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M / A ' 7 


PRESS 

REVIEW 


The following articles are reprinted solely as items of interest for the independent evaluation by members of 
A TSU. The opinions, statements of fact, or conclusions expressed herein are not those of the Association. 



IBM Introduces 
Small Computer 
Starting at $9,875 

Firm Cuts Prices on Some 
Copiers and Typewriters, 
Creates New French Unit 


By a Wall Street Journal Staff Reporter 

ATLANTA-A small business computer 
selling for as little as $10,000 was introduced 
by International Business Machines Corp. 

Most small business computers cost 
more than $20,000 and until yesterday, the 
price of IBM’s least expensive such com¬ 
puter was $33,560. 

The new machine, the Model 5110, is 
aimed at one of the most rapidly growing 
markets in the computing industry: compa¬ 
nies with annual revenue of about $1 million 
who lately have been snapping up so-called 
personal computers for use in small offices, 
warehouses and factories. 

The 5110 also seems to be an effort to re¬ 
direct one of IBM’s less successful recent 
products, the Model 5100. 

In separate announcements, IBM also cut 
prices on some electric-memory typewriters 
and copiers, added to its line of electronic 
typing systems and said it has created a 
new French subsidiary. 

Models of the 5110 computer system will 
cost from $9,875 to $32,925, depending on 
memory size and other features. Main mem¬ 
ory in the machines ranges from 16,000 to 
64,000 characters and the largest system can 
store an additional 4.8 million characters of 
information on diskettes, which are memory 
media that look like 45-rpm records. 

First deliveries of the 5110 are scheduled 
for next month. 

5100 Sales Modest 

The 5110 computer is an improved ver¬ 
sion of the 5100 that IBM introduced in Sep¬ 
tember 1975 as a desk-top aid to scientists 
and engineers. Sales of the 5100 have been 


modest, industry people said, because many 
potential customers regard it as too costly 
for scientific work and too difficult to adapt 
to commercial tasks. 

By changing the packaging of the elec¬ 
tronic circuits inside the computer and the 
way in which they are wired together, IBM 
has made the 5110 from three to 30 times 
faster than the 5100, depending on the work 
it is doing. Diskette memory also was 
added; auxiliary memory in the 5100 con¬ 
sisted of a tape cartridge. 

Prior to the 5J10, IBM’s lowest-priced 
computer aimed at the small business mar¬ 
ket was the System 32. 

IBM said it will continue to sell the 
Model 5100, but that some of the machines 
sold as new will actually be refurbished 
ones. 

Price Reductions 

In the area of office machines, the pur¬ 
chase prices of four of IBM's 10 models of 
memory typewriters were cut from 10% to 
25%. For example, the price of the Mag 
Card Selectric typewriter was reduced to 
$5,400 from $7,200, and the price of the Mag 
Card II was lowered to $11,150 from $12,390. 

The purchase price of IBM’s Copier II 
copying machine was dropped to $13,500 
from $15,000. 

The company also said It changed the 
method for computing the credits it gives 
rental customers toward the purchase of 
copying machines. 

The price changes took effect yesterday 
and apply to nongovernmental customers; 
the company said it made similar reductions 
in its governmental pricing. 

Adding to its Office System 6 family of 
electronic typing systems, IBM introduced 
the Models 6/442 and 6/452 information pro¬ 
cessors. The machines employ impact 
printers; other members of the System 6 
family use nonimpact printing. 

The 6/442 rents for $575 a month and sells 
for $17,250. The 6/452 rents for $685 a month 
and sells for $21,100. 

In Paris, IBM’s European subsidiary, 
IBM Europe S.A., said it created a subsidi¬ 
ary in France called IBM Southern Area De¬ 
velopment aimed at providing management 
advice and services for certain of its activi¬ 
ties in Africa and the Middle East. 

The subsidiary will be headed by Michel 
Faucon, general manager for central ser¬ 
vices of IBM Europe. 


Reprinted by permission, The Wall Street Journal, January 11,1978, ©Dow Jones & Company, Inc. 










- SOFTWARE 

Remote Services Industry Sees Continued High Growti 


NEW YORK — Still cruising through what some observers see as 
a period of youthful expansion, the remote computing services in¬ 
dustry is looking ahead to continued growth rates higher than those 
of the EDP industry as a whole. 


