20 years ago this week, Microsoft just about killed Australian PC manufacturing

In late June of 1995, Australia's top PC manufacturer Osborne went into voluntary administration, caused in part by tactics that made Microsoft the titan it is today – and shaped our industry in nasty ways. Osborne Australia started life as the local distributor of the famed Osborne One CP/M luggable made by US company Osborne …

[Anonymous Coward]

Wangaratta *snigger*

It's a sad story that was told out across the world as well. In Britain the story was similar but a few survived: Acorn for example did quite well.

Also see the parlous state of the software industry until the noughties were done. Thankfully, nowadays we see a much healthier ecosystem across the board. Some of it much reviled, depending on your point of view, but at least there is diversity and choice.

However, PCs are STILL blighted by the Windows + preloaded crap thing.

[Ian Easson]

Re: Wangaratta *snigger*

"PCs are STILL blighted by the Windows + preloaded crap thing"

Well, pre-laded crap applications (from the OEM) are still in existence.

But mandatory pre-loaded Windows on a PC disappeared over 15 years ago.

Or did you not notice?

[Steve Davies 3]

Re: Wangaratta *snigger*

But mandatory pre-loaded Windows on a PC disappeared over 15 years ago

Eh? Perhaps for business users maybe but there are still retailers who insist that it is illegal to sell a PC without Windows pre-loaded.

Can you (as a non business user) got to say... Dell or HP and buy a new laptop without Windows? Are you even given a choice?

Sorry, nothing (IMHO) has changed over the years. MS still has the leverage over the suppliers.

Can you go into PC-World (shudder) and buy a PC without Windows?

I very much doubt it.

[montyburns56]

Re: Wangaratta *snigger*

"Can you go into PC-World (shudder) and buy a PC without Windows?"

Why would anyone who wants a PC without Windows want to go to PC World in the first place? It's a piece of piss to buy a PC without an OS these days, just because the big boys don't sell them it doesn't mean that there aren't loads of places that do like Ebuyer, CCL, Novatech, Scan etc.

[Sorry that handle is already taken.]

Re: Wangaratta *snigger*

The g in Wangaratta is hard, fortunately.

I had one of these Australian Osbornes in my yoof. AMD Am386DX/DXL-40 with "4MB" of RAM (in reality the motherboard's 640KB cache + 3MB of SIMMs), later upgraded to "8MB" at great expense.

Oddly, when booted from cold it would take far longer to load games (e.g. Syndicate) than it would if rebooted after it had been on for a while.

[Tac Eht Xilef]

Osborne did well at first in the government/corporate world, thanks to "buy Australian" pressures & high IBM prices. However, I suspect the typical government 90/180 day terms didn't help their cash-flow at all...

"... “Australians are not known for their preference to buy products via telephone or mail-order catalogues.”

Dell changed that, selling PCs at prices local manufacturer couldn’t match even though it was shipping them in from Malaysia. Before long, Australian buying habits changed, ..."

From memory, that preference almost smothered Dell's local ops in the cradle too. After a year or 2 of poor sales the local management convinced a very reluctant Michael Dell that they needed showrooms in Australia. They eventually opened a few - just in time to be too late for the latest round of government & big corporate purchasing.

The showrooms struggled on for a couple more years, but by then IBM & others had sewn up government & corporate sales & leasing which mostly killed that market. Local computer shops had sprung up everywhere and computers were becoming common in the big-box retailers, which meant the casual buyer could head out on a Saturday morning & come back with a new computer.

Eventually Dell did get a bit of a foothold in the gov't/corporate market, but they never approached anything like the powerhouse they were in US sales.

[Tannin]

The missing bit

This looks to be an excellent article and I'll read it more carefully when I get a moment free, but on first glance it seems to miss the real key to the Osbourne story, which is this:

Osbourne grew at a fantastic rate at a time when computer prices were falling very fast. It grew largely at the expense of other Australian manufacturers and retailers simply by pretending to offer amazing prices, prices often below the cost price of the components required to build a similar system. Many competing organisations went to the wall at this time because Osbourne were undercutting them.

