Frontiers of Progress -1961 Sales Meeting part 4
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CHALLENGING FRONTIERS

L. R. SHEELEY

This is the start of the third day of our meeting, the half way point. So far we have covered many subjects. Vital subjects such as the GE 210, the GE 225, OCR, etc. All directed to make your sales job easier.

There is a lot more to come. . . of equal or greater interest. . . all important in your job.

We have talked for a long time about systems responsibility and the systems concept of selling. General Electric is noted for this concept. It is a sound principle. The principle of one manufacturer supplying a complete system to a customer and assuming the responsibility for the functioning of the entire system. In other words. . . selling the customer service instead of hardware.

Ideally, any manufacturer with the system philosophy should manufacture all the hardware components that make up the system. If such were possible the manufacturer could control the timely delivery of the components, the quality level of the equipments and have control over the cost of the products.

As you know. . . we have not yet reached this stage. Who knows, we may never go all the way. " We may never be in a position to manufacture all of the many peripherals for use with our systems. We will. . . and we now have plans. . . to manufacture the major peripheral devices. Let me be sure each one of you understands our philosophy. The General Electric Company was founded and has flourished on research and innovation, We have never been successful copying someone else's idea. We are innovators. We develop products where innovation is the key. Products that make a contribution to the state of the art. . , Products that provide extra value for the customer, This then is our philosophy in regard to peripherals, We don't want to build another mousetrap if a good one now exists, . , One that provides value to the customer. If it doesn't catch mice (or provide that value to the customer) however, we're interested.

We have definite and positive plans to develop peripheral devices where we can innovate. . . Where we can make a contribution to the state of the art. . . Where we can provide extra value to the customer.

I'm sure you have all thought about this important business the way we have. Peripherals constitute from fifty to seventy per cent of every computer system sold. Look at the dollars going outside the General Electric Company. . . Many times to our competitors. What a challenging opportunity to make a real contribution. . . to give our customers extra value. And not the least, to double the sales volume for our Department. This is the challenge ahead of us, And to talk specifics here is Ken Manning, manager of peripheral engineering.

OUR NEW CHALLENGE

K. P. MANNING

I'm here today to talk to you about the Computer Department's newest and fastest growing business. . . the building of peripheral equipments. So first, I suppose, we should define a peripheral, and the best example I know concerns a girl who was picked up so many times she eventually grew handles.

Now, in computer language, peripherals are considerably more than handles because they are the means of 'talking to' and 'hearing from' a computer. Without them, the best computer in the world is no more than a deaf, dumb and mute idiot.

Therefore, the importance of complementing our computer product complex with a solid selection of 'home grown' peripherals cannot be over-emphasized.

As Dr. Johnson has told you, Peripheral Equipment Engineering is a recent function of the Computer Department, It was organized as a separate and independent subsection early last fall, and since then, we've been working.

Effectively, this work has been directed along the lines of equipment development which can best serve your sales efforts. In a number of areas, we are making what I feel are genuine contributions to computer peripheral technology, and in others, exceptional improvements in existing types of devices.

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We are in business seriously and it is our objective to provide as complete a line of computer products as will serve our best interests. What is more, in every peripheral we tackle, it is our intention to produce truly new equipment. The General Electric Company has been built on a philosophy of invention, and we in Peripheral Equipment Engineering have no interest whatsoever in 'me-tooing' our competitors.

Generally speaking, we have set our goals, regardless of the individual unit, to accomplish five primary aims:

1. To fill a genuine need.
2. To innovate rather than imitate.
3. To build a better machine.
4. To increase reliability.
5. To do the job more economically.

As you've no doubt heard gentlemen, the Computer Department has a new document handler. Not just another conventional sorter, but what we believe will be the best document handler to hit the market since ERMA took checks and balances out of the age of the calculating machine and moved them into the era of automated banking techniques.

What's more, I'm not talking about a machine that's on the drawing boards, or in our plans; but rather the document handler which we will begin to deliver about the end of July.

It's no news to any of you who have been in the banking end of the computer business that the heart of a sorter is its feeder and the feeder always has been in everyone's equipment a most troublesome item. Critical to adjust, limited to a narrow range of paper weights, and sensitive to document limitations, and that hence, the sorter, because of its electromechanical limitations most often has been the slowest member of a high speed electronic data processing system.

The people in our handler program here in the Department were well aware of these problems. They were not newcomers to the problems they faced. Most of them had analyzed and evaluated sorters, helped select the best sorter we could obtain, and then had felt that same discontent which led all of us to realize finally that if we were to have the kind of sorter we wanted, we would have to build it 'Ourselves.

We did. We had a few problems, a few headaches. Nothing much, just the sort that made mountains look like mole hills, and some round-the-clock schedules which made eight hours of sleep all together feel like a two weeks vacation with pay.

But when we got through, we had the kind of sorter for which you gentlemen have been asking, and for which we had been searching since the early days of ERMA. A sorter not limited by double feeds, or by a limited range of document weights, or by difficult adjustments, or the major service problems which have plagued us over these last few years. Here are some of the features we went after and got:

1. Paper range from 2 1/2 mils in thickness to punched tabulating cards. . . and don't think those punched cards weren't a headache !
2. A single feed with no slowing down to change mode of entry to the machine when you changed document types.
3. Simple adjustments with critical tolerance broadened to within practical limits.
4. High reliability, and
5. A consequent low maintenance factor.

At the same time, our Industrial Design people were working to give you the best looking, most operator-effective handler on the market. In performance, human engineering, and appearance, we have a document handler that can't be beat. . . A device that will increase our standing in the banking market. Nor is the handler limited to banking applications as we shall see when we discuss the new character reader in a few moments.

First, however, let's consider our new high speed card reader. Here, I could tell you almost

the same story, I've just related about the handler. But the important fact is that we have now achieved a truly superior card reader which remains effectively competitive both in price and performance while incorporating all the best features of a high speed reading device. These include:

1. General handling of cards at high rates.
2. Freedom from read errors.
3. High reliability.
4. Low maintenance, and
5. A basic simplicity of concept which increases the reader's over-all performance.

Human engineering and appearance also were important to us in the finalized design of this equipment. So again we have a peripheral equipment to which we can point with genuine pride.

Now, let's see the high speed card reader in action.

(A short movie was shown at this time)

I've saved for last, gentlemen, the best news of all concerning the General Electric high speed card reader and that is its availability date. . .in or before December 1961

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That's what Manufacturing tells me. Mark it on your calendars, gentlemen, it's a big day for peripheral equipment engineering:

As Dr. Johnson has said, magnetic ink character recognition was a major achievement in our ERMA system. It has become a national banking standard and was a big help in putting the General Electric Computer Department on the map.

Now with our new General Electric character reader, we're going a step farther and taking the lessons we learned in character recognition with our banking experience into the much larger business field.

For here is a reader that will accept either the new GE 59-B Font or the ASA standard OCR Font and will read documents either magnetically or optically.. .. In its initial release, the character reader will be factory adjusted for reading in a fixed position which can be selected by the customer and which will depend upon the type of format which the customer normally employs on his credit cards, retail sales or insurance documents, to name a few specific examples.

To provide truly competitive costing, the character reader will take advantage of standard circuit packages, a major step toward achieving the kind of across-product-line compatibility which we must build into all of our peripherals.

Furthermore, to get the reader on the market as early as possible, we will utilize the existing document handler which will be ready and waiting for our use.

I have suggested credit cards, retail sales vouchers and insurance accounting as three general areas of application for the new character reader. Marketing has much broader and specific plans, and I'm certain, too, that you gentlemen here today will help us enlarge our field of sales as soon as you and your customers see what our reader can do.

To begin with, your customer may select either magnetic or optical recognition, depending upon the individual type of application required. Each has its advantages and disadvantages.

The chief advantage of the magnetic ink principle, of course, is that it is more nearly obliteration proof. It is not disturbed by pencil marks, oil smudges, stains and other such document defacing effects. On the other hand, magnetic ink is more expensive to work with because it requires special inks and higher cost ribbons.

While optical reading requires more careful control over the condition of the documents being serviced, it has the important advantage of accepting a wide range of general commercial inks and ribbons commonly in use by business firms.

In either case we are fortunate that the character reader escapes the stringent and expensive obligations of using banking's E-13B magnetic ink font.

Not that I'm here to discredit what we've done in the banking field. In fact, exactly the opposite would be my aim. E-13B has made banking and computer history, and Computer Department is proud of this record. Moreover, with the introduction of our new. encoder, we feel that we will make another firm step forward and increase our reputation in banking circles.

The General Electric full field proof encoder comes to you as the result of a project which was formed to meet the demands of the banking people for a device which would do a fast and effective job of proofing and encoding. Essentially it is important to note that this calls for simultaneity, a cardinal rule of automation.

In the document handler, for example, a document is sorted from the stack in order to read it, and in so much as it has been separated and read, it can be directed into anyone of a number of bins. Hence, the handler does a multiple job and increases the efficiency of the total banking operation.

By the same token, this concept of simultaneity which is directly related to efficiency became the fundamental motive of the encoder as design philosophy as we sought to accomplish proofing and encoding in a simultaneous process. This was an aim which we realized coupled with a degree of versatility not available in any other comparable and competitive piece of equipment.

