THE NAME OLDFIELD IS ASSOCIATED WITH RUNNING FAST

There is no taller tale than the TRUE tale of the beginnings of the General Electric computer business.  So throw away any business school concepts you may have of thorough market analysis, careful planning and organizing.

Substitute instead a philosophy of IMPLEMENT - BEFORE THE PLANNERS STOP EVERYTHING!!!

History

When histories of the computer business are written they will undoubtedly mention a number of you gathered here. Unfortunately, they will likely omit mention of one of the business' principal pioneers and promoter --  BARNEY OLDFIELD. 

Without Barney there would never have been a General Electric Computer Business.  In the face of severe and constant obstacles, Barney single-handedly mouse-trapped GE into the computer business and then bootlegged it's implementation while GE's management was distracted by a major reorganization. To the extent that the GE computer business made a lasting contribution to the industry, it is Barney Oldfield's legacy.  

But I'm getting ahead of my story.

ORAC 1952

My association with this story begins in 1952, when I was Supervisor of Accounting in GE's Electronics Laboratory, which built ORAC, one of the earliest digital computers, for Wright Field.

Charlie Wayne- later the Director of the Computer Science Laboratory at Syracuse University- was in charge of this effort. One of his engineers was Curt Cockburn who later came to Phoenix and now lives just north of here in Cave Creek.

As a result of ORAC's success, Business Plans were periodically prepared by various GE departments requesting permission to go into the Computer business. I was drawn into assisting in the preparation of these plans since I had what few cost numbers were available on computers.  I did this reluctantly as the plans preparation required considerable time and were consistently returned  from Ralph Cordiner, then GE's Chairman, with a big "NO! RJC" scribbled over them in orange crayon.

Metcalf Report 1954

In 1954-The Famous Metcalf Report on the future of the Electronics Business was issued. This was a market research report on the future of the Electronics Industry, prepared by George Metcalf, GM of the Electronics’ Division's Commercial and Government Equipment Department. The Metcalf Report's chapter on Electronic Computers, as we called them then, forecast that electronic computers, believe it or not, would become commercially feasible and would emerge as the fastest growing segment of the electronics market.

This chapter on Electronic Computers was authored by a Clair Lasher.

Lasher Business plan -late 1955

Thus, in late 1955 the prescient Clair Lasher, under the auspices of the Technical Equipment Department, located at Electronics Park in Syracuse New York, orchestrated another business planning effort to go into the computer business.

Again, Ralph Cordiner returned it with his customary, "NO!! RJC".

As part of this effort Clair Lasher had asked the Manager of the Microwave Laboratory, Palo Alto, California, to look into the work the Stanford Research Institute ("SRI") was doing on the ERMA computer system for the Bank of America. Remember that this was in the days of the propeller driven DC 6 and the West Coast was a long way from Syracuse.

ENTER BARNEY OLDFIELD

Barney Oldfield, the Manager of the Microwave Laboratory, was a consummate promoter and a man with a hearing defect - HE COULD NEVER HEAR THE WORD NO!!!

Barney, whom Clair Lasher asked for help, was always looking for reasons to expand the Microwave Lab. and thought he saw an opportunity, with a SRI connection, to become the Computer Laboratory as well.

Barney reported to Dr. Haller, General Manager of the Laboratories Department.  Haller had a philosophy, and a plan, to build small laboratories adjacent to universities with specific technologies. i.e. the Microwave Laboratory at Stanford, the Electronics Laboratory at Syracuse for advanced circuits and silicon and the Advanced Electronics Center at Cornell for infra-red ray research and golf putters. (Putters, incidentally, rank among the half dozen largest ventures to have emerged from this group assembled here.)

In late 1955 Barney sent an appropriation request to Syracuse that envisioned the Microwave Lab expanded fourfold to produce the ERMA system for the Bank of America.  

Meanwhile Dr. Haller, in what he considered a real coup, had hired Dr. Robert Johnson - boy genius- to head up a Computer Laboratory to be established at Penn State, where Haller had been Dean of Chemistry and Physics.

With his Penn State plan foremost in his mind, Dr. Haller gave Barney's Palo Alto plan to me, I was then Manager-Budgets, Measurements and Auditing for the Department, with instructions to "make a list of all the reasons to say NO!"

In early 1956 Barney flew into Syracuse with George Trotter, his Administrative Assistant, to get his plan approved.  Trotter, who was not invited into the meeting, waited outside. Haller, normally a mild mannered man, did everything but jump up and down on his desk saying NO, NO, NO, NO!!!!

