United States. Congress. Senate. Committee on the.

The Industrial reorganization act. Hearings, Ninety-third Congress, first session [-Ninety-fourth Congress, first session], on S. 1167 (Volume pt. 7) online

. (page 37 of 140)
Online LibraryUnited States. Congress. Senate. Committee on theThe Industrial reorganization act. Hearings, Ninety-third Congress, first session [-Ninety-fourth Congress, first session], on S. 1167 (Volume pt. 7) → online text (page 37 of 140)
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5270



APPENDIX Ed)



RESULTS OF THE COMPUTER USER INTERVIEW PROGRAM

To augment the statistical work done to analyze and evaluate com-
puter market trends, it was concluded that a limited number of user
interviews should be made. Respondents were approached by our staff
members who, representing an anonymous manufacturer, were seeking
information on how users could be served better by manufacturers and
opinions on certain phases of the computer industry. Individuals express-
ing these opinions were assured that they would not be quoted directly and
that their views would not be held up as representative of the views of the
organizations they served. On this basis, most interviewers, anxious to
make their views known to manufacturers, expressed their opinions rather
freely.

While time and budget did not permit scientific sampling and ques-
tionnaire techniques, knowledgeable and representative users were selected
in various industries and geographical areas of the country. A concerted
effort was made to select interviewees who were not currently IBM users,
as well as those who are, to try to avoid a completely biased response,
but because of IBM's market position, most interviewees had some type
of IBM equipment in their computer systems. The interviews were con-
ducted in some depth, guided by a questionnaire, and the responses gen-
erally paralleled the findings of the statistical analysis.



5271



APPENDIX E (2)

1. IBM COMPLETELY DOMINATED THE FIELD

The history and current situation at respondent locations indicated
that most were and are IBM customers. While there was equipment of
other manufacturers scattered around, 90% of the respondents had IBM
products installed. A consensus of responses relating to equipment is
briefly summarized as follows:

(1) Most installations had card preparation and input systems.

(2) Program assistance and availability were at least as im-
portant as the somewhat minor technical performance
differences to most users, and usually more important
than price when the installations were being considered.

(3) Nearly all installations were leased and few users were
in favor of outright purchase.

(4) Most installations were being used up to, or almost up to,
capacity.

(5) Even though respondents were selected heavily from the
engineering and scientific area, most mentioned a pref-
erence and need for data processing capability also.

(6) Most users were attempting to develop their own skilled
programming staffs, but wanted assistance available from
the manufacturer.

(7) Most interviewees belonged to, supported, and favored
organized user groups.

(8) 70% of the users ran and favored an open shop.



5272

APPENDIX E (3)

2. MOST RESPONDENTS WERE PROSPECTS FOR ADDITIONAL,
EQUIPMENT SALES NOW OR IN THE NEAR FUTURE

In line with the fact that most present installations were being used
nearly up to capacity, respondents generally indicated that they were in
the market for additional equipment, were ready to "trade up" to bigger
machines, or were at least considering it. There was a tendency, as
the user acquired more experience, for the work to expand to fill avail-
able machine time. There was general agreement that some sort of
feasibility study was the first step in the process of expanding installa-
tions and that equipment selection probably would be based again on
program assistance availability, performance, and price - in that order.
Nearly all respondents were certain that they would be spending more
money for equipment three years hence than they are now.

3. IBM WAS PRE-EMINENT IN THE AREA OF SALES AND SERVICE
COVERAGE

Though most respondents were experienced users and thus less
prone to depend completely on manufacturer image, most agreed that,
like it or not, IBM was pre-eminent in the field as far as sales and
service were concerned, and, more important, certainly conveyed that
image to the users. IBM sales and service coverage was far and away
the most extensive. Nearly all had been contacted at least once by
almost all manufacturers during the preceding six months, but IBM has
and maintains the most complete sales coverage. Some respondents,
although favoring other manufacturers' hardware to a marked degree.



5273



APPENDIX E (4)

indicated that they would probably string along with IBM because they
felt safer with this choice, or because their management would reverse
their decision if they proposed non-IBM equipment, based on the image
that IBM has been able to project.