How could they do this? It was a simple trick: Osbourne took the money six weeks in advance.Six weeks was a very long time in the computer industry in those days, long enough to see prices change considerably, often by hundreds of dollars. (Typically, the retail price of a typical system wouldn't change so much, but the components would: you'd be shipping a 486DX/2-66 instead of a 486DX/2-50 as your most popular model, or upping the RAM or the graphics card, installing a 5400 RPM 850MB hard drive instead of the 4500RPM 500MB unit you using a few weeks prior.

Osbourne, in short, had found a way to sell into today's market at much lower future prices. By the time they actually delivered a system, it was about the same system at about the same price as most competitors were shipping on that same day, so they could break even or make a small profit - but most buyers were not awake to the trickery and thought Osbourne gear was very cheap. And, of course, Osbourne had had the use of the customers' money in the meantime.

Eventually, inevitably, prices stabilised for a little while and the currency moved the wrong way, leaving Osbourne with no competitive advantage, no cash on hand, and a huge backlog of paid-for orders but no stock to fill them with. They went spectacularly broke and their many gullible customers paid the price. I remember selling several $2000 and $3000 systems at this time to people who had already paid in full for an Osbourne and got nothing at all except an expensive lesson in shonky business ethics.

[RealFred]

Re: The missing bit

I worked for a large State government Department who decided that they would purchase large quantities of Osborne computers. The return rate was well above 25% (many of them didn't even boot straight out of the box). We would go onsite to install and have a large number of spares. We eventually insisted on them shipping 25% more units to each site because we couldn't get one of their engineers onsite to fix the broken ones because they didn't have enough engineers. In short, they were a disaster. The only reason they stayed as suppliers was no-one else could supply large numbers of machines in a short period of time.

[Shred]

Re: The missing bit

I remember that when Osborne hit the wall, I met someone who had paid in advance for a computer. They had been told that for each week the system was late, some amount ($100?) would be taken off the price. The customer thought this was wonderful, because it had been six weeks and counting. The penny hadn't dropped, that they probably wouldn't get a computer and would never see the money again.

In the end, I think most people who had paid in advance at the time that Osborne went under did eventually get a computer - a Gateway branded system. Unfortunately, by the time the machines arrived, they were outdated technology and many would-be Osborne owners had given up and bought a new computer elsewhere.

[TeeCee]

Hmm.

Lifetime warranties

pledged to replace a PC's hard drive and CPU after two years

Aha! That's Gordon Brown economics that is, borrowing money from the good times in the future to generate sales / public goodwill now. The idea being you'll have cashed in your shares / brownie points / made enough to retire / whatever and be off doing something more lucrative before the good times fail to turn up and the company / country / whatever goes inevitably titsup when those liabilities you've stored up for your successors really bite.

Say what you like about Microsoft, but with strategies like that the management should get the lion's share of the blame for it all going pear-shaped.

[wolfetone]

Re: Hmm.

"Aha! That's Gordon Brown economics that is, borrowing money from the good times in the future to generate sales / public goodwill now."

Yeah, much worse than the George Osborne* theory of economics. Borrow more money than the previous incumbents did at a time when the economy hasn't fully recovered to the levels seen by their incumbents.

Anyway, I've one word for Microsoft: Bastards.

*see what I did there?

[Shred]

Only assembled in Australia, not 'made in Australia'

The Australian market in the 90s was dominated by "box shifters", trying to dominate the market by discounting heavily. Every year, there was a new number one selling computer brand. The following year, that brand would be lucky to be in the top five as they ran out of money.

In Osborne's case, the big killer was the five year on site warranty: unremarkable now, but at a time when warranties were all 12 months back to base, it was a massive cost for Osborne to shoulder - and an increasing burden as the installed fleet of computers aged.