User acceptance of specialized 
software, consolidation of smaller firms 
into larger ones, and the growing 
sophistication of network offerings are 
enabling the services industry to mature 
and specialize its products to compete 
with small computers and mainframes. 

Growing pains are surfacing, 
however. The demand for experienced 
sales and technical staff is putting a 
premium on qualified heads, a factor 
which is limiting growth at certain 
firms, industry sources claim. 

Enhancing Software 

New products, often geared towards 
specific applications, are being 
developed, but some firms are enhanc¬ 
ing existing software for extra perfor¬ 
mance and applicability, sources point 
out. 

Acquisitions, too, are helping larger 
firms enhance their product offerings, 
whether in a new market area or in a 
new geographical area. Geographic ex¬ 
pansion is underway both domestically 
and abroad, sources indicate. 

According to a study undertaken for 
the Association of Data Processing Ser¬ 
vice Organizations (Adapso) by Inter¬ 
national Data Corp., Waltham, Mass., 
data processing services revenues for 
1976 were some $3.6 billion with a 
growth of 16 per cent. 

Average growth rate for the next 5 
years, the study claims, will be 17 per 
cent annually. 

A spot survey of major time-sharing 
firms showed general agreement with 
the Adapso/IDC figures and, in every 
case, a positive outlook for the months 
to come. 

National CSS of Norwalk, Conn., for 
instance, saw an “uptrend in revenue 
growth” for the year just finished, ac¬ 
cording to Robert Weissman, president. 
The fourth quarter of 1977 saw a growth 
of some 18 per cent, he said. 

“We’ve seen a reduction in account 
attrition — fewer accounts are leaving 
the firm,” Mr. Weissman said when 
asked to explain the firm’s growth and 
that of the industry as a whole. 

Good Year 

The year 1978, he said, will be “a good 
year” for National CSS, although no ma¬ 
jor product introductions are planned. 
New mainframes — either IBM 303X or 
Amdahl V/7s — are scheduled for in¬ 


stallation in the June to October period, 
he added. 

Asked about the consolidation trend 
in the services industry, Mr. Weissman 
said the firm is “actively looking” for 
firms to take over. 

“We’ve set our aspirations higher 
than before,” he commented. However, 
the industry-wide trend has slowed 
somewhat, he added. 

Only 29 service firms, he noted, have 
annual revenues greater than $9 million, 
but some 2,500 other firms also consider 
themselves in the services business. 
“The consolidation trend will continue 
because this is a highly fragmented 
industry.” 

Plans for 1978 include the expansion 
of sales offices into at least two more 
cities and the enhancement of the 
Nomad data base system which last year 
accounted for some $10 million in 
revenues, Mr. Weissman said. 

General Electric’s Mark 3 time¬ 
sharing services had an “extremely fine 
year in 1977” and GE has projected 
strong growth for the coming 12 
months, according to Robert Hench, 
general manager of the marketing 
department. 

Several new products — a data 
management package and a Fortran 77 
compiler — were introduced last year 
and are expected to contribute to in¬ 
creased revenues, Mr. Hench said. 

Nothing Negative 

Looking ahead to the near future, Mr. 
Hench said: “The pipeline looks strong; 
there are no serious negative indications 
on the horizon, at least as far as the in¬ 
dustry itself is concerned.” 

Control Data Corp., one of the most 
dominant forces in the data services in¬ 
dustry, expects its revenues in that area 
to increase some 21 per cent to nearly 
$300 million this year, according to a 
spokesman. 

Particular areas of strength, the 
spokesman noted, include structural 
engineering, Call/370 services from The 
Service Bureau operation, and several 


industry-oriented services. Although the 
firm declined to elaborate on marketing 
plans for these areas, it was indicated 
that both new products and enhance¬ 
ments to existing ones will be offered. 

And 1978, CDC said, will be “another 
excellent year,” with revenues expected 
to increase faster than the industry as a 
whole. 

Boeing Computer Services, according 
to Ron Koval, vice-president of sales, 
expects growth for 1978 to be in the 
range of 25 per cent to 30 per cent, 
similar to that of last year. 

Existing products will be enhanced, 
Mr. Koval said, but no major expansions 
— either geographic or marketing — are 
planned. The firm’s executive informa¬ 
tion system (EIS), he noted, will con¬ 
tinue to produce “good” revenues as it 
has since its introduction in mid-1977. 