The respondents contacted during the course of the field work were,
as a group, more experienced and sophisticated than the average prospec-
tive buyer of computer equipment, and consequently made more knowledge-
able and pointed remarks during the course of the interviews. Not all of
them thought that IBM was all things to all people in this field, of course,
but enough of them did "£ive the devil his due, " reluctantly or otherwise,
to indicate how overpowering the IBM image and sales coverage efforts
are in this field, and how important "software" is to the distribution of
hardware. Users frequently m^ade the observation that they usually had
to go to a great deal of trouble to seek out and learn something from manu-
facturers other than IBM, and that these manufacturers could not be relied
upon to contact them voluntarily and provide accurate information. In con-
trast to this, IBM representatives were covering them and providing infor-
mation about their products on a regular and frequent basis.

4. IBM WAS THE TOP RANKED MANUFACTURER PRIMARILY
BECAUSE OF THEIR MARKETING ABILITIES

In evaluating available equipment and suppliers, only 50% of the
respondents ranked IBM equipment first, but 80% ranked IBM as tops in
respect to program and applications support and caliber of sales and service.



5274



APPENDIX E (5)

Most respondents observed that, for their purposes, some of the more
technical differences in hardware capabilities were secondary to the
program and applications support and the availability of service. A
summary of the opinions expressed about each manufacturer is as follows:

(1) Bendix - good hardware, little else known.

(2) Burroughs - good hardware, little else known.

(3) Control Data - good hardware, little else known,
even hardware not widely known.

(4) GE - capable, good image, beginning to make their
presence known.

(5) IBM - top rated image, sales, and service.

(6) Honeywell - good hardware, making marketing efforts felt.

(7) NCR - not well known or evaluated.

(8) Philco - good hardware, beginning to make slight market-
ing effort, high price.

(9) RCA - good hardware, making marketing efforts felt.

(10) Remington Rand - well known, acceptable hardware,
weak in marketing and sales effort.

(11) Royal McBee - thought of more as office machinery supplier
than computer manufacturer.

In addition to the above-described field work, the services of the
Booz, Allen & Hamilton electronic data processing group were drawn
upon freely to augment our efforts in the field of equipment evaluation,
especially in the technical areas.



5275



APPENDIX E (6)

Exhibit E-I, following this page, gives a complete list of re-
spondents contacted and interviewed in depth during the course of the
field work. Following Exhibit E-I is Exhibit E-II, a sample of the
questionnaire used to guide the interviews.



5276



EXHIBIT E - (l)
BENDIX CORPORATION

RESPONDENTS TO FIELD SURVEY INTERVIEWS



U. S. Navy
Bureau of Ships
Washington. D. C.
Chief, Computer Systems

Bureau of Standards
Washington, D. C.
Chiet Applied Mathematics

Chas. Pfizer & Co. , Inc.
Brooklyn, New York
Chief, Computer Systems

United Aircraft

East Hartford. Connecticut

Director of Scientific Computers

Grumman Aircraft
Long Island, New York
Director of Research

Socony Mobil Oil Co.
New York, New York
Assistant. Director, Computer Center

Union Carbide Corp.
New York, New York
Chief, Computer Systems

North American Aviation, Inc.
Downey, California
Superintendent, Digital Analysis

Space Technology Laboratories, Inc.

Los Angeles, California

Associate Director, Data Reduction Center

Richfield Oil Corp.
Los Angeles, California
Linear Programming Director

Marquette University
Milwaukee, Wisconsin
Director of Computer Center
School of Engineering



Motorola, Inc.
Chicago, Illinois
Systems Director

Monsanto Chemical Co.
St. Louis, Missouri
Assistant General Manager

McDonnell Aircraft Corp.

St. Louis, Missouri

Director, Engineering Computer Facility

Armour Research Foundation

Chicago, Illinois

Assistant Director, Electronics Research

Admiral Corp.

Chicago, Illinois

Director of Systems Department

A. O. Smith Corp.
Milwaukee, Wisconsin
Technical Director

The Standard Oil Co. (Ohio)
Cleveland, Ohio
Chief, Data Processing

Bell & Howell Co.
Chicago, Illinois
Director of Computers

Babcock & Wilcox

Alliance, Ohio

Vice President, Research

American Enka
Enka, North Carolina
Chief Engineer

Teletype Corp. (AT&T)
Chicago, Illinois
Director, Computer Center



5277



EXHIBIT E-I(2)



Allis-Chalmers Mfg. Co.
Milwaukee, Wisconsin
Director, Computer Department

Phillips Petroleum Co.
Battlesville, Oklahoma
Director, Computer Center

Humble Oil Co.
Houston, Texas
Supervisor, Computer System



Bendix Research
Detroit, Michigan
Supervisor, Computer Systems

Socony Mobil Oil Co.

Field Research Lab.

