Osborne!

The machine, the man, and the dawn of the portable computing revolution.

By  |  Friday, April 1, 2011 at 6:45 am

The first high-profile evidence of trouble at Osborne Computer came in June, when InfoWorld published a story with the alarming title “Far-reaching woes plague Osborne.” It said that the company was suffering from a cash crunch, and that delays with the Executive and a promised add-in board that would give the new machine IBM PC compatibility had hurt Osborne 1 sales.

By then, layoffs had begun at Osborne Computer–92 people in May and 93 in June. In July, the Journal published another story on Osborne’s plans to go public–saying that financial woes had forced the company to give up on them:

Sales of its Osborne 1, a best seller in 1982, fell off sharply in the spring, when the offering was to have been made, forcing the company into a cash squeeze.

Osborne Computer’s main problem has been the timing of its introduction of a new portable computer this spring. Dealers cut off orders for the Osborne 1 to wait for the new machine, but it was behind schedule.

“We had an April with no income,” says Adam Osborne, the chairman. The company was also coming out of fiscal 1982 with flat results or a loss, and competition from newcomers in the portable-computer business was intensifying. Osborne takes the blame for the introduction snafu.

There you go: The first mention in print of the miscalculation that would come to be known as the Osborne Effect.

Still, the Journal ended its report on a cautiously upbeat note: “The company seems to be recovering, although its officials decline to discuss revenue or earnings. Some dealers say the Executive is selling well.”

Adam Osborne on September 9th 1983, using his briefcase as a privacy shield.

The bad news, however, kept coming. In August, Osborne closed a New Jersey plant, laying off 89 employees. It also terminated 200 workers at its Hayward, California facilities. It laid off another 312 on September 9; a photographer captured a memorable photo of Adam Osborne in the corporate parking lot, holding his briefcase to cover his face. (Apparently, that Osborne magazine ad was wrong: briefcases did serve a purpose.)

On September 13th, true disaster struck: the company filed for bankruptcy. It would stay in business, shielded from its debts by the court, but as a shadow of its former self. The workforce, once more than a thousand, shrunk to 27 employees; the dream of Osborne Computer continuing to be a major force in the industry died.

Aftermath

So why did Osborne collapse? Among the people who tried to answer that question was Adam Osborne. In mid-1984, he self-published Hypergrowth: The Rise and Fall of Osborne Computer Corporation. He wrote the book in collaboration with fellow tech columnist John C. Dvorak. “I knew Adam and was hanging out at his house, and he came up with the idea of me helping to keep him honest,” Dvorak explains. “but seventy percent was his.”

InfoWorld published a large chunk of the book in three excerpts, which you can read here, here, and here. In it, Osborne blamed the company’s fate in great part on banks which would not extend Osborne Computer credit it needed to keep going and growing. He also criticized CEO Jaunich for decisions such as pricing the Executive at $2495, which resulted in sluggish sales, and accused him of setting up the company for failure so he could increase his pay package by rescuing it–a charge that Osborne later retracted.

“If you want to build a microcomputer, it’s probably not a good idea at this point.”

–Adam Osborne on The Computer Chronicles, 1984

Curiously, Osborne claimed in Hypergrowth that when he had told the Wall Street Journal that the company’s financial struggles stemmed from “an April with no income” he had been fibbing to cover up deeper problems. He specifically denied that the Osborne Effect had destroyed the company: “The facts are that the Executive was announced on April 17 and shipped during the first week of May–a miracle of punctuality by microcomputer industry standards.”

Those aren’t all the facts, though: if Osborne dealers had read The Wall Street Journal in January, they knew that the company was working on additional machines, even if the new models hadn’t been announced. But the Executive didn’t show up until more than four months later, and the cheaper system and IBM PC-compatible one didn’t arrive at all. That was a lengthy period of uncertainty for Osborne Computer in general and the Osborne 1 in particular.

Creative Computing’s David H. Ahl reported that leaks rather than preannouncements had hurt the company:

To give the jazzy $2495 Osborne Executive a running start, Adam began orchestrating publicity early in 1983. We, along with many other magazines, were shown the machine in locked hotel rooms. We were required not to have anything in print about it until the planned release date in mid-April. As far as we know, nothing did appear in print, but dealers heard about the plans and cancelled orders for the Osborne 1 in droves.