The full field proof encoder has the capability of encoding the entire check with one pass, of proving the validity of the transaction, assigning the transaction code automatically, and routing the document to anyone of three separate pockets. At the same time, it will list the transaction, check for the erroneous transposition of digits in the account number field and provide automatic cue symbols and non-significant zeroes in the dollar amount field. Most important of all, perhaps, it introduces a new concept in the bank proofing operation. This is the force balance technique which relieves the personnel involved from tedious balancing procedures such as nine-ing out. The encoder is able to accomplish this multiplex operation at high speed because it uses electronic components to fulfill its printing mission.

You are all aware of the American Banking Association specification on check coding and the exceptions to these rules which were deemed necessary in the case of punched cards and other pieces with bottom perforations and such. The electronics of our encoder, however, allows us not only to meet the standard requirements of the American Banking Association for encoding checks, but also to cover the exceptions in our standard encoder operation. . . A time saving feature of a major importance.

Another important aspect of our design philosophy was a constant awareness of customer requirements, including such essential factors as:

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1. Operator comfort,
2. Operator convenience,
3. Human engineering,
4. Operating efficiency,
5. Ease of maintenance,
6. Appearance design, and 
7. High reliability.

Moreover, we did not design the encoder in a theoretical vacuum. Rather, we took constant advantage of the expert consultation of bankers, specialists in banking procedures, product planning, and your communications and suggestions from banking circles across the nation.

The full field proof encoder is designed to be the finest piece of equipment of its type ever produced. It will fill a very real need in our banking processing systems. As with the other equipments I have described today, we have done our utmost to provide you with the handsomest, most compatible appearance design we would obtain, a good looking unit which will earn a reputation for competence where ever it is installed.

Again, the most important news is last. The General Electric full field proof encoder should be available some time in February.

A number of other products also are underway in the Peripheral Engineering area. As Dr. Johnson has told you, it is most necessary that we produce a large random access memory, a flexible disk memory, printers, optical character readers, and tape transports. These projects are under way as are other projects which we will bring to your attention at the earliest possible time. Each of them, we feel, will become an important part of a computer system, and each will give us a fuller share of the computer business.

When the General Electric Company made the decision to enter the computer field with the advent of ERMA, we were forced by circumstances to concentrate on the electronics of the data processing field. In the early days, the make or buy decision was often as simple as saying, 'If it's electro-mechanical, we'll buy.' But now, the Computer Department has come of age. Now, we have made a full-fledged entry into the peripheral field and we mean to stay there, grow there, and to complement our computer systems with every peripheral it is to our advantage to produce for ourselves.

As I have shown you today, we have started with some big jobs to fulfill major needs in our existing computer systems. Because of what we have accomplished with our sorter, our card reader, our character reader, and our encoder, we will have better banking and better business electronic data processing.

The other new peripherals which are under development also have been selected on the basis of value to our computers and your customers. We are not in business to produce gimmicks or gadgets. What we build must be of a solid and substantial value. Therefore, looking ahead to 1962, 1965, 1970 and beyond, we invite you to join us in our search for and evaluation of those peripherals which would do the most to fill genuine data processing needs. The questions and the requests, the complaints and the suggestions you receive from your customers throughout the United States, properly sorted, studied, and weighed well may furnish us with the requirements that shall motivate many of our future peripheral equipment plans.

Thank you, Gentlemen for your attention.


FROM OFF-SHORE

K. R. GEISER

A few weeks ago in the Wall Street one of their feature writers wrote, 'Overseas the sun never sets on G. E.' s foreign operations.....' To those of us concerned with the domestic consumption of electric ranges, or computers, this innocent statement may have slipped by as little more than a writer's paraphrase. For, as far as most of us are concerned, the General Electric monogram is as much a the trade mark of being American as apple pie, as peanuts, popcorn, and the world series. Let those who must take coals to Newcastle, owls to Athens, or refrigerators to the Esquimaux, the General Electric Company has business enough here at home to keep us busy the rest of our lives.

Gentlemen, that may be true to a degree, but at most, it must be a half-truth.

Business we do have at home, and that business is important. Important, yes, but not the whole story. As the United States has been pulled into world affairs so has U. S. business.

Basically, there are two reasons for this migration, First, there are those exceedingly attractive market areas which have broadened throughout the world since the end of World War II, and to compete with low cost goods and equipments shipped into the country, we are going to have to move out into broader markets with those products we can create competitively by virtue of automation techniques.

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Regardless of typewriters, sewing machines and such, let's take a look at the facts as they are pertinent to General Electric. Last year, sales amounting to more than four billion two hundred million dollars placed us fourth among the nation's industrial concerns.

This means that nationally we topped in sales such major corporations as Socony Mobil, U. S. Steel, and Chrysler. The world picture was much the same with only Royal Dutch stepping into the hierarchy above General Electric.

Granting that this is quite an achievement, the big question remains, where do we go from here? What about 1962, 1965, and 1970. Does it not occur to you that if our company is to continue its dynamic growth, we can not concentrate solely upon the domestic market. That one computer in every bank, two refrigerators in every home, and 'keep the light bulbs burning' are not the sales philosophies which will provide the necessary answers to the over-all future of General Electric.

Rather, we must broaden the scope of our thinking, and by our thoughts and our actions, the scope of our markets. .. markets which must move off-shore, and I mean a great deal farther off shore than Hawaii or Alaska. Yes, gentlemen, the world has become much too small a place for any major U. S. company to continue its growth by catering only to a restricted market area encompassed by domestic boundaries.

Moreover, in many lines where low foreign labor costs result in sufficiently reliable products, a very significant trend has developed. The sewing machine industry has to all intents and purposes moved off shore and the typewriter business is showing strong indications of following the same route.

Therefore, giving up certain major products as home-produced items, it becomes increasingly important for us to concentrate upon the more sophisticated products which may be subjected to the most advanced of automation techniqueness with electronics as a prime example.

In the past few years, as you may know, Mr. Lasher, Mr. Averitt, myself, and others in the Department have made extensive trips abroad. The business planning operation has established a permanent Computer Department office in London under Mr. Jim Donovan who now has most of western Europe as his beat. Within the last month, I have returned from a flight around the world in connection with Computer Department plans, and I might mention in passing that I found business conditions in general better than the jet transport facilities which flew me here and there. For example, it took me longer to get out of the Tokyo airport after arriving than it took me to get from Hong Kong to Japan and a broken 707 windshield on an India bound jet set us down in Cairo for two days.

All this, however, is beside the point, and our business here today is to have a look at the foreign computer market, what our competitors are doing, and what we intend to do. Now the logical starting point, is of course, an estimate or prediction of what the computer industry outside the USA will amount to over, say, the next ten years. This chart shows our prediction of the world computer business. To get it in proper perspective, we have shown it relative to the USA prediction. The lower segment is the hardware prediction. . . and this includes maintenance, parts, and supplies. The extreme top area of each curve entitled, "Contract Applications" adds computing centers computing services. . . including machine time, programming, analysis, and contract facility operations.

The obvious question is, who is enjoying this business at the present time? This chart shows the major companies participating in the 1960 business. And while the U.S. off shore bar shows Remington Rand, Bull, I.C. T., and others making a significant effort, as might be expected IBM is getting the lion's share. Below this, on a world basis, the percentages get pretty small and have to be analyzed on a country by country basis.

The next question is, in what countries is this business going to exist in the future. . . and if we let 1970 represent a typical year in the future, the computer business apparently resides in the various countries shown in the bar at the right. The distribution between countries does not show as much variation as might be expected and this is partly due to the fact that the countries shown are those that

fall in the category of being the most industrialized, or most rapidly developing. The size of the market, of course, is not the only criterion that is important in determining whether or not a country represents

an attractive market area. Many other factors must be taken into account such as the stability of individual currencies, cost of labor, the ability to repatriate earnings, the risk associated with losing one's capital investment. All of these have been gathered into a single category termed monetary considerations.

Another category also representing a combination of many considerations, we have labeled, national political and this includes such factors as: the country's feeling concerning the acceptance of equipment manufactured in or by another country, trade barriers designed to eliminate equipment from other countries, whether nationals from other countries would be tolerated working in that particular country, and other conditions of a generally nationalistic nature.

The fourth criterion which has been applied to each country is an estimate of how well competitors . . . that is, competition from the U. S., or competition from companies of that country. . . how well these competitors are entrenched, and how good a reputation they already have established.

As you observe, this chart shows these criterion rated on a scale from one to ten, where one is the least desirable and ten the most desirable. Also,

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to put these ratings in proper perspective, we must consider their relative weightings. Market size, of course, is more important than either monetary considerations or the national political factor, and we have given it a weighting of twice as much. How well entrenched the competition is, is of still greater importance, and we have given this a weighting of three times as much. Summing all these up, Australia emerges as the number one market, Canada as number two, Great Britain as number three, West Germany as number four, Japan as number five, and Italy as number six. With that covering the broad view of the world market and our competition there, it might be of interest to you should we exchange our telescope for a microscope and examine a couple of specific areas of the foreign market problem in more detail.