Dallas, Texas

Supervisor, Computer Systems



40-927 O - pt. 7-29



5278



EXHIBIT E-II (1)



Company

City

Interviewee Name

Position



Interviewer_
Date



5279



EXHIBIT E-II (2)



I. HISTORY AND CURRENT SITUATION



1. Please review the company's use of electronic data processing equipment.



(1) Date of First Installation

(2) What Applications



(3) What Equipment



(1) Date of Second Installation

(2) What Applications



(33 What Equipment



(1) Date of Third Installation

(2) What Applications



(3) What Equipment



5280



What equipment does your company now operate?



Central Processor: MFR.
Tape Units: NUMBER _ "



Input and Output Equipment:



How is program data prepared ?



How is input data prepared ?



EXHIBIT E-II (3)



MODEL_
TYPE



Rank the factors that governed the selection of this equipment.



Price



Performance



Manufacturer

Program Availability

Compatibility with Existing Equipment_
Other



Do you lease or purchase this equipment ?
Approximate Monthly Rental $



or Purchase Price $



3. How many hours per MONTH - WEEK - DAY are you running on the central processor?



What is the approximate split of this time between engineering and scientific
and data processing <% ?



5281



EXHIBIT E-II (4)



5. Briefly describe your more typical engineering and scientific problems.



Rank Main Application(s)
6. Briefly describe your data processing applications.



Rank Main Application(s)



7. Briefly describe the operation of your computer installation.

Open or closed shop ?

Extent of internal utility and systems programming?



What program support do you expect the manufacturers to provide?



What benefit do you derive from user organizations?



5282



EXHIBIT E-II(5)
II. FUTURE PLANS



1, Do you see any future changes in the use and application of your computers?



2. What implications do these changing requirements have on your computer capabilities ?



4. What procedure will you follow in the selection of this equipment?



3. What plans do you have for future equipment additions, replacement or changes ?



5283



EXHIBIT E-II(6)



5. What factors will govern this selection (in their order of importance)?



Price

Performance



Manufacturer

Program Availability

Compatibility with Existing Equipment_
Other



6. How much do you think you will be spending for equipment three years hence as compared to now?



III. EVALUATION OF AVAILABLE EQUIPMENT AND SUPPLIERS



1. How would you rank available computers in their ability to fulfill your needs?



2. How do you rank the various manufacturers in respect to program and applications support?



5284



EXHIBIT E-II (7)



3. How do you rank the manufacturers with respect to the caliber of their sales and service?



4. What manufacturers have called on you in the past six months? (How many times?)



What is your over-all opinion of each of the following manufacturers?
Bendix



Burroughs



Control Data
GE



IBM



Honeywell
NCR



Philco
RCA



Remington Rand
Royal McBee



5285



EXHIBIT E-II{8)



IV. DISCUSSION OF FUTURE TRENDS IN THE USE OF COMPUTERS



1. Impact of Modular Design -

Large vs. Multiple Small
Satellite Concept

2. Application Centralization or Decentralization -

Scientific vs. Business vs. Process Control

3. Will a used computer market develop?



4. What impact do you see service bureaus having on developments in the computer industry?



5. What hardware or software needs do you envision that are not now satisfied?



5286



61



the aiitomnlic handling
of injormution



august



readout



ATIACHMKNT # 3

THE WEED OUT!

Still prognosticating a dim future for the staying power of computer manu-
facturers, a generous number of market analysts have gatliered and gar-
nished their statistics with perfectly reasonable logic.

Their basic contention: although the market for hardware will continue
to prosper, it is clearly impossible for the present number of computer manu-
factiirers (a) to sur\'ive tlie substantial investment required for advanced
technology, particularly where there is no strong alternative market to ab-
sorb heavy annual losses (i.e., t.v. sets or electric razors); (b) to maintain
satisfactory field support and software backup; (c) to mass produce medium
and large scale systems, and finally (d) to compete \\'ith a large flock of com-
parable firms, all offering basic;\Ily the same equipment for "a narrow,
vertical market."

Their conclusion: "the weed out" will surely take place within a handful
of years with three or four firms dominating the field and the remainder
(if they insist on remaining) accepting a minute fraction of tlie luarket.

In support of their forecasts, market analysts have been confronted with
one irksome problem, namely, all visible evidence of late, has indicated they
are dead wrong in both contention and conclusion.

Despite the fact that a number of forecasts have pointed to small com-
panies as the first to expire, it is precisely in this area where some of the
real strengths of the industry have appeared. Not only have these "weenies"
persisted in selling their machines, but they continue to announce new hard-
ware of sizeable proportions.