In early April, Osborne told dealers he would be showing them the machine on a one-week tour the week of April 17, and emphasized that the new machine was not a competitor for the Osborne 1. But dealers didn’t react the way Osborne expected; said Osborne, “All of them just cancelled their orders for the Osborne 1.’

Osborne reacted by drastically cutting prices on the Osborne 1 in an effort to stimulate cash flow. But nothing seemed to work, and for several months sales were practically non-existent.

Toshiba's T1100. Image from Wikipedia.

Still, it’s clear that theory behind the Osborne Effect–that an otherwise healthy enterprise committed unwitting suicide by preannouncing products–doesn’t stand up. The Osborne 1, so alluring in 1981, looked like an antique by 1983, in part because it had originally aspired, as Adam Osborne had explained, to mere adequacy. If people didn’t find it so tempting anymore, they didn’t have to wait for better Osbornes: They could buy a Kaypro or a Compaq or one of numerous other computers that built on the Osborne 1′s innovations. And many of them did.

Moreover, the product category that Osborne Computer created–CP/M-based luggables–didn’t outlive the company by very long. The booming market for IBM-compatible machines had already left CP/M a dead operating system walking. And “lap-size” computers were getting better at a furious pace. The portable computer of the future wasn’t anything that Osborne had preannounced: It was Toshiba’s T1100, an enormously popular PC-compatible laptop.

Here’s bittersweet video of Adam Osborne guesting on a 1984 episode of the public-TV series The Computer Chronicles, pointing out–accurately–that the PC business in the mid-1980s was more about mass production than innovation, and recommending that ambitious young people not enter it:

Looking back, Thom Hogan attributes Osborne Computer’s failure to problems similar to the ones outlined in Hypergrowth:

Cash flow, basically. And decisions relating to it. The company was undercapitalized from the beginning, so the very rapid growth essentially had us ordering more supplies every month faster than we were taking in money on the income side. The company would have sold even more than we did with more capital. Basically it was “buy as much new parts and add as much staff as we can afford” every day. I can’t remember a month where the cash flow numbers looked great, despite the profitability numbers looking decent. Some of the undercapitalization was greed. The VCs back in those days didn’t see any reason to put more money in as long as a company was managing to keep the balls juggling in the air. But then they made another decision that impacted the juggling: replacing Adam with Jaunich was amongst the most terrible decisions I’ve seen in Silicon Valley. The VCs thought that it was necessary to take the company public and get their big cash out. But replacing Adam pissed Adam off, to the point where he became counter productive (announcing the Executive II before we had the Executive out the door, sitting in Paris for weeks on end, etc.). And Jaunich simply didn’t understand tech businesses at all and started making decision after decision that was, well, to put it bluntly, stupid and wrong.

Resurrections

Osborne Computer may have filed for Chapter 11 bankruptcy, but it was eager to prove it could bounce back. It regrouped, installed a new management team–Adam Osborne remained on the board for a while but eventually left–and sent employees to trade shows wearing cheery “Osborne is Back” buttons. More important, it released the Vixen, based on the concept for a smaller, cheaper Osborne that the Wall Street Journal had mentioned in January of 1983.

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29 Comments For This Post

  1. Steven Sinofsky Says:

    Thanks Harry! I lugged this machine to college–it practically took up my whole dorm room!! It also ran my parent's entire business using dBase. The 300b modem and fidonet made for quite the connection to the "world" :-)

  2. The_Heraclitus Says:

    A few years later I had the Compaq clone to this one. It was amazing to be able to use the same machine at work & home.

  3. pragmatist Says:

    While there is little doubt that cash flow was a huge part of what happened there, I think that there is more to the story. For one thing, clearly the "Osborne Effect" is real. It certainly didn't help the situation, and if dealers really did cancel orders, it had to have made the problem far worse.

    There are, I think, another two issues as well. One is the idea (which we have seen with other companies) that you can easily move top executives from one industry to another. Sometimes it works, but clearly it didn't work here. The pricing on the "executive" was stupid enough that I can't dismiss the description of Jaunich's tenure as being filled with "terrible and stupid decisions" and the decision to appoint him as really bad, as sour grapes. The wrong top executive, making a string of bad decisions can bring even a company with a healthy cash flow to its knees.