As I walked out of the meeting behind Barney, George Trotter grabbed his arm and asked "How did it go?!".  Barney replied, "Very good, he's weakening".

The ERMA Contract

During this period, Barney made a formal proposal to the Bank of America to finish the development and manufacture the SRI ERMA

system for the bank. This inches thick proposal was made on the letterhead of a non-existent Computer Department. It included plans for the

Microwave Lab. expansion, which Dr. Haller had so resoundingly rejected, and showed Dr. Johnson--without his knowledge—,as Manager-Engineering.  George Trotter was listed as Manager Finance though he lacked the required GE credentials for that position.  Other section manager spots were filled with Microwave Lab personnel of doubtful pedigree. Pictures of the Microwave Lab., the Advanced Electronics Center, and two of the Electronics Laboratory--one taken from the front and another from the rear--were included to demonstrate GE's facilities and manufacturing capabilities.  (These pictures-and Dr. Johnson's-were available in a Laboratories Dept. brochure).

I've never known how much Al Zipf of the Bank of America was a part of this subterfuge, but I've got to believe he was in cahoots with Barney all the way.

 The Industrial Computer Section

In February or early March 1956 Ralph Cordiner, exhibiting a change in form, followed his NO! to Clair Lasher's Business Plan with a letter of explanation. The key passage in that letter was:

"UNDER NO CIRCUMSTANCES WILL THE GENERAL ELECTRIC COMPANY GO INTO

THE BUSINESS MACHINE BUSINESS.   HOWEVER, SOMETIME IN THE FUTURE,

IN SUPPORT OF OUR HISTORIC BUSINESSES IT MAY BE NECESSARY FOR US TO GO INTO THE PROCESS COMPUTER BUSINESS."

At that point Barney Oldfield flew into Syracuse with a letter of intent from the Bank of America for $30 million of ERMA systems.!!!

In a hastily convened meeting of Dr. Baker, General Manager of the Electronics Division, Dr. Haller, Ike Karr (Dr. Baker's Divisional Manager -Engineering) and Barney it was decided the ERMA system was "A ONE CUSTOMER SPECIAL-PURPOSE PROCESS COMPUTER FOR THE BANK OF AMERICA".  Thus, the letter of intent was accepted as being in line with Cordiner's memo.   This, in spite of the fact that the letter of intent provided for substantial royalties to the B of A from sales of computers to other banks.

Upon accepting the letter of intent Dr. Baker told Barney that he, Barney Oldfield, was to be held personally responsible for seeing that the ERMA contract was fulfilled.  The letter of intent was accepted in the name of the Industrial Electronics Section of the Technical Equipment Department headed by Clair Lasher, who had fathered the business plan.

Characteristically, Barney took the warning about being held responsible as a go-ahead to head up the effort and did not hear the word "Industrial" or "Section" in the title. Besides,  he still had all that stationery which said Computer Department and it would be a shame to waste it.  In addition there already was a Section head: Clair Lasher.

OLDFIELD ASSUMED HE HAD BEEN APPOINTED TO HEAD A COMPUTER

DEPARTMENT and later graciously offered the position of Manager -Marketing to Clair Lasher.

He then set to work to flesh out his new DEPARTMENT. The first man put on the payroll was Ken McCombs - Manager Finance, to whom Barney had already promised a position with his expanded Microwave Lab.  Ken was a Californian, who as Plant Accountant for the GE flat iron plant in Ontario, California had the only GE financial job west of the Mississippi.  His position had been abolished and he was desperately trying to stay on the West Coast.  Barney told him the business was to be located in Santa Barbara.  Second on the payroll, as the National Sales Manager, was Owen Lindley who also received a commitment he would become 

Marketing Manager if Clair Lasher didn't accept the position. Barney, who liked to neutralize his detractors by hiring them, asked Ken McCombs -who had neither met me nor interviewed me- make me an offer I couldn't refuse.  I was the third person on the payroll as Manager- Budgets and Measurements to legitimatize his ambitious forecasts.