Perhaps the best example is Control Data Corp. with its 160A, 1604, soon-
to-be-announced 924 and Stretch-class 6600. Packard Bell Computer is
another case in point where rumor of corporate lack of optimism in its com-
puter division will find little support when PB announces its 350 late this
Fall. Computer Control Corp.'s forthcoming DDP and El-tronics' ALWAC
IV, a solid state entry to be ready next year, are further indications that the
staying power of the small company is not to be underrated.

Having recently completed its 100th 7090 installation and with a flock
of small to medium-sized contenders rolling off its production lines, there
is little doubt that IBM will continue as the giant in the computer industry.
But companies such as RemKand, well-known for their ability to turn an
advantage into a loss, have shown promising signs of twisting the bit in the
opposite direction. Surprises are also forthcoming from RCA with research
in high speed circuitry through diode memory.

As for others: Burroughs is very much in the solid state field with the
5000, 270 and forthcoming announcement of the 260. Philco has stuck neatly
to its 2000 series improving speeds with the 212. Advances in high speed
tape units and mass storage devices are also under development by Philco.

Sales of the Honeywell 400 have been excellent and FACT although em-
barrassingly late, reportedly is now ready to fly on the 800. Some technologi-
cal rabbits may also be pulled out of General Electrics new Sunnyvale hat.

In general, the most pessimistic news for computing market analysts is
the obvious fact that within the last three years, no one h.is left the field.
There are of course, .some trends which have influenced the health of the
industry; namely, a tempering of the early fever of the sales pitch which
coidd easily have dri\en a company or two into trauma and ultimately out
of the c-omputing business. Also, there is a maturing realization of the need
for long term investment coupled to a gradual shift in the purchase vs.
rental balance providing smaller firms with a more encouraging, earlier
dollar return. Fin;illy, the field itself has expanded from what may have
been a narrow, wrticil base of a doc;ide ago, to a rapidly growing tree
.sprouting numerous horizontal branches such as process c-ontrol, real time
control, and many new areas of general purpose application.

It would seem therefore, that "the weed out" is hardly a frightening pros-
pect except that as the prophecies do not bear fruit, the job securit)- of die
priiphesiers nia\' be inversely cflectcd.



August 1061



5287



Attachment § 4



lendix gives up on compyter;



It is selling its Computer Div. to Control Data Corp. Sale

price, according to a preliminary

agreement, is under $10-million to be paid in cash and stock



Whenever a contender in the elec-
tninic computer business cashes in
his chips — as Bendix Corp. an-
nounced it was doing this week by
selling the assets and business of its
Computer Div. to Control Data
Corp. — the poker faces of the re-
maining contenders stiffen. They
know that with another man drop-
ping out. the game may well get
harder rather than easier. The game
of Electronic Data Processing — or
EDP — is played with megabucks,
and it's almost as fast as three-card
Monte.

The loss. Most people in the in-
dustry believe that it cost Bendi.x
as much as $.30-niil!ion to try its luck.
But Bendi.x Pres. Malcolm P. Fer-
guson says that a S40-million invest-
ment figure that has been circulating
through the industiy is extraordi-
narily high. At this time, he refuses
to say how much Bendix did invest
in computers. According to a prelimi-
nary agreement between Control
Data Corp. and Bendix, the pur-
chase price for Bendix's computer
division is under .$10-million, to be
paid in stock and cash over a period
of time.

If the loss is in that magnitude, it
indicates that getting out of the
game is more costly than ever. Royal
McBee Corp. and Underwood Corp.,
both of which backed away from the
table when the stakes started to sky-
rocket, figure they lost about $S'mil-
lion and S12-inillion, respectively.

Stubborn optimism. Bendix's de-
parture also has started speculation
among the kibitzers that this may
be the beginning of a shake-
out in the industry that will result
in a sudden rush of mergers or
dropouts. But, even though few
companies in the industry have seen
black ink on their books yet, a
major shake-out or merger trend is
unlikely at this time. "The remain-
ing contenders in the business-
scientific field — International Busi-



iii'ss Macliines; Univac Div. of
Sperry Rand; Control Data Corp.;
General Electric Co., Philco Corp.,
a subsidiary of Ford Motor Co.;
RCA; National Cash Register Co.;
Minneapolis-Honeywell Regulator
Co., Burroughs Corp.; and Nlonroe
Calculating Machine Co., a sub-
sidiary of Litton Industries — all feel
stubbornly certain that it's in the
cards that they'll be among the big
winners.