First, considering General Electric's long relationship with Japanese industry, it no doubt came as something of a surprise to you that Japan showed up fifth on a list of six international markets. So, let's have a look at some of the factors that made this occur. Peculiarly, Japan is one of the few highly developed industrial countries where there is still no convertibility of currency. There is, it is true, the bright note that thinking people in Japanese banking circles believe this may be remedied by 1963.

Currency problems notwithstanding, the data processing business in Japan is getting a lot of foreign attention as the following chart indicates. The first box, IBM Japan is of particular interest in that it is ninety-nine percent owned by the IBM World Trade Corporation but is validated to manufacture punched card equipment only. So, in the next series of blocks with bird tracks between them, we note that IBM has licensing arrangements with five domestic Japanese concerns, including reciprocal arrangements with Toshiba for the manufacture of their equipments. As will be noted, Remington Rand has invested in Toyo and Nru as also have Toshiba and Mitsui. Nru will rent and sell imported Remington Rand equipments and Toyo will manufacture. Meanwhile Mitsui is the franchised distributor of General Electric process control computers while negotiations are underway to establish a similar arrangement for Marubeni to distribute our general data processing lines.

If this is not enough of an oriental maze, learned on my recent trip to Japan that Nippon Electric, the most experienced electronic company over there, is negotiating an exchange of know how agreement with Minneapolis Honeywell. Hitachi whom we already have listed above in connection with IBM has firmed an exchange of know how agreement with RCA while Oki is working out the same sort of arrangement with Burroughs.

As the gentlemen from Japan themselves would admit, or perhaps, it was the King of Siam, the whole affair is a 'puzzlement. ' Nevertheless, the further industrialization of Japan is progressing at a phenomenal rate and the ministry of international trade and industry which essentially dominates the industrial scene has laid out a five year plan to get Japanese industry into the electronic data processing business. So far, in the first year, they have accomplished more than they had planned to do and they are now making a vigorous entry into their second year.

Now, let's do a little continent hopping to glance at the most advance data processing complexes as they exist in Europe. In the British Isles, for example, there are eleven major companies well entrenched who have produced to date some 397 computers and computer systems with ICT responsible for the lion's share of 225, or somewhat more than half. It is interesting to note here that ICT is the result of a 1959 merger of Power-Samus and the British Tabulating Company, the latter of which was formerly a part of the IBM World Trade Corporation who chose to break away from IBM and IBM patents, know-how and sales facilities. . . only to beat them at their own game. So note, gentlemen, that regardless of any thoughts to the contrary, that beating IBM not only can be done, it has been done by at least one British company.

Other important British concerns include Elliot Brothers, Emi and Ferranti, all of whom produce excellent computer equipments for the European market, the latter under such colorful names as Perseus, Pegasus, Orion and Sirius, perhaps so the Greek gods can help them.

In Germany, there is also a strong computer picture. Telefunken, a subsidiary of Aeg, is a strong contender who will become stronger, particularly in view of their contract to automate the West German postal system. The TR-4 is a good system and the TR-5 will be better, although some of their handcrafting, point-to-point assembly systems seem fantastic to those of us who have visited their operation. Standard Electric at Lorenz, a subsidiary of

I.T.and T., also is producing strong, effective products as is Olympia to whom we should pay particular regard for their relatively small, low cost computers of good reliability.

So much for our brief leap-frogging between countries. We'll return to specific foreign markets later. But now, let's take a look at one of our competitors in the world market. . . the one, IBM.

The IBM World Trade Corp. operates in 87 countries with 36 served by nationally incorporated companies and the rest by branch offices and sales agencies. With some 33, 000 employees, only about 370 are located in New York. And that, Gentlemen, means that nearly 99 percent of IBM's foreign operation is overseas with its effective power where it belongs in the various market areas. As a measure of its effectively, we may observe that for the last five years for which figures are available, IBM's World Trade's growth has averaged more than 22 percent per year.

IBM's World Trade Organization is a very well thought-out, well implemented setup. They are manufacturing and buying in many countries, and they are selling almost anywhere a computer may be

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sold. For a given market in a given country, they are assembling components and peripherals from the nearest possible locations thus availing themselves of the lowest possible manufacturing costs for a given market area. And this gentlemen, should interest you, for, in spite of such low cost maneuvers, they are continuing to sell at New York prices, and firming their sales with a maintenance and computer services backup comparable to that which they maintain in the United States. Laid out in chart form, this presents a plan in strategy unparalleled by other manufacturing companies of the world.

In fact, before we leave the subject, I can't resist mentioning that so ingenious have been some of the efforts of IBM's applications people, that Tom and Dick Watson, the presidents of IBM and IBM World Trade, respectively, recently have received from Pope John XXIII, the Grand Cross of the Equestrian Order of Saint Sylvester, for the use of IBM computers to speed the indexing and analyzing of the complete works of St. Thomas Aquinas. I further understand that while Tom and Dick were in Rome, they also posed for their holy pictures. It's one of the facts of life of the computer industry which we can not ignore that IBM got there first with the most. As we have discovered, it is just as true abroad as it is with your home markets. The question is what are we going to do about it?

Before we get down to computers in particular, however, let's make a brief survey of the General. Electric Company on the international scene.

For more than three-quarters of a century, General Electric has participated in international business. First through exports from the United States, then with investments in foreign enterprise, off shore manufacturing operations, and licensings. During this long international experience, world conditions, as we know too well, have faced continual change. Industrialization from a few bright spots in the British Commonwealth, on the continent, and in the United States, has come to encircle the globe. Governments, national sentiments, economies, and markets, all have changed, and changed again. And with these complex evolutions across the face of the earth, General Electric's international activities have learned to adapt to survive, and to grow.

In 1959, the increased importance of the world wide scope of the company was recognized by the consolidation of all international activities into a single company group under one vice president, Mr. James Goss, at the president's level.

INTERNATIONAL GROUP LOCATIONS

The chart before you delineates the division by function of the international group. These divisions consist of the major manufacturing subsidiaries which report directly to Mr. Goss, and a component for the development of existing and new manufacturing organizations through which they report during their formative or transient periods. The international group embraces a complete export sales operation capable of handling anything in the General Electric business line form individual items to complete systems and maintains sales offices and agents in the major trade centers of the business world. Supporting functions include. . . licensing, know-how and technical data service to licensees. . . international finance, international portfolio management, and legal and patent operations. Many off shore markets are growing even faster than U. S. Markets in 1960, the company's foreign sales, including exports, the sales of Canadian General Electric, Ltd., and other foreign affiliates, amounted to $600, 000, 000. It is expected that the total sales of the international group will reach the $1,000, 000, 000 level. In 1960 more than $257 million U.S. export orders were received, representing a 23 percent increase over 1959 in heavy equipment and producer goods, and 15 percent in consumer goods. The latter was achieved despite loss of almost the entire Cuban market, and substantially reduced sales in Venezuela as a result of economic conditions.

While we are starting to increase our export business, some markets can only be reached by domestic manufacture. Where the exportation of U. S. finished products is not practical in the face of such controls as high import tariffs, quotas and currency restrictions, our investment in foreign subsidiaries to serve their markets has grown substantially. For many years, the General Electric Company has invested abroad in manufacturing plants and sales subsidiaries. During 1960, we have stepped up our investment in markets where the potential for local manufacturing is good and where export sales to such markets are foreclosed. Our total foreign investment exceeds $250,000, 000 on a conservative evaluation basis and the number of employees is approximately 40,000, with facilities located around the free world.

There are service shops in subsidiary companies and technical field representatives in the

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following countries. . . United Kingdom, Iceland, Norway, Denmark, Germany, Belgium, Netherlands, Portugal, Spain, France, Switzerland, Turkey, Italy, Greece, Yugoslavia, Morocco, Union of South Africa, Formosa, Philippines, Japan, Australia, Mexico, Venezuela, Uruguay, Brazil, Puerto Rico, and Argentina. It is estimated that some five hundred General Electric personnel exclusive of any IGE employees are involved abroad in service areas.

Major manufacturing subsidiaries are in operation in Italy where the Compagnie Generale Elettricita and its subsidiary fair manufacture apparatus, appliances, electronic equipment and lamps. In Canada some 13,000 people in five million square feet in eight communities are engaged in manufacturing essentially the same broad complement of products.

The operations in Brazil (about 7000 personnel) produce small apparatus, appliances, radios and television sets. Mexico, Uruguay and Argentina with 1700, 1500 and 1700 people respectively manufacture similar classes of electrical and electronic equipment. Smaller factories also are operating in Portugal, South Africa, Turkey, England and Columbia. Our total facilities outside of the continental U. S. occupy some twelve million square feet of factory and office space. In addition to this, we are represented by over 200 independent agency and distributor outlets throughout the world.

At present, thirty manufacturing plants in ten countries will be expanded and the volume of locally made General Electric goods will increase substantially by the establishment of additional facilities in these and other countries.

The General Electric philosophy is to form an integrated world manufacturing and sales organization which is linked together by the total General Electric resources and its patent and know-how strengths. The strongest effort will be applied to the international needs for technologies, processes and procedures emphasizing industrial automation and all phases of data communications and computation.

