Te Computers Nobody Wanted My Years with Xerox Other publications by Paul A. Strassmann: Information Payof: Te Transformation of Work in the Electronic Age – 1985 Te Business Value of Computers – 1990 Te Politics of Information Management – 1994 Irreverent Dictionary of Information Politics – 1995 Te Squandered Computer – 1997 Information Productivity – 1999 Information Productivity Indicators of U.S. Industrial Corporations – 2000 Revenues and Profts of Global Information Technology Suppliers – 2000 Governance of Information Management Principles & Concepts – 2000 Assessment of Productivity, Technology and Knowledge Capital – 2000 Te Digital Economy and Information Technology – 2001 Te Economics of Knowledge Capital: Analysis of European Firms – 2001 Defning and Measuring Information Productivity – 2004 Demographics of the U.S. Information Economy – 2004 Te Economics of Outsourcing in the Information Economy – 2004 Paul’s War: Slovakia, 1938 – 1945 Te Economics of Corporate Information Systems – 2007 Paul’s Odyssey: America, 1945 – 1985 Te Computers Nobody Wanted My Years with Xerox Paul A. Strassmann Te Information Econonomics Press new canaan, connecticut 2008 Copyright © 2008 by Paul A. Strassmann All rights reserved. No part of this work may be reproduced or transmitted in any form or by any means, electronic or mechanical, including photocopying, recording, or by any information storage and retrieval system, without permission in writing from the Pub- lisher. Tis publication has been authored to provide personal recollections and opinions with regard to the subject matter covered. Published by the Information Economics Press P.O.Box 264 New Canaan, Connecticut 06840-0264 Fax: 203-966-5506 E-mail: [email protected] Design and composition: David G. Shaw, Belm Design Produced in the United States of America Strassmann, Paul A. Te Computers Nobody Wanted 1. Biography; 920; 2. History of Computers Version 1.0 – June 2008 US Copyright Preregistration Number: PRE000001135 ISBN 978-1-4276-3270-8 v Table of Contents Prelude 1 Te IBM 360 Promises 2 Te Honeywell Installation 4 Te IBM Counter-Attack 7 Computer Leasing 8 Te Deterioration of IBM 9 Gideon Gartner 11 Amdahl Computer Systems 12 Being Recruited 15 An Unexpected Ofer 15 Moving to Xerox 17 Te Xerox Tower 18 Visit from Joe Wilson 20 Scientifc Data Systems 21 My First Sigma Computer 22 Te IBM Divorce 24 Dislodging Computers 26 XDS Conversion 29 Te Leningrad Caper 31 Dealing with the Soviets 34 Exploring Opportunities in Education 35 Project Plato 37 Te Xerox 530 39 Te End Game 40 Winding Down XDS 42 Toughts about XDS 45 Corporate Information Systems 49 Te Equipment Billing Situation 50 General Manager of the Information Services Division 52 Organization of ISD 54 vi Te Corporate Data Center 56 Manufacturing Systems 57 European Regional Centers 59 Fuji-Xerox 60 Te APL Computer Language 61 DanRay Telecommunications 63 Brazilian Computer 67 COIN: An Attempt to Change the System 68 Unwinding ISD 69 Copier Troubles 71 Selling Copiers 73 A Fatal Injury 75 Strategic Planning 77 Te Planning Job 80 Planning for the Ofce of the Future 81 PIMS Research Findings 83 Te Pendery Papers 85 Te Architecture of Information 90 Te Information Products Group 91 Te Xerox 860 Word Processor 92 Xerox 820 Microcomputer 93 Digital Equipment Corporation’s Personal Computer 94 Diablo Data Systems 95 Shugart Floppy Disks 97 Century Data Corporation 98 Versatec Electrostatic Printing 100 Kurzweil Computer Products 101 Western Union International 101 Xerox Computer Services 102 Computer Laser Printers 104 Splitting Marketing 107 vii PARC 111 Assembling the Staf 112 First Encounter with PARC 113 PARC and XDS 117 PARC and the Internet 119 Te Xerox ALTO 120 Elkind Probes 123 From ALTO to a Product 125 Te Nixdorf Visit 128 Xerox 6085 Professional Computer System 130 Te Decline of Xerox 131 Don Pendery 134 Retrieval of Information 135 Document and File Control 137 Search for the Carlson Legacy 140 Myth Making and Myth Exploitation 144 Te Paperless Ofce 149 Paper Merchants 150 Swedish Royal Academy 152 Lobby Exhibit 153 Chester Carlson’s Notebook 157 Te Carlson Jinx 158 Te Mirage of a Miracle 162 A Historical Point of View 166 A Postscript 171 Proceeding with Retirement 172 Prelude hile I was waiting for my year-end bonus at General Foods in 1964 I received a call from a managing partner of Arthur An- dersen. Would I consider talking to the Chief Financial Ofcer Wof the National Dairy Products Corporation in New York who was looking for a corporate systems director? Working for some sort of a dairy com- pany was certainly not my idea how to advance my career until I looked up information about the NDPC. It was larger than General Foods! NDPC was a holding company that owned well-known brands such as Kraf and Sealtest. Te frm had been consistently proftable. I went for the interview with Mr. Kenneth B. Fishpaw, who in my view could