Not a few of these companies have
suffered shortages in working capital
because of the delayed return on
leased equipment. But most console
themselves with the thought that
they would be in the black if equip-
ment out on rental were considered
as sold. In other words, if they had
sold their computers instead of rent-
ing thcui, they would be ahead of the
game. Even if such rationali7ations
are not the way the game is played
according to the rule book, it helps
morale.

Early starter. Although Bendix
was one of the early computer manu-
facturers — it delivered its first G-1.5
computer to an oil company in 19.55
— it never "had big ambitions in
business data processing," according
to Ferguson. The C-15 computer is
a relatively small, electron-tube com-
puter used primarily for engineering
and scientific calculations. About
270 of them have been sold since
19,55.

In 1959, the company decided to
build a transistorized computer
slightly larger than the G-15. It grew
into a much larger system — the G-20
— a large-scale data processor that
can be used for both business and
engineering. However, liecause of its
relatively limited marketing pro-
gram, Bendix was unable to develop
as complete a line of software — pro-
gramming packages for users — as its
competitors, and the G-20 sold
slowly.

Beginning of the end. When Ben-



dix failed to replace tlie G-15 uith
an equivalent transistorized com-
puter, its market position i)luiii-
meted.

Last year, Ferguson announced
that Bendix was giving up all at-
tempts to get into business data pro-
cessing and would concentrate on
engineering and scientific markets
only.

Natural buyer. Wlien Bendix made
tlie decision to withdraw, it didn''
take long to find a buyer. There a' }
good reasons why CDC wanted it;
The Minneapolis company, famous
for being the only other profitable
operation in the computer business
besides IBM — is strictly a computer
specialist. And (he Bendix line dove-
tails nicely with its own. ,

Started by a group of engineers
fiom UNIVAC in 19.57, CDC's first
product was a large-scale solid-state-
computer, die 1604. This was deliv-
ered in 1959, and 4:3 of them are now
in operation. Initially, the company's
objective was to make a fine com-
puter and sell it to customers— uni-
versities and research laboratories —
who knew how to program it and
would need a minimum of expensive
programming and training aids.

Generally, CDC has used a highly
accurate marketing technique. It
claims it sells two out of every three
customers to which it presents a
systems proposal (average cost^
$20,000 a pitch).

Good fit. Bendix fits right into
CDC's future pl.ans. The older tube-
model G-15 is slightly smaller than
CDC's solid-state 160 computer.
And since customers almost always
move up when they replace a com-
puter, CDC will have a fine basis for
upgrading G-15 users to its own
160s. And the G-2a— the big Bendix
unit— fills a niche in Control Data's
line of larger equipment, an exten-
sive array that includes the largest,
and fastest computer systems nov/
made in the U. S.

BUSINESS WEEK March 9. 1963



5288



Bendix Sells Computer



The Los Angeles-based com-
puter division of the Bendix
Corp. Is being sold to a Min-
nesota company for a price in
stoc kand cash of "under $10
million." '

Bendix announced the deal
jointly wit hthe- purchaser,
Control Data Corp. oi Bloomr
ington, Minn.

Control Data "will take over
all assets of the division. In-
cluding a plant at 5630 Arbor-
vitae In Los Angeles. The
plant employs 485 persons
Control Data did not neveal
its plans for the local opera-
tion^- . . •

' The joint announcement

did state, however, that Con-

; tpiol data- will continue the

', line of Bendix G-15 and G-20

[computers. The G-15 is a



small computer primarily
fused for scientific and engi-
neering jobs. The G-20 is large
scale, solid state digital com
puter used in both engineer-
ing and data processing appli-
cations.

The deal is subject to ap-
proval of boards of directors
of both companies by March
15.

No reason was given offi-
cially for the sale. But it has
been well known that Bendix
has been disappointed with
its earnings in the highly
competitive computer busi-
ness.



5289



North American Aviatio7i
Unit Drops Computer Line

B;t n Wall Street JochnaL Slaff Reporter

LOS ANGELES-Autonetics division of
North American Aviation, Inc., will discon-
tinue its line of commercial computers,



Online LibraryUnited States. Congress. Senate. Committee on theThe Industrial reorganization act. Hearings, Ninety-third Congress, first session [-Ninety-fourth Congress, first session], on S. 1167 (Volume pt. 7) → online text (page 37 of 140)