Now, where do the Computer Department's plans fit into the international picture of General Electric activities. First, let me point out an important evolution which is currently taking place in the company's world wide philosophy. This emerges from the fact that our enormous diversity of products are not in many instances best served through a single international agency. Granting the valuable know how the international group possesses, its ability to act for the entire company, its enormous and beneficial backup in strength of personnel throughout the civilized world. There exist, nevertheless, certain specialized product areas which may be better served at a department level.

The General Electric Company and its international group are well aware of this condition. Vice President James Goss has a series of organizational plans on his desk which he plans to implement progressively in the interest of eliminating much of the bottleneck which has existed. Generally, it is the intention of these plans to put more and more of the responsibility on certain key operating departments and allow them to take care of their own off shore operation. The General Electric Computer Department is one such department and toward that end we have been making substantial progress to begin with, we have established our goal, and it's a good one. For, it is our aim to obtain twenty five percent of the off shore computer business by whatever means are required to get it. We have formulated a number of steps for our master plan, and more are in progress. Moreover, it is our intention to implement them as rapidly as possible. For example. . . as you are no doubt aware, Canadian General Electric has made the decision to go into the manufacture of electronic data processing equipments. These will be computers generated by the Computer Department. In France, CFTH has decided they are about ready to manufacture electronic data processing equipments. As you may know, Compagnie Francaise Thomson-Houston is essentially a sister organization as the result of a 1918-1981 agreement with General Electric which gives them the right to design and manufacturing know-how on any GE product delivered to a customer. In return, they pay a fixed percentage to General Electric. Under such circumstance, it is, of course, to the Computer Department's advantage to work very closely with CFTH as they enter the electronic data processing field, and this we intend to do. Before we leave the subject of CFTH, one word of caution, gentlemen. The agreement of which I have spoken does not obligate us to provide CFTH with financial, business, or commercial information.

In Italy General Electric has its subsidiary company. Cogenal, and although no firm commitments have been made in the area of computers, when we are ready to take steps into the Italian market, the way is open to us.

In Australia, the Australian General Electric Company has been reactivated, and the new president of this company will be moving there from New York in the near future. Here IBM is not so well entrenched and we not only have opportunity to be first, but are in an excellent position to move forward.

These are some key areas. They represent concrete and successful operations on which the Computer Department may depend. But they are by no means our entire world plan.

Undoubtedly, for example, we will be able to sell a few Phoenix made computers at New York City prices in many countries, but the disparity of labor is such that we can not in the long run consider doing business with American cost against foreign labor costs. This means that we must take steps to manufacture in the various countries we intend to serve. And this brings up one factor to which I have not given sufficient consideration in my talk so far. This is that the problem of getting established abroad is not so much that of adequate manufacturing facilities. . . I have already mentioned a few of our ways to such an end. . . as it is. . . First, where do we obtain the applications personnel, second, where do

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we acquire programming experience capable of programming in the language of the country, and third, how will we provide adequate service backup for our equipments at an economical figure. We believe we have the answers to these problems.

Two other items which have entered into our considerations are the availability of established in-place sales and distribution organizations closer to the computer market than our own international group has been. And the immediate need for a source of relatively unsophisticated tab equipments to serve the potential customers of future computer systems.

Also, in the off-shore market area, there is a very definite requirement for smaller size computers. For here, the ratio of small businesses is larger than we usually find in the United States. And here, too, we have made our plans.

Now, before I say, 'Good Morning', it is important that we both recognize the fact that what I have shown you here of our plans is about as much as you would see of an iceberg. . . that is the one-sixth you can observe above the surface of the sea.

The important thing, however, is this. As our plans become accomplished facts, you will be the first to know. Today, you are our representatives across the face of the nation, tomorrow, no doubt, you will be instrumental in helping the General Electric Computer Department to circle the globe.

I thank you now for the time you have given me on this spring day of year one in the Computer Department's international operations.


OFF-SHORE SALES

B. D. CREEDE

Ken Geiser has given you an excellent survey of the computer world as we see it at the present time.

It may seem so complete in fact, that you may wish to ask what we in sales are doing and what our relationship is to this department planning on computers.

In my talk today, I will try to do two things.. first, to explain our export sales plan and its relationship to the long range business planning. Second, explain where we are in our sales program.

There are details where the business planning operation and sales differ in analysis and approach, but in general this is due to the different restraints under which we work.

We in sales are, I must say, a little jealous of business planning who have seemingly boundless resources from our point of view since in making their plans they can, conjure up wealth and facilities, assuming the establishment of subsidiaries, acquisition of complementary corporations, or a joint venture with a top notch foreign company.

We in sales on the other hand, are confined to the stark, gray realism of available funds and recourses. Further, we must, in achievement of our goals, avoid commitments which would prejudice the inconstant and incomplete long range big picture. To do this we must work closely with business planning so that we will know their thoughts and contribute to them from our experience. . as we go ahead. As will be illustrated by our foreign selling activities to date, our most powerful source of business information is what we have learned by doing. We may get bruised a bit, but we learn.

In the past we have made substantial contributions to the business planning and in turn look to business planning to provide us with new resources with which to work as we go along in the future.

In beginning our activities abroad about a year and a half ago, we in sales took what we had to work with and with our understanding of the foreign market and began with little steps.

Our neighbor, Canada, was obviously the easiest step, and we started our efforts there in the fall of 1959. In Canada we had a wholly-owned company which was interested in expanding its product lines for the future. They had a mature organization with complete resources, trained people, equipment facilities, a nation wide sales offices, stable management, and a good currency. They did not however, know our business.

Our competitors were mainly American companies, some with substantial Canadian operations. In spite of a preferential tariff, English competition was low because of American technical superiority and closeness. There was peripheral (tab and typewriter) manufacture in Canada but no computer assembly.

I should, however, point out here that even in the case of Canada where we can go on vacation without passport, visa or money problems (except the problem of having enough). Even in Canada we are dealing with a different country with its

Page 64

different laws, money exchange fluxuations, tariffs and in most areas markedly differing practices and traditions.

For instance, we tend to accept our banking system as the obvious way to do the job, but really it is unique in the world. Other countries could and some will follow our lead, but they do the job differently with different controls and laws. In Canada, for instance, you can write checks on your savings or interest account and for most small short term loans you simply get the bank's permission to overdraw your account to the amount needed. You thus have, in effect a plus and minus interest and balances on a checking account. Checks are not normally returned and must be physically retained as long as twenty years by the bank. Trust work and home and automobile loans are not within the charter of commercial banks.

The customer is a super king compared to the U.S., because in effect, there are only five banks in Canada each with hundreds of branches all located across the street from one another. Lastly, even a lowly adding machine is not normally seen around the teller's cages, and people are used rather lavisly.

In Canada we can no longer deal in the same manner as we do at home even though two markets may lie as close together as Windsor, Ontario and Detroit, Michigan. Because the General Electric Company U. S. A. dare not for tax reasons own property, lease equipment or solicit sales in the dominion. Initially, Canadian GE had no computer organization, but by virtue of receiving the cooperation we had expected from CGE, we have been able to go ahead substantially meeting our goals for getting them into business; handling their' own sales, applications engineering, product service and financing, further, in accomplishing these objectives, we learned a good deal and established many principles of operation.

Looking back, three things stick out. . . one we found that our representatives management, although they may be "tops" in their own business, must be shown the unique features of the computer business, especially the traditional customer service requirements. two... because of the pattern of leasing set in our business, a separate company chartered in the country must normally purchase the imported equipment, lease it, and service it. The normal IGE sell from New York approach cannot be used. Three. . . . computer sales tend to be consummated more slowly abroad than at home because, acceptance of computer, is less complete than in the U.S.A. for many reasons.

Our second project, early in 1960, was Australia, with the help of IGE who had been studying the country for about two years, we in sales decided to probe for opportunities.

I think a little historical background would be in order here. In 1953, GE had sold its operation in Australia which was a joint venture owned by its mature daughter, the Associated Electric Industries limited of England and Australian General Electric. AGE then became only a corporation folder in a lawyers file in Sydney and AEI carried on the business and acted as our sales representatives. About 1958 it became evident that the growth of the Australian economy made it an important area for new General Electric effort and a thorough study was begun by IGE.

Late in the winter of 1960, the AGE was reactivated and we began our market cultivation by sending Jim Wylee down even before AGE actually had an office.

In Australia we found some conditions similar to Canada but there were major differences. We had a more equalized position with our U. S. competitors since there was no Australian manufacture of computer of peripheral items.

Here, however, we would really face the British preferential tariff since we were about equal to their transportation distance. Money was more tightly controlled and the Australians had a more pronounced individualistic national and political position.

We have had a full-time man in this market since February this year expect our first order within the next six months.

AGE now is going ahead with plans for an extensive marketing and manufacturing build-up with headquarters in Sydney.

The Computer Department is a pioneer in the new Australian General Electric Company, a company which is welcomed as a large step in Australia's much needed industrialization.

Again we learned a few more important things in Australia. For instance. . . . .

One. . . we found that sales could not be made by sending even a top sales engineer into a market for a few weeks of months. Sales were consummated too slowly for trip-selling techniques and as soon as our man left the market even for a brief return trip home, we, in effect, abandoned our prospect to competition.