Several large-scale IBM 3033 
processors are on order for installation 
at a McLean, Va., data center which will 
open late this year, the Boeing executive 
said. 

Asked to comment on trends curren¬ 
tly affecting the industry, Mr. Koval 
said that an integration of small com¬ 
puters and large communications 
networks will be necessary in the future. 

“We have to shake out the role of the 
minicomputer as a front-end device for 
distributed processing and as a turn-key 


stand-alone system,” he explained. Boe- “: 

ing, he noted, -is considering the sp 

problem from both angles. n< 

Tymeshare, Cupertino, Calif., expects 
1978 to be a good year, “roughly com- ci 
parable in terms of growth to 1977,” ac- c< 
cording to Ronald W. Branniff, group pi 
vice-president for the Computer Ser- ss 
vices group. 

The firm expects to do over $100 sp 

million in business, a first for sa 

Tymeshare, in 1978, Mr. Branniff said. y( 

Tymeshare is still consolidating its vi 

1977 acquisition of the Western States tt 

Banking Association credit card fr 

processing operations, Mr. Branniff sj 

said, noting that that deal was the si 

largest acquisition the firm has under¬ 


taken so far. ui 

Currently, the firm has a “healthy tl 
base of customers and we’re hiring a S( 
lot,” the executive said. y< 

Rapidata, Fairfield, N.J., had a c< 



Reprinted with permission, Electronic News, January 9, 1978, ©Fairchild Publications. 







^RE & SERVICES 


wtfi Rates 

loe- “reasonably good year” in 1977, a 
the spokesman said, noting that 1976 “was 
not a good year.” 

ects Revenues for the last 9 months of the 
om- current fiscal year were up 16 per cent 
’ ac- compared with the 6 per cent gain ex- 
oup perienced for all of 1976, the spokesman 
Ser- said. 

Bowne Timesharing, a firm here that 
$100 specializes in word processing services, 
for saw 1977 as “an interesting year, a tough 
aid. year,” according to William Mahony, 
its vice-president of sales. He attributed 
ates the toughness to increased competition 
ard from stand-alone word processing 
miff systems which were marketed by firms 
the such as IBM and Wang, 
der- Despite the resulting “confusion in 
users minds” — a factor which slowed 
lthy the selling cycle down — Bowne grew 
]g a some 44 per cent in revenues in the past 
year and expects to grow by some 30 per 
j a cent in 1978, Mr. Mahony said. 


Reprinted with permission, COMPUTERWORLD, January 2,1978, 

©Computerworld, Newton, MA 02160 


Users Told Not to Underestimate 
Cost of Installing Small Machines 


By a CW Staff Writer 
ANAHEIM, Calif. - When 
it comes to costs, putting in a 
minicomputer is just like put¬ 
ting in a mainframe: "You 
have to do your homework," 
John M. Weir, president of 
Accounting Datamation, Inc. 
told a session at a recent con¬ 
ference here. 

Installation costs are impor¬ 
tant because they often exceed 
hardware costs, he cautioned 
about 200 attendees at a ses¬ 
sion on the criteria used in 
selecting and evaluating a 
minicomputer. 

The installation includes the 
planning and system design 
phase, the programming of 
the system to meet the objec¬ 
tives outlined in the planning 
phase, implementation of the 
system and both hardware and 
software maintenance. 

One of the most important 
cost-cutting hints an or¬ 
ganization installing a system 
can follow is to make a plan 
and stick with it, Weir said. 
Following a plan requires the 


involvement of the people in 
the firm where work habits 
are to change because of the 
system, such changes should 
be anticipated, he said. 

The most important change 
that will take place when the 
mini is installed will be the in¬ 
creased efficiency of manage¬ 
ment, he added. 

'Pay as You Go' 

In order to follow a plan, the 
organization should be aware 
of the areas that need to be 
automated. Some applications 
may be of marginal value to 
the business, he told the 
group. 

The best way to make sure a 
system is cost-justified is to 
adopt a "pay-as-you-go" pro¬ 
gram of savings, he said. 

Management should be 
heavily involved in the study 
of which system to choose and 
the implementation plan, he 
noted. All the design work 
should not be left to others; if 
management is to make the 
final decisions, there is "no 


substitute for you in manage¬ 
ment of the business to get in¬ 
volved." 

