made it, verbally, anyway. I started as an ALTAIR dealer, but new products from IMSAI and Processor Technology looked interesting. MITS threatened to cancel the dealership of anyone who carried other brands. The MITS people tried to protect their leadership position the wrong way.

Brand-name competition in iron wasted enormous amounts of time. People would come to The Computer Store to ask, "Why is an ALTAIR better than an IMSAI?" We responded, "Choose a computer that can do a function or solve a problem, don't just choose some brand of iron." I'm sure most people believed we were just defensive about the ALTAIR, but we really believed in solving a problem with software and hardware, rather than selling features of brand-name iron. We could honestly recommend the ALTAIR computer, and we were especially impressed with ALTAIR software, but we grew tired of defending our choice of brands.

Many dealers left MITS because of their prohibition on competitive brands. Finally, we too changed brands and lost the MITS ALTAIR line. I delayed for over a year and finally acted with fear. I fully expected our customers to associate us only with MITS, and expected them to stop dealing with us. I imagined it would be like starting business all over again. After we changed lines, I was astonished: Not one customer left us! Customers understood, after all: Iron is secondary; problem-solving is primary. This was a big problem that ruined MITS, almost ruined my store, and wasted a lot of energy.

BIG PROBLEM: BUILDING RELATIONSHIPS WITH PROSPECTS

IBM Mainframe installations are locked-in to IBM by a huge investment in programs, procedures, training, and momentum. At The Computer Store, we put a lot of effort into before-the-sale problem analysis and planning with the prospect. When we completed this planning process, we developed a list of recommended hardware and software with prices. For our prospect, this became his shopping list! Our effort was always appreciated, but everyone's a price-shopper, too. We tried to think of ways to get "account control", or to sell our consulting services, but we never solved this problem. Neither has anybody else, to my knowledge.

COMPARING TWO ENVIRONMENTS

Working at The Computer Store was an exciting job. We responded to an enormous variety of requests. We designed, recommended, specified, configured, installed, trained, debugged, and fixed computer systems for every conceivable application. Perhaps that is the answer after all; helping people help themselves!

In many ways, operating The Computer Store then and participationg in The Great Peace March now are strikingly similar. In both cases, we operate with inadequate resources and face great uncertainty. Many problems remain to be solved. Solving these problems will offer excitement, and we eventually see the problems as great opportunities.

 

Community Search:
MacTech Search:

Software Updates via MacUpdate

Chromium 75.0.3770.142 - Fast and stable...
Chromium is an open-source browser project that aims to build a safer, faster, and more stable way for all Internet users to experience the web. Version 75.0.3770.142: Release notes were... Read more
Viber 11.1.0 - Send messages and make fr...
Viber lets you send free messages and make free calls to other Viber users, on any device and network, in any country! Viber syncs your contacts, messages and call history with your mobile device, so... Read more
Wireshark 3.0.3 - Network protocol analy...
Wireshark is one of the world's foremost network protocol analyzers, and is the standard in many parts of the industry. It is the continuation of a project that started in 1998. Hundreds of... Read more
DEVONthink Pro 3.0beta4 - Knowledge base...
DEVONthink Pro is your essential assistant for today's world, where almost everything is digital. From shopping receipts to important research papers, your life often fills your hard drive in the... Read more
Adobe Creative Cloud 4.9.0.512 - Access...
Adobe Creative Cloud costs $20.99/month for a single app, or $52.99/month for the entire suite. Introducing Adobe Creative Cloud desktop applications, including Adobe Photoshop CC and Illustrator CC... Read more
SketchUp 19.1.174 - Create 3D design con...
SketchUp is an easy-to-learn 3D modeling program that enables you to explore the world in 3D. With just a few simple tools, you can create 3D models of houses, sheds, decks, home additions,... Read more
ClamXav 3.0.12 - Virus checker based on...
ClamXav is a popular virus checker for OS X. Time to take control ClamXAV keeps threats at bay and puts you firmly in charge of your Mac’s security. Scan a specific file or your entire hard drive.... Read more
BetterTouchTool 3.151 - Customize multi-...
BetterTouchTool adds many new, fully customizable gestures to the Magic Mouse, Multi-Touch MacBook trackpad, and Magic Trackpad. These gestures are customizable: Magic Mouse: Pinch in / out (zoom)... Read more
FontExplorer X Pro 6.0.9 - Font manageme...
FontExplorer X Pro is optimized for professional use; it's the solution that gives you the power you need to manage all your fonts. Now you can more easily manage, activate and organize your... Read more
Dropbox 77.4.131 - Cloud backup and sync...
Dropbox is an application that creates a special Finder folder that automatically syncs online and between your computers. It allows you to both backup files and keeps them up-to-date between systems... Read more