Two. . . we learned also that international computer customers demand local roots as well as a local support organization.

In the spring of 1960, Bob Davidge, Far East power systems sales specialist of IGE and

I planned to go after electrical utility computer business which was seen to be coming up in Japan. We approached it by beginning with the stimulation of GE' s traditional Japanese distributor, the very large trading company named Mitsui Busan Kaisha. I can calibrate very large for you by saying that their gross sales are two billion plus per year. After discussions with Mitsui they agreed to send two men to Phoenix for training, one for process

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computer,

one for business data processing.

Our batting average on this project was only an even five hundred, but in addition to this we learned a lot about the business data processing situation in Japan and made strong friends. The tangible results all accrued to process computers ---four orders to date which total about a million dollars. We learned from our contacts with one of our Japanese trainees that Mitsui was a financial partner with Remington Rand in a computer venture in Japan and because of this we dropped our business data processing plans with Mitsui, at least for the time being. We goofed a bit here, but again we learned.,

You may have seen the two new Japanese visitors around our plant recently. These men are from Marubeni-Iida Company, our new distributor also a very large trading company. Mr. Honda is in our sales training course. . . Mr. Ichikawa who has now gone back is an application engineer here to help sell a GE 225 to his company's Osaka, Japan office, he will return for further training to become an application engineer for GE computers.

Again to illustrate the differences we encounter, I would like to mention a few points about the banking business in Japan. There is no personal check transit between banks. Banking is a trading function and your signature is an impression from a personalized and unique carved ivory stamp. I got a kick out of this stamp which is about the size of the last two joints of your index finger because its handle is hollow and inside it is a small stamp and handle, whose impression is about the size of a lead pencil eraser.

On a contract the large stamp would be used for the signature. . The little one would be used for changes. All legal signatures are made with these stamps, even inter-office letters.

Japan is a different world for computers requiring the oriental appreciation and understanding of his own business ways, and sales approach but benefiting from the help of American consultation in areas of advanced methods.

WE are making progress in Japan now, in a market, which is as Mr. Geiser pointed out, complicated by unique historic company relationships, government intervention, currency nonconvertability, language difficulty and oriental paperwork methods.

I see possible solutions for each of the above problems and possible success if we make the correct moves.

In Japan we got our first good view of the problem of language and customs and the need for us to consider them carefully in our planning. We also got a better understanding of our two major competitors especially the so- called international B. M. In the Fall of 1960 as a result of a request for a proposal from an old friend of General Electric, the Puerto Rico Water Resources Authority, I looked at Puerto Rico as a market for us to consider, IGE has a sizable marketing facility there. On the surface it looked easy to reach, easy to support, financially solid and an expanding market. I found, however, that our two major competitors had substantially neutralized the market for the present and the foreseeable future and this area was removed from our list for actions.

Our latest project Spring 1961 is Europe which is the most complicated and expensive market to reach, but should be the most rewarding of our foreign sales opportunities. You may think that the European common market will simplify our efforts greatly, but generally it will tend to make life easier for our competitors with local factories and more difficult for us in the early stages of our getting started. This will be true because of the rather limited European facilities which we have at the present time.

Here again a little more history. For some sixty years prior to 1953, General Electric had major interests in European operations through ownership, portfolio investment and licensing. By World War Two, however, the growth of strong local manufacture of electrical apparatus, appliances and lamps in Europe brought importation of General Electric U.S. made equipment to practically zero. Anti-Trust activity against General Electric caused the company to reduce its ownerships of foreign companies, even those it founded, to minority portfolio holdings, and previously broad licensing arrangements were curtailed as a result of decentralization. This contraction of relationships and European operations involving the company's traditional product lines occurred concurrently with the growth of international interest and a competitive European build-up in Europe in new product areas such as computers.

Our major U.S. competitors have on the other hand concentrated on their international penetration. I.B. M. for instance has factories in Germany, France, Italy, and England, and its total European sales and manufacturing personnel will run to more than 23,000 people. Strong foreign competition also exists in Europe.

I believe that you see that we have here, a challenging situation. It is much the same as your own with the added features previously mentioned. On our side is the fact that all levels of the company are interested in the development of international business in our new product lines, jet engines, atomic energy and automation... the latter including business data processing. We thus have top level support for our war. Business planning is working on allies and we are carrying on local actions with the volunteers we have and can recruit.

During the last year General Electric has purchased control of Compagnia Generale Elettricita of Milan and we are presently trying to work out a basis of cooperation with that Italian company. We also have other approaches in process which are short of the alternative of just buying your way in. That approach is, of course, very costly.

During the next few months we will  be testing

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these methods and may at various times be needing your help. We hope you will remember that you are part of a world-wide organization and that you will look for and pass on opportunities you see in doing business with your own customers.

Lastly, our future abroad will rest on your success here at home and we wish you great success...


BARTER WITH OTHER TRIBES

G. W. GAMBLE

By way of definition, the Special Accounts sales unit primarily serves the OEM. . . he can be a big market. . . he is an important market. . . he can serve us in a number of ways. the OEM is not to be over looked.

While most of our Department's sales activity is concerned with providing end users like banks, with our standard products, we consider it a definite advantage and plus business to provide the original equipment manufacturer with some of our products with which we can make a definite contribution. These include our standard products, with or without modification, sold to other manufacturers for incorporation into their products and systems, or even new or non-standard products sold to the original equipment manufacturer for resale. These include a class of devices which utilize our special engineering or manufacturing skills, which fit into out plans for standard product line expansion, or provide manufacturing load where needed.

Of equal importance are some special assignments which by their nature require marketing and other backup skills similar to those employed in selling to the original equipment manufacturer. I think this can best be realized by considering a division of effort in which selling to an end user is a more application oriented effort while selling to the original equipment manufacturer is more engineering oriented.

For example, there is much circuit and operating technical details which must be understood by the customer before he can integrate our equipment with his to form a system. In almost every case some modification is required of our equipment, and his to affect this integration. The responsibility of applying the complete system is, of course, his. There must be, therefore, a rather noise free communication channel between customer and our Computer Department Engineering Section.

Ideally, there must be sound economic justification for our relationship to a particular OEM to exist. We must complement their skills. It also must be clear that our talents are sufficiently unique that we can both take a profit at competitive prices for the final equipment or system. Now for a few examples. . .

I believe most of you are familiar with our relationship with NCR. This is typical utilization of skills which complement each other in the end product. NCR has long experience in the manufacture of equipment which is more on the mechanical side, such as their cash register and other office equipment. General Electric brought the electronic skills to the system. While NCR has gained some strength in the electronics area and we plan to essentially conclude our deliveries of NCR 304 electronic units to them, by the end of this year, it has been very important OEM business for us. We have enjoyed the leadership in magnetic ink character recognition and associated electronics for controlling document sorters as an outgrowth from its development for banking systems. We have provided magnetic ink character readers to NCR, Pitney Bowes, Ferranti Packard and others for their document sorting equipment, and we are currently negotiating with Cummins Chicago to provide our magnetic ink character reader and general purpose sorter control, to be used with their PERF-O-DATA line of equipment. Here again mechanical and electronic skills are joined.

AUTOMATED POST OFFICE

The General Electric Company has long had an interest in the post office modernization program. There is planned considerable data processing and control equipment for post office automation, and while little has materialized to date, we have been working with the food machinery and chemical corporation on their project to automate the Oakland, California Post Office. Letter, parcel and flat sorting machines are each under the direct supervision of a separate electronic memory control. An electronic directory contains the locations of some 14, 000

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destination bins and performs the conversion from a code, which is an abstract form of the address information and the proper destination bin signals. In this manner 106 operators will sort 670, 000 pieces of mail each hour.

A general purpose computer will be employed to do overall production scheduling, accounting and reporting. FMC is about to place an order for a prototype of the electronic directory. We are in an excellent position to receive this order.

The Bay area rapid transit district has been formed to develop plans for a wide spread rapid transit system for the five county metropolitan San Francisco area. A bond issue close to one and one half billion dollars will be placed before the voters in November. Electronic data processing techniques are being consider ed for. . . automatic train control, dispatch, fare collection, general data processing for financial accounting, operation scheduling and maintenance of inventories. Cities such as L. A., Dallas, District of Columbia, Montreal, Boston, metropolitan New York, Cleveland and others are actively considering modern rapid transit systems.

As an example of bringing our special manufacturing skills to the OEM, we are currently negotiating with Sperry Utah to provide magnetic core memory planes for their Sargent Missile Guidance Computer.

Other departments of our company are an excellent source of OEM business as well as an end user of Computer Department products. We have supplied engineering assistance to the Specialty Control Department on the logic design of a glass cutter control. They will use some of our printed wiring boards in this equipment. The Industry Control Department and the Communications Products Department will use units of our systems and components, such as printed wiring boards, 225 tape systems and even a complete GE 225 to complement their process control systems.

A good example of the development of a system which is the first of a new product line for the Computer Department, is the advanced information system for our Financial and Services Operation in Schenectady. Very briefly this system consists of two General Electric 225' s located at Schenectady and connected on line through wire links to remote file access stations located at General Electric sales offices and warehouses throughout the country. This will provide direct and centralized order and financial reporting services.