I don't think Barney ever had a meeting with Bill Morelock, the General manager of the Technical Equipment Department, who he now presumably reported to as the Industrial Computer Section.  As self-appointed General Manager of the Computer Department Barney set about hiring section managers. Since time was of the essence in making this a "fait accompli", opportunity's lighting struck several individuals, who, because of their immediate "no questions asked" availability, suddenly found themselves section or sub-section managers.  (At a later date I overheard him remark to Audrey, his secretary who was annoyed by one of them, "Don't worry Audrey, his job will soon outgrow him")

In the meantime, Clair Lasher, understanding the true meaning of Cordiner's memo and the "tenuous" nature of the ERMA proposal, was trying to distance himself from this activity.  Ultimately, Clair, faced with the "fait accompli" had to decide to either join-up or sit by and not participate in the unfolding of his vision of a computer business.

Site Selection

Barney, who believed in "out of sight out of mind", (as you field salesmen know, the farther from headquarters the better) and buttressed by his sojourn in far off Palo Alto, immediately set up a site team to "get the hell out of Syracuse".  This sat well with those who were suddenly propelled into positions above their expectations and local reputations.   In fact, they immediately

began running around the country like CIA agents, leaking the secret that the mysterious company X was GE, and being royally wined and dined by Chambers of Commerce, Realtors and other such community builders.  Clair Lasher, being the only experienced Section Manager, and well aware that this fledgling could not survive without the infrastructure provided by Electronics Park and of the over capacity existing within the Park, stood aloof from this Keystone Kop activity.

While all this was happening, Dr. Baker reluctantly retired and his Electronics Division was divided into three divisions.  The announcement of the Division breakup also announced a new

Industrial Electronics Laboratory reporting to Dr. Haller, Dr. Haller wanted Don Garr, from the General Engineering Laboratory in Schenectady, to head this new operation-- but did not want Ken Geiser to come as part of the deal.  I was in Dr. Haller's office when he gleefully told someone on the phone that he had managed to sell Geiser to Barney for "that computer fiasco".  In any event, Geiser, whose his wife Pat was deeply involved in community activities, wanted to stay in Schenectady with his troops.

I will not go into the comedy that was otherwise known as the "Site Selection Study".  While California sites were preferred, the Bank of America, which was exempt from use taxes but not sales taxes, did not want us in California at the cost of $1.2 million in sales taxes.  Suffice it to say, Phoenix won the wining and dining contest and Phoenix was selected as the site for the Computer Department. An independent SRI study was then commissioned to justify the selection of the Phoenix site. Naturally, this study selected another site.  But, after SRI was informed our initial problem was to attract experienced computer engineers, a follow-on SRI survey showed Phoenix to be the preferred site by the engineers. (Which, incidentally turned out to be true.  Regardless of how chosen, Phoenix proved to be a good site.)

The site was therefore chosen, much to the surprise of Bill Morelock, General Manager of the Technical Products Department, to whom the Industrial Computer Section was presumably reporting, who had no idea a site study was needed, especially considering the excess capacity in Syracuse.

One interesting aside to this was a turf battle waged against Harrison Van Aken, the General Manager of the Communications Equipment Department, over Colorado Springs as a site. It was high on the list of preferred sites for the Computer Department but Van Aken advised us that he had "dibbs on it" for his Communications Department and would block us from going there. He was ultimately forced into some excess capacity then available in Florida.  When he later became General Manager of the Computer Department it was in Phoenix -- not Colorado Springs!.

The Move

All this was happening during the changing of the guard triggered by Dr. Baker's retirement, the sorting out of the pieces from the breakup of the Electronics Division and the coming aboard of three new Division General Managers.  One of these was Harold Strickland to whom Bill Morelock reported and Barney acted as if he also reported to Harold.

Sensing this moment of opportunity, Barney Oldfield prepared a very innocent looking $5,000 appropriation request to cover some office space in Phoenix for "liaison with the B of A" and a sales office.  While Harold Strickland was trying to get his feet under his desk, Barney was trying to get this request on top of it.

While trying to get a meeting with Harold Strickland, Barney put the manufacturing people -Earl Kittle, Bill Lord, Don Reed and others- on the road to Phoenix to set up facilities, make procurement arrangements, and so forth.  Meanwhile, others involved in the plan were taking trips to Phoenix with their wives to choose housing.  The manufacturing people drove 300 miles a day and would call in each evening to get instructions on proceeding.   Each night they would receive the same instructions: "keep going and call in tomorrow night".  

