Osborne Computer Corporation
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Osborne Computer Corporation Stock Certificate
San Francisco Bay Area,
|Adam Osborne, Lee Felsenstein|
The Osborne 1
After Adam Osborne sold his computer book-publishing company to McGraw-Hill in 1979, he decided to sell an inexpensive portable computer with bundled software and hired Lee Felsenstein to design it. The resulting Osborne 1 featured a 5 inch (127 mm) 52-column display, two floppy-disk drives, a Z80 microprocessor, 64 KB of RAM, and could fit under an airplane seat. It could survive being accidentally dropped and included a bundled software package that included the CP/M operating system, the BASIC programming language, the WordStar word processing package, and the SuperCalc spreadsheet program. Osborne obtained the software in part by offering stock in the new Osborne Computer Corporation, which he founded in January 1981. For example, MicroPro International received 75,000 shares and $4.60 for each copy of WordStar Osborne distributed with his computers.
Unlike other startup companies, Osborne Computer Corporation's first product was ready soon after its founding. The first Osborne 1 shipped in July 1981, and its low price set market expectations for bundled hardware and software packages for several years to come. The company sold 11,000 Osborne 1s in the eight months following its July 1981 debut, with 50,000 more on backorder, although the early units had a 10 to 15% failure rate. The peak sales per month for it over the course of the product lifetime was 10,000 units, despite the initial business plan for the computer predicting a total of only 10,000 units sold over the entire product lifecycle. Osborne had difficulty meeting demand, and the company grew from two employees, Osborne and Felsenstein, to 3,000 people and $73 million in revenue in 12 months. The growth was so rapid that, in one case, an executive who returned from a one-week trade show had to search two buildings to find her relocated staff. The company announced in October 1982 a temporary bundling of Ashton-Tate's dBase II, increasing demand so much that production reached 500 units a day and severely diminishing quality control.
Despite early success, Osborne struggled under heavy competition. Kaypro Computer offered portables that, like the Osborne 1, ran CP/M and included a software bundle, but Kaypro offered larger 9 inch (229 mm) screens. Apple Computer's offerings had a large software library of their own and with aftermarket cards, could run CP/M as well. IBM's 16-bit IBM PC was faster, more advanced, and offered a rapidly growing software library, and Compaq offered a portable computer that was almost 100% compatible with IBM's offering. Osborne's efforts to raise $20 million in capital to rush an IBM-compatible computer to market were unsuccessful.
The Osborne Effect
According to proponents of the Osborne Effect, Adam Osborne damaged his company's current sales when he began showing the Osborne Executive to journalists in early 1983. Dealers rapidly started cancelling orders for the Osborne 1 in anticipation of the new Executive. Unsold inventory piled up and in spite of dramatic price cuts – the Osborne 1 was selling for $1295 in July 1983 and $995 by August – sales did not recover. Losses, already higher than expected, continued to mount, and OCC declared bankruptcy on September 13, 1983. Disagreement exists on whether the Osborne Effect truly caused the company to collapse, with Robert X. Cringely and Charles Eicher attributing its failure to other causes.
When it was apparent that the company would be closing down, a company meeting was held with all employees. The first round of layoffs involved sales staff, production staff, domestic marketing and most mid to low-level clerical support. These employees were presented with their paychecks only. The management that remained was primarily from the international marketing division.
Nine days later on September 22, a group of 24 investors filed suit against OCC and several individuals, seeking $8.5 million in damages for masking the company's true financial situation and accusing several directors of the company of insider trading. Osborne emerged from bankruptcy in 1984 and released the Osborne Vixen, a compact portable running CP/M, in late 1984. However, the company never regained its early prominence. A last ditch effort to create a fully IBM compatible Osborne produced three prototypes, but too late to save the company from bankruptcy. The failure to move into the IBM compatible market rapidly enough allowed competitors to leapfrog to advanced designs, while OCC continued to rely on its earlier dominance of the now-obsolete CP/M platform.
Commercial rights for the Osborne brand name were later acquired by the Finnish clone PC maker Mikrolog Ltd which to this day markets its server and desktop PCs domestically under the previously world famous name.
- The Henry Ford Blog: "The Rise and Fall of the Osborne Computer Corporation", April 16, 2015 — with images.
- McCracken, Harry (April 1, 2011). "Osborne!". Technologizer. Retrieved April 3, 2011.
- Ahl, David H. (March 1984). "Osborne Computer Corporation". Creative Computing. Ziff-Davis. p. 24. Retrieved April 4, 2011.
- Hogan, Thom (April 13, 1981). "Osborne Introduces Portable Computer". InfoWorld. IDG. p. 1. Retrieved April 4, 2011.
- Cringely, Robert X. (June 16, 2005). "The Osborne Effect". The Osborne Effect: Sometimes What Everyone Remembers Is Wrong. PBS. Retrieved November 25, 2009.
- Andrew Orlowski (June 20, 2005). "Taking Osborne out of the Osborne Effect". The Register. Retrieved June 22, 2009.
- Freiberger, Paul; Swaine, Michael (1984). Fire in the Valley. McGraw Hill. ISBN 0-07-135895-1.
- Leonard G. Grzanka. "Requiem for a Pioneer" in Portable Computer Magazine, January 1984.
- Osborne, Adam; Dvorak, J. C. (1984). Hypergrowth: The Rise and Fall of Osborne Computer Corporation. Idthekkethan Publ. Co. ISBN 0-918347-00-9.
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