Jump Over Left Menu
13. ICL - THREE RIVERS
13.1 Presentation to ICL Directors, 18-20 March
The period between January and March 1981 was spent in preparing for a major demonstration to top ICL Directors at RAL. It was clear that the level of commitment required by Three Rivers meant that ICL Senior Management needed to be convinced of the uniqueness of the product, SERC's commitment and some indication of the market potential.
An update of the ICL Business Plan was prepared by Peter Lever. In it, he stated that the Roberts Panel's Software Technology initiative would standardise on PERQs. In a letter commenting on the Plan on 19 January 1981, Rob Witty suggested that standard should be replaced by Common Base as SRC does not impose rigid standardisation in research areas. This is the initial statement which later resulted in the term Common Base Policy being attached to the project.
Invitations were sent by RAL to ICL and it was arranged that Colin Haley, Director for Product Planning and Arnold Jewitt, Director with special responsibility for Government funding would attend a presentation on 18 March. This was followed by a second presentation on 20 March to Peter Aylett, Director of the United Kingdom Division and Doug Cormish, Director of Marketing on 20 March.
Assuming all went well, there was to be a formal presentation to ICL's Chris Wilson and the Chairman of SRC, Geoffrey Allen in April.
Immediately after the presentations to the ICL Directors, Ed Fredkin was to arrive in the UK hopefully to conclude an agreement.
The presentations to the ICL Directors went off without a hitch. All were impressed by the product and SRC's commitment to this form of computing. There was great hope that the meeting with Fredkin the next week would bring the long drawn out negotiation to a close.
13.2 Government Rescue ICL - 19 March
Immediately after the second PERQ demonstrations, the true state of ICL's financial position hit the press. Ever since the Autumn of the previous year, the government had been attempting to find a private-sector buyer for ICL, whose financial position had been deteriorating drastically since the middle of 1980, but without success. The ICL share prices stood at 196p on 10 September 1980 and had dropped to 40p by March 1981. The annual accounts released at the turn of the year had shown a net debt increase of £64.8M and, due to leasing arrangements, this represented a loss approaching £lOOM.
The reasons were varied ranging from the strength of the pound, rougher competition as demand slowed in the world recession and the emphasis placed by ICL management on mainframe sales in direct competition to IBM when the centre of gravity in computer sales had been steadily moving towards small systems.
On 19 March, the British Government announced a £200M loan to ICL over two years to rescue it from bankruptcy. Sir Keith Joseph told the Commons that the aid was intended to give the company a breathing space in which to review its longer term business opportunities. The British Government were dependent on ICL computers with £300M of installed systems.
Kenneth Baker, Minister for Industry, declined to express his full confidence in ICL's management and indicated that ICL would require a strong management team for the period ahead. The Government was examining several proposals for ICL research and development projects which it might assist by additional aid.
The press that weekend were anticipating imminent top level management changes in ICL and an ICL spokesman admitted there would be changes also. The general view was that ICL's performance in the next six months would be even worse and some massive change in direction was needed. There was immediate speculation that ICL would be taken over by CDC, Univac and Siemens.
Ed Fredkin, Financial Times under his arm with headlines of the Government rescue of ICL, arrived in London on Sunday, 22 March, to finalise the negotiations with ICL. The timing could not have been worse.
13.3 Visit of Fredkin - March 1981
Ed Fredkin arrived in Heathrow from Boston having hired and piloted a plane from Pittsburgh to Boston. He visited RAL on Sunday afternoon and gave an update of Three Rivers.
Further capital had been raised and deliveries were beginning to improve. Five systems had been shipped the previous week with the intention of going to 50 per month by the end of the year. They had recently ordered a Xerox laser printer for documentation production and a VAX system for production control.
Fredkin seemed genuinely interested in giving ICL marketing rights in the UK but not elsewhere. On the other hand, ICL wanted a non-exclusive world wide agreement together with the exclusive UK marketing rights. Fredkin felt that this would weaken Three Rivers' negotiating ability in other countries. Olivetti had already made a strong bid to get exclusive Italian rights.
As far as manufacturing was concerned, he believed Three Rivers could cope with the USA demand but additional manufacturing capacity for the world market might be attractive.
On Monday, he popped into RAL before departing for ICL and changed over the RAL PERQ to a 50 cycle power supply. At the time, we found that some of the test programs labelled EF stood for Ed Fredkin - a man of many parts!
13.4 Frame Agreement
By 27 March, Fredkin had concluded a frame agreement with ICL (with a detailed contract to follow) which gave ICL exclusive rights in the UK, South Africa and Australia. ICL could sell in other countries until an exclusive agreement was concluded with one company.
ICL had to agree to take a minimum of 200 systems in 2 years. Maintenance would be done in the UK immediately with manufacture in a year's time.
The presentation to Chris Wilson was agreed for April with the aim of signing the full contract with Three Rivers by June.
On 6 April, ICL sent RAL a price list offering PERQs at a price of £22,500 with a discount of at least 25% on the hardware and no charge for the software. An ICL/SRC Heads of Agreement was to be signed indicating the extent of the collaboration. The issue of putting UNIX on the PERQ was raised. Professor Rogers on behalf of CSC had indicated that university sales of PERQs would be very low without UNIX. ICL were sympathetic to mounting UNIX.
The presentation to Chris Wilson never took place. By May 1981, the existing ICL management had been dismantled and replaced by Chris Laidlaw as Chairman and Robb Wilmot as Managing Director. Wilmot immediately decided on a thorough review of all ICL projects over the next two months to be followed by a product and marketing strategy.
Trying to get ICL committed to PERQ was like snakes and ladders with very few ladders and very long snakes! Dr Manning wrote to Robb Wilmot inviting him to RAL to see the PERQ and to continue the dialogue between SERC and ICL.
13.5 PERQ Purchases
To ease ICL's financial position a little and also Logica's, who were having budget cuts, RAL purchased one of the two Logica systems and the ICL system each at a discounted cost of £15K.
By April, RAL had 3 PERQ systems purchased from 3 different companies!
13.6 Department of Industry
As a result of the request in 1980 by C&C Sub Committee that DoI consider funding some PERQ purchases, a letter was received by the Committee in February 1981 which indicated that:
- DoI would consider purchasing 4 systems under the pre-production order scheme and situate them in appropriate user situations.
- ICL could request 25% funding for further development work.
- Software houses associated with PERQ developments could also get 25% funding.
DoI's view was that a proper evaluation of the first two PERQs should be completed prior to any further commitments.
In summary, DoI could offer their usual channels of aid to ICL but could not finance 6 PERQs for the SRC community in order to make good a shortfall in SRC's purchasing ability.
In March, DoI wrote to Brian Oakley after a Review Meeting between ICL and SRC at which DoI was present. DoI hoped that ICL would bring forward a project support application to DoI for UK manufacturing.
Before DoI would look at that application favourably, it needed to be sure that adequate software was available on the PERQ. In DoI's view, SRC was the key organisation in making sure that software necessary for the SRC user community would be available in a timescale that users have faith in. DoI required a clear specification of what work was needed to get the software into shape, who would do it and whether it was new software or modifying existing software.
RAL was asked by Brian Oakley, the Secretary of SRC at that time, to produce a detailed assessment of what was needed and the manpower costs. A meeting had by now taken place between Chris Wilson of ICL and Geoffrey Allen, Chairman of SRC. There was a danger that there could be a difficult circle with SRC refusing to commit until ICL agreed to manufacture, ICL refusing to commit until it had a guarantee of the size of the market from SRC, and DoI not committing anything until it was sure that the other two were committed.