Osborne also liked to market their product as being manufactured in Australia. IBM actually manufactured machines like the PS/2 Model 30-2086 at Wangaratta. The IBM machines carried the coveted "Australian Made" logo - a logo that Osborne computers could not display, because they were only assembled from imported parts. If I recall correctly, the Osborne branded displays were re-badged Philips units and the motherboards were made by Micronics, although I stand to be corrected.

[Tannin]

Re: Only assembled in Australia, not 'made in Australia'

"If I recall correctly, the Osborne branded displays were re-badged Philips units and the motherboards were made by Micronics, although I stand to be corrected"

Just so. And to their undying credit, their keyboards were rebadged versions of the matchless Honywell 101WN - to this day one of the best keyboards ever made. Even now they command a premium, I see here one advertised second hand for an astonishing $285 US - http://www.classicautomation.com/Catalog/ProductDetail.aspx?partnum=101WN638-1E - which seems too much even for that quality. Although I hoarded them and never failed to substitute an inferior new keyboard whenever I resold a traded-in Osbourne system unless I particularly liked the customer, alas I wore my last one out three or four years ago and now must make do on inferior modern units.

The only better keyboard I've ever used was - astonishingly! - one of unknown origin shipped new with (of all things) otherwise quite horrid little Amstrad 386 units. I still have two of those little treasures, much loved and still in daily use.

[Alan Brown]

Re: Only assembled in Australia, not 'made in Australia'

Cherry G80 keyboards come pretty close to the Honeywells.

[J Cooper]

Let's step it back a bit...

Interesting considering my father Tom Cooper launched the success of the original Osborne Portable computers distribution in Australia. His Australian owned business President Computers at this time was in the top 5 worldwide distributors until Adam Osborne (USA founder) decided to send a team to set up shop locally in order to leverage his success in the Australian market as a direct competitor. My father a visionary, saw the direction of DOS based PC's and was clever enough to forge ahead with "luggage USA" competitor Kaypro giving Osborne a run, until he launched his own private label PC in Australia, which was assembled in Queensland. I count myself fortunate to have been a witness to this era and to have personally met innovators such as Adam Osborne and particularly proud to be the daughter of an Australia IT Captain of Industry. Here's to you Dad for the efforts and energy you put into the Australian IT sector as a true leader and entrepreneur of your time.

[Kaypro2018]

Re: Let's step it back a bit...

Hi! JCooper. By sheer coincidence, your father's name came to me during a sleepless moment at 4a.m. last night and something made me grab my iPad and Google 'Tom cooper kaypro' as couldn't remember the President name.

I would very much like to get in touch with your father Tom, if possible. I was the Canadian counterpart to him. Although I wasn't an Osbourne distributor, I was the Canadian exclusive distributor for Kaypro, taking them from zero to huge in mere months. Things got ugly when the Kay family decided that they could save money by bypassing me and going direct. I'm happy to report that they lost 90+% of their sales and not too long thereafter went out of business. I had, much like your father (we had discussed this strategy) also created my own private brand of IBM compatibles, that were actually Taiwanese parts, and branded them under the Challenger brand name.

I would be extremely pleased to be able to reestablish contact with him. He will hopefully remember me and can email me at kaypro2018 @ gmail.com

[Jim 59]

Lol. I remember an add in PCW mag or somewhere, showing a pretty secretary "lugging" what appeared to be a smallish steel suitcase. I don't think Osborne used the word "luggable", but it has never really been used on any products but theirs.

Incredible nifty at the time though. That fold out screen/keyboard was a wow.

[Anonymous Coward]

I recall someone commenting on an advert for an early "luggable" computer that was trying to advertise its portability, but whose rather heavy weight was given away by the fact that the hand/knuckles of the person holding it in the photo had gone white.

That might have been the Osborne, I can't remember now...

[Tannin]

Cheers J Cooper. I remember President Computers: they were worthy competitors and made good kit.