be typecast as person who looked and acted as an ideal CFO who was completely trustworthy. He talked in reasoned, carefully phrased clear sentences as if his words would require audit certifcation. I took an immediate liking to this man of grace and old-fashioned courtesy. Ken explained that the NDPC was not an operating company but provided headquarters oversight over widely diversifed global operations. Tough the frm included more employees than General Foods the entire head- quarters operation was squeezed into modestly furnished small quarters located a walking distance from the New York Grand Central station. Te headquarters, smaller than one hundred people, consisted of auditors, ac- countants, lawyers and investor relation executives. My job would be to organize a corporate staf that would guide the various units of NDPC on an accelerated migration to pervasive computerization. Te frm already operated over ffy small computers and was now facing, as a major invest- ment, the soon to be announced IBM 360 series. Te scope of my job would be to oversee spending that would be a multiple of what I proposed for General Foods. I was particularly im- 2 paul strassmann pressed with Mr. Fishpaw’s recitation of the logistic challenges. Te NDPC operating units produced and distributed perishable products where mis- takes or delays, such as in the distribution of ice cream, could not be toler- ated. Te frm was vertically integrated, which included the ownership of delivery trucks that brought products directly to stores. Te truck drivers also placed the goods directly on the shelves or into the freezers. Out-of- date merchandise would be lifed for return to the company’s warehouse. Accounting for the deliveries and the issuing of credit for return merchan- dise would be the driver’s responsibility. As Fishpaw described the NDPC operations he presented what I would consider a textbook case of how one must deploy a rapid-response logistics value-chain. It appears he must have been coached about my work on COPT at General Foods and about the sort of centralization vs. decentralization conficts I had to address. It dawned on me that IBM must have had a hand in setting up the interview. Afer rather perfunctory greetings from the CEO, the head counsel and the treasurer I was ofered the position as the corporate Director of In- formation Systems. Later I found out that there were no other candidates interviewed for the job. The IBM 360 Promises Early in 1964, while Kraf as well as Sealtest would be studying the restructuring of their computer set-ups, all planning was suspended by the news from the IBM sales force that a new computer series, the IBM 360, would radically change ways how one should think about comput- erization. By consolidating its increasingly disjointed and incompatible lines of computers, IBM promised to increase the technology life of their hardware from four to at least seven years. With a longer technology life, the purchase instead of leasing of added capacity would become more at- tractive. IBM also claimed that sofware applications would be portable re- gardless of the size or confguration of the hardware. All of this turned out to be false claims even though it persisted as a part of IBM’s promotional advertising. A time- sharing operating system would make it feasible to set up telecommunications links with terminals. Tis promise turned out to be wrong because the IBM time-sharing system never worked properly. the computers nobody wanted 3 Processing power, memory and magnetic storage would be infnitely scal- able but that was true only in a very limited sense. Sofware frms would now have an incentive to ofer standard applications for IBM computing, thus reducing the costs of innovation. Most importantly, all applications now running on IBM equipment, which had its 1400 series installed throughout NDPC, would be able to run and migrate upwards on the new equipment without any change in code or without loss in performance. Tat was not true at all because all that IBM ofered was a degraded capability named “emulation.” High-level languag- es, such as COBOL, would make it possible for companies to use simpler and more reliable instruction codes. In other words, comes April of 1964, IBM would ofer a nirvana in the computing heaven, where everything that used to be difcult would now become easy to do. Behind much of the hoopla and misrepresentation were the IBM marketing machine that promoted capabilities that the IBM technologists could not deliver imme- diately, and some cases only a decade later. Starting in January, IBM salesmen visited major customers with blank order forms for machines with unknown specifcations, unknown performance and unknown prices. Customers were told that there would be limitations on the production capacity would constrain the ability of IBM to fulfll orders. Terefore, IBM was introducing a priority system.