Now a brief summary of our products and services of current interest, for the OEM. We have magnetic ink character readers, and our general purpose sorter control, printed wiring boards, special magnetic core, tape, or other memories which require a minimum modification from our standard units. Special engineering assistance to other General Electric components.

Now what part do you play in this area of our business.

Let us take the hypothetical Kolossal Mfg. Corporation within your sales district which manufactures equipment for data handling. Up to this time, their manufacturing skills have been mostly electro mechanical. Competition in this age of automation forces them to improve the versatility of their product.

They call the General Electric Computer Department sales office, and ask you to talk with them about what GE products can do for them. Gather all the facts you can, if you think we have an opportunity here, contact me and we'll discuss it. If it develops that we can contribute we'll back you with engineering help. . . while for certain marketing strategy reasons it is not always clear that we want to do business with a particular manufacturer, you can, through a knowledge of our standard products and our engineering and manufacturing special capabilities recognize business opportunities and bring them to our attention. They then may be exploited by us. To give you the story first hand on the special engineering capabilities that you can count on here is Bill Bridge. . . . .


BARTER WITH OTHER TRIBES

W. H. BRIDGE

Thank you, George.

As you know, the Computer Department got started by selling things that we didn't have. Then, a few engineers were hired to bail us out, and to develop some new products to sell. Of course, this didn't discourage our sales people, they kept on selling things we didn't have. . . and the Computer Department kept on growing.

As Bob Johnson told you on Monday, Engineering has organized a group to help you sell bird banders, fish counters, and other things we don't have. This is the Special Systems Engineering Subsection.

We have set out to accelerate the growth of the Computer Department by doing engineering work

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which is based on specific customer requests. By engineering special modifications and attachments to standard products we can help you increase sales of existing products. By securing funded military development work you can bring in profitable business and we can increase our technical know-how for the development of new products. Even more important than this, we want to help you bring in that 'big job', another ERMA or 304. We want to work closely with you in seeking commercial opportunities to develop complete new systems which will expand our product line and create completely new businesses like the Computer Department.

From all of these special engineering activities, we want live information on what customers need, so that we can provide better products for you in the future.

To accomplish these objectives, we have organized three units in the Special Systems Engineering Subsection. The Special Business Systems Unit, managed by Paul Dodge, handles the modification of standard products. . . bird banders, etc. Many of you already know Paul through the inquiries he has answered for you. Paul, would you stand up so that the rest of the group can meet you. . . Thank you. The Military Systems Unit is managed by Bob Kettlety and I would like you to meet Bob. Thank you, Bob. I would also like to introduce Norman Poole, who heads the Commercial Systems Unit, but unfortunately I can't because Norm has just left Bell Labs and is somewhere between New Jersey and Phoenix, on his way to join us.

The Commercial Systems Unit develops new systems for commercial customers in which there is a large amount of new equipment in comparison to the amount of existing products used. An example of this is the order processing system which we are developing for the Finance and Services Operation of General Electric. This system includes a computer center in Schenectady with two 225's and several peripherals, including mass random access disc files. While this is a relatively large computer center with monthly rentals of about $30,000 the computer center represents only thirty per cent of the total system. Fifty per cent of the system consists of special data communications equipment such as the file access station. Seventy five of these units will be located in 31 cities throughout the U. S. Another major expense is the communication lines which will be leased from common carriers such as AT&T and Western Union. This system is one example of the big jobs we are expecting from you in the future. We are also working on bringing in big military jobs which are related to our products.

We are interested in the big jobs, but we want the little jobs, too. The ones that will help the orders-received budget today. To handle these, we have set up the 'Spec' procedure. 'Spec.' is our answer to the IBM RPQ system. It doesn't really change anything you are doing right now. What it really does is set up a procedure for us to report to you what we are doing. It also provides guide lines for giving us the kind of information we need to generate better quotations for you. A check off list of facts we need to know to process a spec quotation in your box, at the front desk. In the future we will publish lists of specs that we have completed. Options that are available by special request will also be referenced in the data book by spec number.

There are many things about Special Engineering that I want to discuss with you, such as the costs of doing specials and the ways of getting a quick answer from us. Some of these problems are outlined in the spec data in your mail box. From this point on, we want to work closely with you in developing the technique of getting the feature you need to make a sale at the price the customer will pay.


BARTER WITH OTHER TRIBES

G. W. GAMBLE

Thank you Bill. . . in addition to this Engineering support, we can keep you informed of special manufacturing skills, which we can and desire to bring to other companies and too, while our policy concerning particular OEM business opportunities will continue to change, we can keep you informed of this policy. For example, both Remington Rand and RCA have, in the past, approached us with a proposal to enter into a joint development of the document sorter. They could then supply this sorter with their banking systems. We declined to accept this proposal, however, there may be other similar proposals under different circumstances which we would accept. These, of course, must be carefully reviewed by our management. And finally, we can keep you informed of current activity with OEM's and special customers, in particular regions, as up to date examples of the kind of products and services that we can and are interested in providing.

In summary, we can bring to the OEM our special skills and the available facilities of the company as a whole as well as our Computer Department. The OEM can provide an enlarged market for our standard products. . . additional use of components of our standard equipment to balance manufacturing loads where needed and provide a measure of future product offerings by manufacturers who are in fields allied to ours.

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NEW MOTHER LODES

D. F. CAYCE

This is blue sky. I show it here to remind you that there is no blue sky law in the computer business.

Putting it another way 'the sky is the limit' to the possibilities for serving customers with our products. Our own imagination and abilities are the only limitations that will delay our providing equipments and programs which are the opportunities that exist in this blue sky area.

Out of just such emptiness some six years ago came the idea and opportunity of MICR to break the paper handling bottleneck in the Bank of America. You all know how this has spread beyond the Bank of America, throughout all banks, and is now beginning to undermine those piles of punched cards that surround other customers.

The function of Advanced Systems Sales is to develop projects similar to the Bank of America which will lead to additional new concepts in equipment or programming which in a broad market. Because of the long term headquarters follow up work associated with such projects, continuing sales responsibility is usually retained at headquarters until the initial contract is completed. For example, the sales responsibilities for the Bank of America and Western Reserve University are handled in advanced systems.

What types of advanced systems are we looking for?

We want, ideally, additional large scale projects which will provide new system approaches, the development of new equipment and new programming all of which will contribute to the advancement of the art and expand the usefulness of computer automation to additional businesses.

An example of such a project would be a new approach to customer billing for large businesses like the Bell System Companies.

Many projects will naturally be of much smaller scale and might involve but a single area of development. Our information searching selection using the GE 225 for Western Reserve University is an example in which special programming is a new area.

Where will such projects be found?

Most will come from customers whose needs are expressed or developed by growth, changing conditions or constructive analysis either on their part or with our assistance.

Each of you has one or more customers that keep you on your toes with questions on how to do new jobs which today may be impractical.

A second and a most constructive source of new projects exists within our own organization. Ideas for equipment and programs constantly develop within the Laboratory, Engineering, Application, Product Planning and Sales. Many must be filed away for future use but the most obvious can be matched with customer needs in one or many areas for development into the product line.

A third source comes from ideas originating with other manufacturers. Every group working with prospective or actual customers continually develop new computer uses and as soon as these ideas become public we and others strive to develop and improve the vest applications.

Who are the groups that develop new applications?

Quite naturally, product planning participates in the development of any new system to lend their guidance for widest customer acceptance.

In the Applications Section, the Systems Research and Development Subsection under J. Levinthal provides research and analysis, and develops the new techniques, system design and computer applications required for the application.

In Engineering we have the Special Systems Engineering Subsection under Bill Bridge who work with the other groups to design and engineer the special equipments which the new systems require.

While these groups share the responsibility for the development of specific new systems and applications for customers they have the assistance and cooperation of all others in the department for any help they need.

How can you the salesman help in this area?

You are the primary contact with customers and can provide both customer generated ideas and individual ingenuity for real advances.

We will appreciate --- we want --- your bird dogging of ideas and will be glad to work with you in

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the headquarters spadework needed to help you with your customers on their unusual requirements.

Don't leave these 'far out' ideas in orbit.

Bring them in.

So our outer space will be turned into a galaxy of useful satellites.


ACRES OF DIAMONDS

V. L. SCHATZ

Good Morning:

By now you fellows have all heard of the early history of the Computer Department....You know of the sizeable block of business we received from the Bank of America contract and how this was followed by the National Cash Register contract. You, of course, are also aware of the solid block of support we received from our corporate funds. These three blocks of business have been and continue to be vital blocks in the financial foundation of the department. However, a fourth block is necessary in order to complete this foundation and to assure ourselves of a base from which we will grow to greatness in the Computer Business. Of course, I'm talking about the General Electric Internal Market. You will note that this foundation includes no block of business labeled "Defense Development Contracts".

We can take justifiable pride in the fact that we are the only manufacturers to become established in this business without significant direct government aid. However, we are also the only manufacturer with the broad array of sister departments from which to draw business.

Let's take a look at this GE market. . . This gold mine in our own back yard. It has been and continues to be our biggest single potential customer. To date, this market has provided us with orders for 47 general purpose systems in 43 installations. Certainly, these systems vary in configuration, but they add up to a total monthly rental of approximately $528,000.