Then, one Thursday afternoon in late November 1956 Barney called the Les Lee Building in East Syracuse, where we had our offices, and Geiser's Engineering group in Schenectady with the word that Harold had signed the appropriation request.  He instructed everyone to get on the road to Phoenix and not to answer the phone after he hung up.  He declared that upon terminating the call he was going to be unreachable for two weeks.

Needless to say, there was consternation in the Division staff for two weeks over the sudden disappearance of the Computer Department.  This was partially cleared up when the Arizona

Republic prematurely announced the selection of Phoenix by GE as the site for its Computer Department.

HERB GROSCH

We could fill up the whole afternoon with "tall tales" about Herb, but will only mention him in passing today.

Two weeks before the site had finally been selected, Herb who was on his honeymoon, made a deal with the Arizona State College at Tempe (now University) for space for an IBM 702 computer (with a military priority which he had diverted from the Jet Engine Department at Evendale, Ohio), purchased a house and held a press conference to announce that "he" had selected Phoenix and the rest would follow.

Two weeks after Barney's call, when Harold Strickland stormed into Phoenix, about 150 GE people, formerly of the Industrial Computer Section, were in place and calling themselves the Computer Department.   I was not there, but the story is that Harold refused to enter the office until Barney had the sign on the door, which read “Computer Department”, painted out and repainted as the "Industrial Computer Section".

Barney - the Firefighter

As I have said, Barney's management style was to implement.  He would get his managers together, make a plan, approve their budgets, issue instructions and delegate authority.  He would then go off by himself on a weekend and come back with a different plan and budget and send it off to New York.  While he was spending time flying back and forth to New York defending this later plan the original plan would proceed without interruption.

This was both an exciting and productive period in the GE computer business.  Very few people were aware of the fires-, which he himself had set- that Barney was fighting in New York so things could proceed smoothly in Phoenix.

BARNEY AND ARIZONA STATE COLLEGE'S GRADY GAMMAGE.

When Barney and Arizona State College's president Grady Gammage met, each immediately recognized a kindred soul.  Barney allowed as how he would like to house his engineers on the campus until he could get the Black Canyon plant built.  Grady allowed as how he would like to have them if he just had his new engineering building.  Barney expressed a willingness to lease such a building on a five-year full-payout net lease basis and in his usual fashion, immediately prepared an appropriation request to erect a building on the Black Canyon site.  He leaked the Black Canyon building plans to the engineers, most of who had purchased homes in Scottsdale in anticipation of a Tempe location.   These engineers, who were critical to a successful implementation of the ERMA project, made unhappy noises that reached New York.  Meanwhile Barney and Grady prepared their lease.   Grady went to his Board of Regents and told them the General Electric Company had generously agreed to finance a new Engineering Building for him.  Barney, in the face of mounting opposition to his Black Canyon building plan, withdrew the appropriation request, as, "fortunately he had found some space to lease on the Arizona State campus".

I don't know who that building is dedicated to but it should be called the Barney Oldfield Building.

Out of Business

By the end of 1958 we had moved into the 50,000 square foot Deer Valley plant, shipped the first ERMA system and were hard at work on the NCR 304 contract.  

THEN, the B of A held a dedication ceremony for the ERMA system at San Jose.  This was a big affair to which the Board of Directors of GE, as well as the Bank's board, was invited.  A number of GE's Board and top management, including Ralph Cordiner, attended this ceremony.  Cordiner took one look at ERMA, and said "My God we're in the Business Machine business! How did we get here?"  He fired Barney on the spot and appointed Clair Lasher as acting General Manager with the orders to phase out the ERMA and NCR contracts, drastically reduce personnel and curtail all marketing and engineering while developing a plan to create a modest Process Computer operation.

For the next 18 months, with a payroll of nearly 1,500 people, the Computer Department was under orders to go out of business.  So far as I know only six people in the Department were aware of this.  The rest thought management was infected with some kind of paralysis.

The Big Look

Where Barney's "modus operandi" was to implement, Claire’s was to PLAN.  He steered the entire department into planning efforts in an attempt to affect a change in Cordiner's decision.  Finally, in June 1960 he wrangled a meeting with the Executive Office of the Company where he presented a plan called "The Big Look". This plan envisioned an all out effort to go after the computer business and was of such a magnitude that, other than IBM, none of our competitors could match it.   This plan (which garnered considerable support from GE's Treasurer, John Lockton, who enjoyed using his influence with the banks to get computer orders, and from the Comptroller, Gerald Phillippe, who didn’t like finding out about GE's plans from IBM salesmen before he knew them himself) was enough of a challenge to convince Ralph Cordiner that GE should be in the business.