System design should be un¬ 
dertaken by the people who 
know why an application 
should be performed a certain 
way. Final responsibility for 
how an application is run 
should lie with its user, who 
should sign off on a descrip¬ 
tion of what work is wanted, 
he recommended. 

Programming of the system 
can be done by an in-house 
programmer, software consul¬ 
tant or by the vendor who sold 
the system. If the user chooses 
to go to a person outside his 
organization to write the pro¬ 
grams, he should look for 
someone who is familiar with 
his business. 

The user should go visit an 
installation, Weir advised. 
Even if that particular installa¬ 
tion is not doing exactly what 
the user wants to do, "you'll 
come out of the place with 
good ideas," Weir said. 



SERVICES GROWTH OUTPACES TOTAL DP SPENDING 


The $5 billion computer services indus¬ 
try accounts for 16% of total dp spend¬ 
ing in the U.S. Its revenues were almost 
tour times the value of terminal and 
data entry equipment shipments in 
1976. almost three times the revenues of 
all minicomputer makers, and about 
the same as the total of general purpose 
mainframe shipments in the U.S. 

A study of the services industry by 
International Data Corp. shows a com¬ 
pounded growth rate of 17% over the 
next five years, compared with some 
15 f 7 to 16% for total dp expenditures. 
Nancy Scull of idc. speaking at the 
adapso conference, said the service 
vendors are feeling less threatened by 
the proliferation among first-time users 
of minicomputer-based systems, and 
instead are putting them to use in the 
services business. 

In the longer term, the vendors can 
see using minis to develop products. 
The research firm also notes a continua¬ 
tion of the trend toward increasing spe¬ 
cialization by service companies. 

Processing firms dominant 

•Of the $5.3 billion in revenues last 
year, processing service companies 
drew down a dominant 68%, or $3.6 
billion. Next in line were staff-support 
services firms (that offer custom/con¬ 
tract software and systems development 
services) with 13%. followed by soft¬ 
ware package vendors with 10%, and 
facilities management companies with 
9%. In growth, however, the packaged 
software business led the way, up 34%, 
over the previous year and expected to 
continue at a 27% compounded rate 
over the next five years (see table). 

As might be expected, international 


revenues of processing companies were 
much lower than of software com¬ 
panies. Among the latter, foreign sales 
accounted for an average 17% among 
large software companies, 15% for me¬ 
dium-sized firms, and 11% for the 
small. But among processing firms, it 
was only 6% for the large and medium, 
and a mere 1% for the small. Scull 
pointed out, however, that'this does not 
include revenues derived by any joint 
ventures abroad. 

In general, she said, the companies’ 
strategies look like this: 

Processing companies are interested 
in enhancing their current products and 
adding packages for the same indus¬ 
tries they now serve. Medium and small 
firms are interested in geographic ex¬ 
pansion, both domestic and interna¬ 
tional, and have some interest in 
minicomputers—but she reported that 
overall there’s little interest in minis. 


mergers and acquisitions. Medium¬ 
sized companies anticipate getting into 
packaged software, while the large 
firms are moving into dbms packages. 
There’s also a strong interest in turnkey 
systems. 

Systems software packages 

Software companies are also enhanc¬ 
ing their current products. Large and 
medium companies, in particular, see 
growth through geographic expansion, 
while medium and small firms are look¬ 
ing for growth through specialization, 
mergers, and minicomputers. In the 
matter of new products, all seemed 
interested in the systems software pack¬ 
ages market, the medium-sized firms 
planning to do more in dbms packages. 
All seem interested in minicomputer 
packages and in applications for man¬ 
ufacturing, banking, and insurance. # 


Large companies are interested 

in 



THE SERVICES MARKET IN THE U.S. 


($ billion) 

1976 

1982 

(Source: Input) 

Average 
Annual Growth 

Remote Computing 

$1.8 

$5.7 

21% 

Batch Processing 

1.6 

2.4 

7 

Facilities Management 

.8 

2.1 

17 

Total Processing Services 

4.2 

10.2 

16 

Porfessional Services" 

1.1 

2.2 

13 

Software Products 

.6 

1.9 

21 

Total Market 

5.9 

14.3 

16% 


:: Custom software and dp consulting 


Reprinted with permission, DATAMATION , December, 1977, ©Technical Publishing Company, 
Greenwich, CT 06830.