I am sure that by now you must be going through the mental manipulations of subtracting the sold installations from the number of departments in order to arrive at a rough figure of remaining sales potential. You may even be further reducing this figure by the number of installations you expect to sell in the next month or two.

Let me make this job a little easier for you. Here is our immediate potential in the GE market, as closely as we could determine it.

133---EAM installations

20 ----305's

36---- 650's

15 ----1401's

4 -----704's

1 -----705

You all know what a 705 is. 705 times 2 is 1410. This makes it a half fast 1410.

1--- UNIVAC II

4---7090's

2---2000's

3---S.S. 80's

1---Burroughs 205

1---Burroughs 220

2---RPC 4000's

7---G-15's

Let's take a look at these installations in terms which are easier to understand. The GE general purpose lease dollars of $528,000. vs. all others of $1, 564, 000. per month. Even allowing for the fact that our equipment is replacing existing equipment in many cases, this will still leave an estimated competitive equipment lease rate of at least one million per month probably closer to 1. 2 million. That impresses me as a market still worthy of our best efforts. Thar's gold in them thar hills, fellows, and that's no superstition.

Your competitor is not making it easy to replace this equipment. Just about the time you think you have made our equipment attractive to your customer, your competitor comes along with a used equipment sales price which is also very attractive, particularly to the unwary buyer. Believe me when he offers these low sales prices, he is not being overly generous. He knows better than anyone else what his junk, pardon me, equipment is worth. By no stretch of the imagination can this equipment be considered as first class merchandise. Our customers need to be told this.

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They should be made aware of the obsolescence problems, the service and reliability problems, the high maintenance costs and the general problems which can result from excessive down time. He also needs to be warned about the difficulty of maintaining a qualified staff of people interested in working around this obsolete equipment. . . computer people are undoubtedly the most mobile of any professional group. This used equipment problem has been a headache of major proportions to our competitor and unfortunately our sister departments are too often supplying the aspirin. Thus, these used equipment sales within GE cut us two ways. They represent profits we don't receive and they solve a very sticky problem for our competitor.

Other than the pure dollar value of the GE sales, let's look at some of the less obvious benefits. We have in GE the most knowledgeable aggregation of systems people, data processing people and computations people in the world. Most of these people are anxious for us to succeed. They can and will help up if properly approached. They want to feel that they are making a contribution to the growth of the Computer Department. I fully believe that one of our single greatest strengths in this department is this vast reservoir of talent. We've been advertising along these lines for several years, and rightly so. However, this reservoir is no good to us unless we can tap it. Get to these people... encourage their participation in users groups, encourage an exchange of new applications and program concepts, encourage then to talk up our equipment, get then on our side by erasing their identity with the competitor. The GE users can and will form the nucleus of the most proficient group in the business. This will truly become an extension of the Computer Department itself. These people represent the greatest proving ground in the world for our hardware, software, applications concepts, programming concepts, etc. Their applications cover the entire spectrum including manufacturing, finance banking, engineering, utilities and you name. No other manufacturer has anything close to such a laboratory at his disposal, nor does he have the financial facilities to develop such a lab. Over the years, our largest competitor has regarded this GE lab as his own private domain and he has drained literally millions of dollars worth of direct benefits from this lab. Like the farm girl who went to the city, we ought to start selling what we used to give away.

As another benefit of this GE business, it's difficult to even evaluate the influence our GE components have on other sales in a given geographical area or industry. Our professional people are very active and highly respected in local technical society meetings. Their decisions have a profound influence on other people. There are 82 years of solid achievement standing behind that GE monogram. Sure it has taken on a few nicks and dents over the years, but name me a major corporation that age that hasn't. As a matter of fact, real quick like name me another 82 year old major corporation.

In looking at the GE market it is easy to make the mistake of assuming that the market is becoming saturated. This calls to mind the story of the new salesman who was hired by the Simmons Mattress people. After one week, he returned to headquarters with the story that there was no sales potential in this field because everyone he talked to already owned a bed. Certainly, we are not in a position like the automobile companies where 'we can develop planned annual obsolescence of computers, however, you can be certain that our next generation will be on the market before we have converted all existing installations to this generation of Computer Department offerings.

Our GE market will never be saturated!

Along with the danger of assuming saturation, we must never make the mistake of assuming that this is a captive market. It's open to everyone in this business, and that includes a number of companies. Your major competitor is doubling and redoubling his efforts within GE. This is right in line with his long standing policy of applying efforts where he hurts the most. Right now, that is the General Electric Company.

Applying a few of the principles of SSM, let's analyze this customer you are trying to woo. What does she look like?

First, you must recognize that five or ten or twenty years age, she was wooed and won by our competitor. Surely, she was out of her class, but it was the only man available.

This customer can be tough. She can not easily be encouraged away from the man she has been sharing her bed and board with for all these years. She's jealous of her independence and decision making responsibility.

As most of you have found out, she's not above needling salesmen from other departments, such as the Computer Department.

She is, however, usually quite cooperative when the facts are fairly presented.

In order to sell this customer, we will have to regard her pretty much like any other customer. She must be sold. A salesman should be assigned each GE account and all of the appropriate people must be aware that our sales representative exists to help them. Don't be afraid to call on all levels and types of management at the customer's site. For example, just ask yourselves. . . in your GE accounts, in how many cases can you identify the managers of manufacturing, marketing, and engineering. Your competitors certainly has no such fears. Our customers must be made to realize that our products are competitive and will serve their needs.

We must point out the advantages of GE doing business with GE. An obvious fact, you might say, but you will convince yourselves otherwise if you

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consider the cases you know where our Data Processing people identify themselves with a competitor's equipment first and with GE second. If they must be convinced, cash flow analyses can be made available to you.

Use other department and services people to help you sell. Many of these people have demonstrated a willingness to help. They recognize the benefits accruing to all of us when the business is kept within the family. We have received some very effective assistance from such contacts.

Call on headquarters for support.

Use your high level management contacts. You all know the Cordiner philosophy of 'every man a salesman'. Our management has demonstrated more than a willingness to step in and help make a sale. Use these contacts with discretion, but use them.' In other words, use the monogram as a banner, but not a bludgeon.

Also, and very important, is the fact that you must follow up on your sales before and after installation to assure satisfaction. Your customer must be encouraged and assisted in using his machine to the utmost I think it is safe to say

that no computer manufacturer will make a nickel in profits on any line of equipment if no machines are used beyond one shift. A satisfied customer is still our best salesman and a dissatisfied customer is the salesman for our competitor. You know that all of our mistakes circulate around GE at leased wire speeds! We must minimize the cause of complaint. I've mentioned that you should call on headquarters for support. Our one and only function in internal sales is to help you see the GE market. . . now and in the future. Included in this support are such items as: Answering questions from the field. Developing and demonstrating sales tools and techniques such as the 225 slide presentation. Assisting with feasibility studies. Assisting with sales calls, particularly by providing answers developed during the feasibility studies.

Setting up and conducting visitor's tours at Phoenix. Incidentally, the working equipment has been an extremely effective sales tool in convincing our doubting customers. Developing better information sources and reporting techniques. Extending sales training through on the job assignments. Providing equipment for display at technical meetings. And, of course, we could list a host of other items if time permitted.

At this point I'd like to just summarize my tale of the new west concerning the GE market: Our GE customer is big and mighty important.

The GE market is not saturated and will not be. The GE market is not a captive market, our GE customer must be sold just like any other customer. Above all else, don't neglect her, your competitor doesn't.

In closing, permit me, if you will, to quote two brand "X" salesmen. One... "Current relations are somewhat strained at blank department. We spent seven months trying to make a sale. You people spent two hours and get the order. " No comment. Two... "Even though we appreciate the GE business, GE is no longer our biggest commercial customer. " I can only add to that comment by saying 'keep up the good work fellows. We are shooting for last place on the brand x sales chart.'


SCALP COUNTING

C. DeGABRIELLE

The original copy of the schedule for this sales meeting listed this part of the program as 'Project X'. As we worked with this presentation it became increasingly evident that Owen Lindley had been clairvoyant in this designation since we found ourselves on the spot when it came to adequately covering the broad areas involved.

I guess in order to set the stage for our talk I would like to tell you about a set of twin boys that were causing their parents a great deal of concern.

The boys were approaching their twelfth birthday and although they had been born as identical twins, and had grown physically as identical twins their natures had developed as exact opposites.

One boy was the eternal pessimist and the other was the eternal optimist. In an attempt to achieve a more even balance in their sons personalities, the parents enlisted the aid of a psychologist. The doctor examined the boys together and then separately and at the conclusion of the examinations met with the parents. He said, 'I believe we can help the boys. They have a birthday coming up in a couple of weeks and I would like you to try my first treatment. ' First go out and buy a dozen nice small presents, wrap these in plain brown paper and put them in a room for the eternal pessimist. Next get the biggest box and the brightest ribbon you can find, fill the box with horseshit, tie it with the ribbon and put it in a room for the eternal optimist. On their birthday let the boys open these presents and I believe you will find a change in their nature.'