The GE 225

Fortunately, Arnold Spielberg, later to become known as "Stephen's father"- and whom I've often surmised was aware of the decision to go out of the business (though not supposed to be),- had designed a drum memory based process computer that could be readily converted to a core memory business machine.  When Lasher got the decision reversed Arnold quickly slapped a core memory on his machine and the GE 225 Business and Scientific computer was born. Of course there was no software, no maintenance manuals, no user manuals or training manuals of any kind.

It is about here where most of you attending the second first annual sales meeting came into the picture. It was called the "second first annual" because the "first first annual" sales meeting had died a-borning when a meeting at which Clair had hoped to get a positive decision never materialized.  Hence, that now famous meeting was called the "second first annual" sales meeting.

Fortunately you had too many challenges to spend much time pondering the apparent contradictions of the then recent past. For until you came aboard, everything had been done in a

"bootleg" mode and often contrary to direct orders.

It took some extremely dedicated people to persevere in those days and it is unfortunate there has never been a fitting memorial to Barney Oldfield, who single handedly -and without the usual authorizations-put GE into the Computer Business.

Epilog

By all measures General Electric's success in the Computer Business far exceeded even the wildest expectations.  Our fondest dream in 1956 was to become a legitimate Department with possibly $80 million in sales.  Unattainable targets were set and consistently surpassed.   Even the most blue sky projections were always exceeded.  The 1956 projection for 1961 was for  $40 million in sales.   That was upped to $60 million in the 1958 projections - the actual turned out to be in excess of $150 million.  Clair's 1961 "BIG LOOK" plan, which assumed an all-out GE commitment to capture 30% of the market, projected an unbelievable $900 million for 1967.  This was cut back to approximately $500 million to be "realistic".  The actual 1967 "if sold" volume exceeded $1 billion.

Why, then, the general belief that the effort was unsuccessful?  I believe that there are three reasons for this widespread view.

(1)   Since very ambitious  projections were always exceeded, additional resources were not available when needed and existing ones were stretched and unbalanced.  To those in the trenches, nothing seemed to go right,

(2)   From the beginning, when Harold Strickland had to race out to Phoenix to find the Computer Department, management resembled a Tolstoyian General desperately trying to keep up with his troops in order to determine the direction of the battle.  The troops’ momentum carries them beyond their assigned positions and extends their supply lines and for which they blame the Generals.  Forces in the marketplace demanded unattainable engineering, software, and delivery commitments of which a surprising number were met.  But, when not met created an aura of failure,

(3)     Thirdly, the GE bookkeeping system reported greater and greater success in a "rental" business as greater and greater PAPER LOSSES.   Unfortunately, even sophisticated financial people confused these paper losses with "real losses".  Ultimately these paper losses became, in a sense, real losses when their magnitude began to impact the widows and orphans who are the principle owners of the General Electric Company. 

It was recognition of this basic incompatibility between the owners of GE and a rapidly expanding rental business that led Reggie Jones, when he became President, to wisely seek a buyer for the computer business. 

PUTTING ALL THAT ASIDE, we are all now a quarter of a century older than we were at the Second First Annual Sales Meeting.  I think you will all agree that in the interim we have learned that the true measure of success,-the only one that counts- lies in making lasting friendships.

ON THAT SCORE ALONE WE HAVE TO DECLARE THE GENERAL ELECTRIC

COMPUTER BUSINESS AN UNQUALIFIED AND INCOMPARABLE SUCCESS!!

(To be performed? At the GE Computer Department Reunion

San Francisco, October 10, 2006)

DRAFT rev.5

Shoot-out at Hughes Aircraft

A Western Drama in three Acts

The Protagonists: GE & IBM

             Author, Playwright & Director: George Snively

Character                                 Who                                                                 Played by

The Villain                    Buck Rogers IBM Western Region Mgr..                Vic Casebolt

The Hero                      Doc Gale Cleven VP IT Hughes Aircraft                         Nate Norris

Gunslinger #1               George Snively, Mgr. Sales Financing GE                   Joe McGoldrick

Gunslinger #2               Don Benscotter, VP Mrkt. Lease Financing Corp.   George Snively

Deputy #1                    Hughes Security Guard                                     Warren Prince

Deputy #2                    Hughes Security Guard                                     Bill Peake

Sheriff             Old Codger (Cleven’s coffee buddy).                         George Jacobi

The Narrator - Ken Fisher

Props:              2            Tables (one to be used as desk)

                        6              Chairs

                        2            Coffee cups

3                    Telephones (not connected)

2                    Security guard caps

2               Tent signs: “Doc. Gale Cleven”

         “Hughes Aircraft Cafeteria”

                                    Small “sandwich board” signs for the actors –except the security guards.