Latest Forum Discussions

See All

Upcoming visual novel Arranged shines a...
If you’re in the market for a new type of visual novel designed to inform and make you think deeply about its subject matter, then Arranged by Kabuk Games could be exactly what you’re looking for. It’s a wholly unique take on marital traditions in... | Read more »
TEPPEN guide - The three best decks in T...
TEPPEN’s unique take on the collectible card game genre is exciting. It’s just over a week old, but that isn’t stopping lots of folks from speculating about the long-term viability of the game, as well as changes and additions that will happen over... | Read more »
Intergalactic puzzler Silly Memory serve...
Recently released matching puzzler Silly Memory is helping its fans with their intergalactic journeys this month with some very special offers on in-app purchases. In case you missed it, Silly Memory is the debut title of French based indie... | Read more »
TEPPEN guide - Tips and tricks for new p...
TEPPEN is a wild game that nobody asked for, but I’m sure glad it exists. Who would’ve thought that a CCG featuring Capcom characters could be so cool and weird? In case you’re not completely sure what TEPPEN is, make sure to check out our review... | Read more »
Dr. Mario World guide - Other games that...
We now live in a post-Dr. Mario World world, and I gotta say, things don’t feel too different. Nintendo continues to squirt out bad games on phones, causing all but the most stalwart fans of mobile games to question why they even bother... | Read more »
Strategy RPG Brown Dust introduces its b...
Epic turn-based RPG Brown Dust is set to turn 500 days old next week, and to celebrate, Neowiz has just unveiled its biggest and most exciting update yet, offering a host of new rewards, increased gacha rates, and a brand new feature that will... | Read more »
Dr. Mario World is yet another disappoin...
As soon as I booted up Dr. Mario World, I knew I wasn’t going to have fun with it. Nintendo’s record on phones thus far has been pretty spotty, with things trending downward as of late. [Read more] | Read more »
Retro Space Shooter P.3 is now available...
Shoot-em-ups tend to be a dime a dozen on the App Store, but every so often you come across one gem that aims to shake up the genre in a unique way. Developer Devjgame’s P.3 is the latest game seeking to do so this, working as a love letter to the... | Read more »
Void Tyrant guide - Guildins guide
I’ve still been putting a lot of time into Void Tyrant since it officially released last week, and it’s surprising how much stuff there is to uncover in such a simple-looking game. Just toray, I finished spending my Guildins on all available... | Read more »
Tactical RPG Brown Dust celebrates the s...
Neowiz is set to celebrate the summer by launching a 2-month long festival in its smash-hit RPG Brown Dust. The event kicks off today, and it’s divided into 4 parts, each of which will last two weeks. Brown Dust is all about collecting, upgrading,... | Read more »

Price Scanner via MacPrices.net

Verizon is offering a 50% discount on iPhone...
Verizon is offering 50% discounts on Apple iPhone 8 and iPhone 8 Plus models though July 24th, plus save 50% on activation fees. New line required. The fine print: “New device payment & new... Read more
Get a new 21″ iMac for under $1000 today at t...
B&H Photo has new 21″ Apple iMacs on sale for up to $100 off MSRP with models available starting at $999. These are the same iMacs offered by Apple in their retail and online stores. Shipping is... Read more
Clearance 2017 15″ 2.8GHz Touch Bar MacBook P...
Apple has Certified Refurbished 2017 15″ 2.8GHz Space Gray Touch Bar MacBook Pros available for $1809. Apple’s refurbished price is currently the lowest available for a 15″ MacBook Pro. An standard... Read more
Clearance 12″ 1.2GHz MacBook on sale for $899...
Focus Camera has clearance 12″ 1.2GHz Space Gray MacBooks available for $899.99 shipped. That’s $400 off Apple’s original MSRP. Focus charges sales tax for NY & NJ residents only. Read more
Get a new 2019 13″ 2.4GHz 4-Core MacBook Pro...
B&H Photo has new 2019 13″ 2.4GHz MacBook Pros on sale for up to $150 off Apple’s MSRP. Overnight shipping is free to many addresses in the US: – 2019 13″ 2.4GHz/256GB 6-Core MacBook Pro Silver... Read more
AirPods with Wireless Charging Case now on sa...
Amazon has extended their Prime Day savings on Apple AirPods by offering AirPods with the Wireless Charging case for $169.99. That’s $30 off Apple’s MSRP, and it’s the cheapest price available for... Read more
New 2019 15″ MacBook Pros on sale for $200 of...
B&H Photo has the new 2019 15″ 6-Core and 8-Core MacBook Pros on sale for $200 off Apple’s MSRP. Overnight shipping is free to many addresses in the US: – 2019 15″ 2.6GHz 6-Core MacBook Pro Space... Read more
Amazon drops prices, now offers clearance 13″...
Amazon has new dropped prices on clearance 13″ 2.3GHz Dual-Core non-Touch Bar MacBook Pros by $200 off Apple’s original MSRP, with prices now available starting at $1099. Shipping is free. Be sure to... Read more
2018 15″ MacBook Pros now on sale for $500 of...
Amazon has dropped prices on select clearance 2018 15″ 6-Core MacBook Pros to $500 off Apple’s original MSRP. Prices now start at $1899 shipped: – 2018 15″ 2.2GHz Touch Bar MacBook Pro Silver: $1899.... Read more
Price drop! Clearance 12″ 1.2GHz Silver MacBo...
Amazon has dropped their price on the recently-discontinued 12″ 1.2GHz Silver MacBook to $849.99 shipped. That’s $450 off Apple’s original MSRP for this model, and it’s the cheapest price available... Read more

Jobs Board

Best Buy *Apple* Computing Master - Best Bu...
**696259BR** **Job Title:** Best Buy Apple Computing Master **Job Category:** Store Associates **Location Number:** 001076-Temecula-Store **Job Description:** The Read more
Business Development Manager, *Apple* Globa...
Business Development Manager, Apple Global Tampa, FL, US Requisition Number:73805 As a Global Apple Business Development Manager at Insight, you proactively Read more
*Apple* Systems Architect/Engineer, Vice Pre...
…its vision to be the world's most trusted financial group. **Summary:** Apple Systems Architect/Engineer with strong knowledge of products and services related to Read more
*Apple* IOS Systems Engineer - Randstad (Uni...
Apple IOS Systems Engineer **job details:** + location:Irvine, CA + salary:$45 - $55 per hour + date posted:Tuesday, July 16, 2019 + job type:Temp to Perm + Read more
Business Development Manager, *Apple* Globa...
Business Development Manager, Apple Global Tampa, FL, US Requisition Number:73805 As a Global Apple Business Development Manager at Insight, you proactively Read more
All contents are Copyright 1984-2011 by Xplain Corporation. All rights reserved. Theme designed by Icreon.