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The parents followed the doctor's advice and on the boys' birthdays led each boy to the room containing his present. They stayed to watch the eternal pessimist. He entered the room with his customary gloomy approach and looked over the table on which his gifts were placed. 'Well, here it is my birthday again, , he said, 'and I won't get anything I like. Look at that, this year they didn't even bother to wrap my presents in pretty paper. ' With that he unwrapped the first small package and found a beautiful watch, he opened the next package to find a pair of field glasses and now he began to unwrap presents with anticipation and as each new object was revealed he became more elated. When he had completed opening his presents his whole outlook on life had changed.

The parents were happy with this result and hurried to the room with the eternal optimist. Here the big red ribbon had been torn off the box and thrown in one corner of the room, in another corner was the top of the box and inside the box tossing handsful of horseshit out over his shoulder as fast as he could, was the son, as the parents entered the room they heard him say 'There must be a pony in here someplace. '

It is with this same spirit of optimism that we introduce you to our pony, the data accumulation and data communication family of products. It is our desire today, to acquaint each of you with our present products and plans and in so doing, to instill in you a high degree of enthusiasm for this line and its potentialities.

For the past year there has been a program in General Electric to get us into the data accumulation and data communication business. Some of you may have come in contact with various aspects of this program and with some of its products. To date, our sales, application and proposal activity has been restricted to internal General Electric contacts.

As of today, the General Electric Company is launching itself across a new frontier into the general marketing of a line of data accumulation and data communication products.

We are announcing through the press and industry journals our entry into this field with the 3100 "Shoptrol" Factory Feedback and Control System and the 3101 Data Collecting System. Advertising is being placed and will appear in July publications announcing these products.

Now that you are in a new business, lets find out something about it.

First, lets talk about our products. The 3100 "Shoptrol" factory feedback and control system is in current production and the first system has been partially delivered to the Metallurgical Products Department of General Electric. This system provides a shop monitoring, control and communication network to monitor and display at a central production control center the status of individual work stations and/or machines.

Located at each work station or machine is a sensing device and operator control station. The operator control station transmits, to the central production control, the condition of its workstation or machine. This status indicates whether the machine or station is: shut down, in set-up, running or in alarm. This display is initiated by the rotation of a key operated switch at the operator control station. As each piece is produced, the sensor transmits a signal to the status monitor in the central control center where a counter is updated. Associated with the monitor is a balance counter which may be set to the desired quantity of pieces on a job or to the total length of time the job should take. As time elapses, or as pieces are produced, the balance counter regresses to zero, and when it is reached a contact closure on the balance counter causes a "job finished" or "time expanded" alarm to be initiated.

The central control center is the location for the termination cabinet which houses the master programmer, power supplies, a termination patch bay, an audio amplifier and space for mounting twenty status monitor panels per vertical bay. A maximum of 160 status monitor panels may be associated with one system's central termination cabinet.

The system has a built in voice communication channel which is reached through the telephone jack at each control station. This allows supervisory or service personnel who have been dispatched to the station to talk with the central control station dispatcher. Optional accessories include a simple operator alarm station and an operator page station.

Where the full capabilities of the operator control station are not required, this alarm station is used. This enables the operator to notify the production control room of an alarm condition at his work station or machine by flipping this switch. The dispatcher can then arrange for assistance to be sent to the operator.

The operator page station can be used in conjunction with the operator control station or by itself. The eight position switch allows the operator to request specific service from the central control center. By setting his switch to a predetermined number the operator could for example request: more material, a maintenance man, crane service, a material handler, an inspector, a foreman or even a relief operator. The setting of the switch at the operator page station results in an appropriate light indication at the production control center. The inputs to the 3100 system are: sensed completion of operation and operator originated station or machine status. The outputs are: visual and audible displays of work station and machine conditions as well as visual displays of production counts. With proper accessories the outputs may be retained in punch cards or punched paper tape.

The 3100 system offers manufacturing management a tool to better utilize the facilities of their shop. The 3100 can be used to control material both inventory and in process, it can assist in the

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level loading of men and machines, it provides the information to allow proper mating of man to machine and finally the 3100 presents a current display of all monitored machines and work stations thus allowing decisions to be made on the basis of actual status of the shop rather than on history. Since, labor, material and facilities are the basic elements of cost in any manufacturing operation, it follows that the better management can control these these items the more efficient and less costly their operation will be. In the 3100 system you can offer your customers a tool to reduce the cost of their operations.

Just to be sure that each of you will be overweight in your luggage on your return trip home, we are adding one more kit to your load. Among other things in this kit you will find a sales brochure on the 3100, an information manual on the 3100 and a price list covering all items in the 3100 system. You will find these kits in your rooms when you return there.

The 3101 system is a data collection system, designed to provide transmission of fixed and variable information from various remote input areas to a central accumulation point.

The remote input stations, called collectors, convert information from punched cards and variable switch positions into electrical impulses which are then transmitted over a communication channel to the central accumulator. The collector station reads eighty column or shorter cards at sixty characters per second and transmits this information to the accumulator. Additionally, up to nineteen pieces of information may be added to the punched card details or. and transmitted to the accumulator where it becomes a part of the stored data. This additional information is added by means of nineteen rotary switches on the collector, that appear on the face of the unit and eight which are behind the locked panel. The heart of the collector station is the high speed card reader which is a General Electric development.

The accumulator receives information via the communication channel from up to ten collector stations in Hollerith card code. Internal logic in the accumulator converts this information to punched tape code and checks the tape code to assure that an acceptable character is being punched. Additional logic in the accumulator controls the multiple collector stations to assure that only one station transmits at a time and further assuring that each collector station has equal opportunity to transmit messages. To the received information the accumulator station adds fiscal week and hour data thus chronologically identifying each message.

The inputs to the 3101 system are punched cards and variable dial settings and the output is eight hole punched paper tape. This paper tape maybe used to obtain hard copy by feeding it to a Flexowriter or it can become direct input to a computer.

The 3101 system is in final pre-production evaluation and shipments are scheduled to start in July. The more we work with this system the more its versatility of application becomes apparent.

Certainly in manufacturing operations such as: an inventory control system, a production control system, an input system for payroll, a quality control system and a sales and finished goods control system, the 3101 has a wide application. In addition, there are applications in chain and retail store areas to control inventory and to order supplies from a warehouse, in hospitals to keep patient and drug records, in service shops to maintain work flow and to control inventory in utilities to update customer usage and to generate statistical control of facilities, and in small municipalities to handle tax records and for personnel control.

Once again as in the case of the 3100 system the 3101 system allows your customer to make better use of his facilities, manpower and materials thus affecting a reduction in cost of operations, which leads to greater profits.

An information bulletin on the 3101 and firm selling and lease prices on both units of the 3101 system are included in your kits.

At the present time in the data communication field we are developing equipment to satisfy the needs of General Electric ' s Financial and Services Organization (FASO). This equipment allows communication between machines in machine language using commercially available communication channels.

One example of such communication equipment we are developing for "FASO" is the data transmission controller. This unit will unload stored information from a 225, or similar computer, and prepare it for transmission over a communication channel. In the reverse direction it will edit and prepare incoming messages for computer storage or inquiry. This preparation for transmission and editing prior to computer entry consists of: multiplexing, adding and checking parity bit for blocks, adding and checking parity bit for individual characters, updating line status in the computer, add blank transmission areas, compress out blank reception areas, automatically interrupt at end of message and turn line around for opposite mode of communication.

None of the data communication equipment is at this time ready for external sale, by fall we should have information in your hands on the first products in this line with early 1962 deliveries to customers. This is an extremely important area for us. AT&T estimates that nearly 80% of their communication traffic will be in the form of data in five years.

The data accumulation and data communication family of products are being organized here at headquarters on a product line basis. An engineering group responsible for development and, production engineering is in place. Cess Krygsman is manager of a Product Planning group with responsibility to round out this product line and to provide us with a complete family of products which are competitive in price and performance. A headquarters sales group has been organized to give you the support needed to sell these new products.

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In this area of support our first effort is the kit which you will receive here. In June and July we expect to visit with you in regional meetings to further acquaint you with these products and their application. As prospects develop and you need additional assistance headquarters specialists are available to you. We also plan to train specialists in data accumulation and data communication equipment with an eye toward establishing these specialists in the field to serve you in a support area. By the end of the year we want to have in each sales region at least one installation of 3100 and 3101 that can serve as a showplace for prospects.

With this planning and with this backup we issue a call to action to each of you. Learn about this new family - promote its sale in your area - and use it to get your prospects machine oriented. These products should take you into several new classes of customers. They can pave the way for future computer sales - and in themselves they are big business. Don't underestimate this product line and its business potential. A lot of people are going to take their first steps toward machine control of their business by installation of data accumulation equipment, others are going to find that these equipments


SIMPLE AUTOMATION FOR NUT-BOLT BUSINESSES

satisfy their entire automation needs. Make no mistake - this field can be an extremely attractive business. A market forecast indicates that in ten years the served market in data accumulation area alone will grow from approximately ten million dollars in 1961 to 500 million in 1970. I am sure that you can see from this $2.5 billion potential that even obtaining a modest percentage of this market results in a sizeable business. Since we are entering the business with full intention of becoming the leader, get on our pony and spread the word that General Electric simple automation is here.

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