ACT I    Scene One

            The curtain opens showing a table labeled “Hughes Aircraft Cafeteria”.    There is a man (with a small sandwich board labeled “Old Codger”) sitting there with a cup of coffee.

Narrator :    The Hughes Aircraft Company had long been a bastion of the IBM Company and was totally “Big Blue”.   Paul Shapiro doggedly called on them but could never get passed the receptionist – until Hughes hired a non-IBMer, Doc. Gale Cleven, as VP of IT.    Paul was able to get an appointment with Doc and brought in the 600 team to make a presentation.     Doc. Cleven was impressed and decided to give GE a chance.

You are looking in on Hughes Aircraft’s cafeteria where an old codger is sipping a cup of coffee.  (As an aside: Doc wanted to attend this reunion but recently had a brain tumor removed and didn’t feel quite up to the trip.)

            Doc Cleven holding a cup of coffee ENTERs stage left.    He spots the Old Codger.    

Doc Cleven: “Hello.  Do you mind if I sit with you?”

OC:   “Not at all.   Have a seat”

Cleven sits opposite the Old Codger.

OC:   “You’re new around here aren’t you?”

DC:    “Yes.   I’m the new VP of IT.”

OC:   “Oh?”

DC:    “ Yes.   I was hired to get the computer costs under control.”

OC:      “How’s it going?”

DC:    “Well.   So far I’ve sent enough equipment back to IBM to reduce the monthly rental from $12 to $9 million.”

OC:    “Sounds good.”

DC:    “Yes.   But it hasn’t made IBM very happy with me.”    “See you around”

Cleven gets up and leaves.  

ACT I    Scene Two

Narrator :    This scene takes place several  days later.    Still in the cafeteria.

Cleven holding a cup of coffee, ENTERs stage left.    He spots the Old Codger and goes to sit with him.

OC:      “How are things today?”

DC:      “IBM is giving me fits”

OC:    “So?”

DC:    “We currently have two IBM 7094’s that need replacing.    I’m planning to replace one of them with an IBM 360 and the other with a GE 600.”   After operating them for 24 months I’ll then decide whether to go all IBM or all GE.   

IBM is having a fit about my soliciting proposals from GE.   They have proposed not charging rent on the 7094’s  during the estimated three months to get the 360’s up and running.    This is about $90,000 per 7094.   Of course the rent will continue on the one being replaced with a GE 600 – putting GE at a $90,000 disadvantage.   I can’t eat that $90,000 difference.”

OC:    “What does GE say?”

DC:    “GE has come up with a very creative way to equal IBM’s $90,000 savings through a sale and leaseback of one of the 7094’s.”

OC:    “Good?”

DC:    “It is, except that IBM is refusing to let us assign our purchase option to the leasing company- even though they let their other customers do it.   

Well, I’d better get back to work.   Have a good day.”

Doc Cleven LEAVES and goes to his office – the desk in the center of the stage.

ACT I   Scene Three

                Stage right, shows two people sitting at separate tables (or just on chairs) talking on telephones:

Narrator :    We are eavesdropping on a conversation between Don Benscotter of Lease Financing Corporation and GE’s Manager of Sales Financing – George Snively.   Let’s listen as George is talking.

George Snively:  “Don, as you are aware,  Hughes’ Doc Cleven has set up a two year contest between us and IBM.    We would like to pitch one of your seven-year leases to him – but he is trying to be scrupulously fair in setting up the contest.           

However, I have an idea. We would be amenable to selling the 600 system with an option to return it after 24 months and treat it as if it had been rented if we lose the contest.

Could you handle it as an early termination in a seven-year net lease?  

Don Benscotter:   “I’m sure that we can but I’ll check with our people and have them run the numbers.’

GS     “Good.    Do you think that you could get the word to Cleven that we might be amenable to such a transaction?   We don’t want to appear to be trying to avoid the 24-month contest.”

DB;      “As you may know, following the IBM 7094 deal where we finally forced IBM to assign us the purchase option, I’ve been working with Hughes’ Treasurer and Pat Hyland, the President to finance several other important transactions for Hughes.   I’ve completed the financing for the purchase and lease of their Malibu Research building, and I’m meeting with them tomorrow in LA on another deal they want us to do.    I’ve been planning on dropping in to see Cleven when I’m there.  

                        Not only will I get your proposal to him, but also I think I can make him think it’s his idea.   I’ll remind him that the other week we kicked around various ideas on how he might get the investment tax credit.   He’s intrigued by your term “diamond dollars” and keeps asking how he can get some of them.”   This is one way he can get them.

GS       Sounds good to me.                  

ACT II Scene One

This act takes place in Doc Cleven’s office.

Narrator :    We look in on Doc Cleven in his office while he’s on the phone with George Snively.

DC:                  George, I want you to catch the next plane and get over here.   I’ve got something to discuss with you.    Pause.   

OK, tomorrow will be soon enough if you can’t make it today..    I’ll pick you up at the airport and we’ll go to lunch.   I’m buying as I’m selling you.

ACT II Scene Two

Narrator :            Time flies and we look into Doc Cleven’s office the next day.

George Snively enters stage right and sits down at Cleven’s desk.

GS:    Ok what’s the urgency and why all the mystery?

DC:      I want you to sell the GE 600 system to Lease Financing with an option to rent.

GS:      What?

DC:      Yes.    If the GE equipment is not selected at the end of the 24 months you will refund the purchase price and charge them the 24 months rent.   Hughes will get the investment tax credit and if we keep the equipment we will have the advantage of the much lower seven-year lease rate.   GE will have the use of the cash for two years and save the personal property tax.   It’s a win-win for all three of us.

GS:      Where do you get these crazy ideas?    I’m not sure it makes sense but I’ll go back to Phoenix and put a pencil to it.

DC:      You don’t need to.   I’ve already talked to Don Benscotter about it and he has run the numbers.    Your job is to go back to Phoenix and convince Vern Cooper to take the deal.   If he doesn’t, he’s dumber than I think he is.

GS:      “OK.   I’ll try.”

ACT III Scene One

This act takes place back in the cafeteria where the Old Codger is sitting.

Cleven holding a cup of coffee, ENTERs stage right (from his desk).    Sits down across from the Old Codger.

OC:   “How’s your day going?”

DC:      “Buck Rogers, IBM’s Regional Manager, has heard a rumor that we might be signing a long-term lease on the GE system and he’s madder than a wet hen.    He’s insisting that he meet with my boss and me immediately.    He’s insinuating all kinds of things like bribery and is threatening to get me fired.”

OC:      “Let me introduce myself.    (Turns the sandwich board with the name “Old Codger” around to the side that says, “Howard Hall – Attorney”)  My name is Howard Hall.   I’m Howard Hughes’ personal attorney and I’ve been keeping detailed notes of our conversations and believe that we have a cause of action against IBM for their statements and actions.

In anticipation of such a show down, I’ve prepared instructions for you.”

Hands Cleven a piece of paper.

OC      These are instructions to follow if Mr. Rogers is abusive and threatens your job..

ACT III Scene Two

 Doc Cleven returns to his office.

Enter Buck Rogers

Buck Rogers:     “My sources tell me that you are planning to sign a long term lease on the GE junk.    You know that they don’t know anything about building computers and certainly can’t provide the software that Hughes Aircraft needs.   Only IBM can service your needs.   If you persist in this foolishness, we’ll have to let Howard Hughes know of your incompetence and that you have been taking bribes from Lease Financing.   We’ll have your job.”

Cleven picks up the phone and dials a number.

Cleven:    “Code One”

BR:      “What happened to your plan for conducting a fair 24 month contest?    We went along with the crazy idea because you assured us that you would conduct it fairly.”

Security Guards rush in from the back of the room while Rodgers is complaining.

Cleven : “Please escort Mr. Rogers off of Hughes Aircraft property.”

            Security guards gently, but firmly, pick up Buck Rogers and carry him out of the room.

BR:      As he’s being carried out.  “You can’t do this to me.   I’ll see that Mr. Watson calls Howard Hughes.  You’ll regret this.”

Narrator :     Hughes Aircraft  subsequently ordered TWO GE 600 systems which,  Doc. Cleven recently advised, remained in service for 8 to 10 years.  

 Thus ends another chapter in the fascinating saga of the Computer Department.