    Last, but not least, is the fact that Osborne (both the man and the company) refused to move with the market. The original Osborne was revolutionary. But, staying primarily with CP/M and not quickly offering compelling updated hardware at competitive pricing meant that things would have crashed. It's hard to make the argument that they didn't move because of the cash flow problems – they DID introduce new models. They just didn'tintroduce models that anyone would want to buy, but they refused to see that.

  4. Owen Linderholm Says:

    Thanks for that Harry, I met Adam right after I moved to the Bay Area when I was working at Computer Currents and we had a good chat about all kinds of things. He was a little bitter but very encouraging to me as someone new to the Valley. He was very much larger than life and wanted to talk about non-tech things more than anything else. I remember that we talked about him moving to India so that must have been coming up. But he didn't talk about health problems.

  5. CMF Says:

    FYI – about 15 years ago, I bought a brand new Osborne, from a dealer who was closing. I have it in storage; complete with all the software, canvas case, and original literature.

    I also have a few Actrix "portables". Originally called Actrix Matrix. A cool machine with a 360 baud internal & external modem (acoustic cups). Has a built-in Epson FX 80 printer, 2 floppy discs & 7" monochrome screen. Also have a TRS 80 & a Sinclair.

    CMF

  6. Larsen E Whipsnade Says:

    After the ZX80 and the Apple II, here was a machine that I could use to earn a living. The Osborne quickly helped me to learn spreadsheets, word-processing, and databases with dBaseII. With this one box, I had broken through the limitations of Basic, and there was no stopping after that. I even managed to attach a Trantor 5mb hard-drive onto my Osborne. I've got good memories of those days!

  7. Jonathan Says:

    When I think portable computers of the time I think Timex Sinclair. I think I still have one in the attic somewhere.

  8. Walter Jeffries Says:

    I had one. Still have it. Somewhere. And an Exidy Sorcerer, Mac128K, MacPlus, MacSE and even a PDP11 mini. Oh, and an HP-71B and a sliderule that are hanging on my wall right here. Incase of power outages. :)

  9. The_Heraclitus Says:

    Wow! A PDP-11. That brings back memories.

  10. Dave Mathews Says:

    Great homage Harry! This was my first computer, and I loved the 300 baud (not the speed, but the design) modem that would slide into a floppy (back when they were) disk pocket as an integrated unit.

    When I was 14 I hired a young programmer to port his Kaypro BBS program to my Osborne, so that I could show sponsored ads when people called into my system – to offset the cost of the phone line. In these days the CP/M operating system was not the same from computer to computer – as the registers were different based upon the motherboard configurations. Even though the Z-80 chips were the same under the hood most software and floppy disks were not portable. This was the first time that this young hobbiest programmer was paid for his work as a developer. That programmer was Dave Moellenhoff, CTO and co-founder of San Francisco-based Salesforce.com. If only I would have invested that $100 in his company, but showing him that he could get paid for his then hobby is a proud and inspirational moment in life that I can look back to.

    I too have a bit of respect posted on my page for the Ozzy. Her 83k floppies and 176k double density upgrade were packed to the gills with public domain software!

    My respect to Adam, a man who was indeed larger than life at 6" something! When I met him at 15 at Computerland in St. Louis, Missouri he towered above everyone.

    I still have it, and have a serial to Ethernet adapter that I will put The Missing Link BBS up on the Internet again someday. Now, I don't have to worry about the cost of that phone line… Boy have times changed. http://davemathews.com/osborne.html

  11. Forrest MacGregor Says:

    I not only owned one in the early 1980's, but when Osborne went belly up, I went around Denver and bought every inventory I could find… software, broken machines, accessories, new units, upgrades, drives, monitors, manuals. I bought it all for about 5 cents on the dollar, and sold it over the coming year at maybe 25-35 cents on the dollar and made 20K or so. The Osborne was the first complete machine, and the early adopter community back then was mostly lawyers and accountants, plus engineers. The lawyers and accountants needed support, and had significant investments in their machines. I had a deal where I would charge no more than $100 plus parts to repair one. No fix, no charge. Breaks again? I fix it for free. I was overwhelmed and it added to my salary at the local rocket company I worked at rather nicely. I put a lot of miles on those things, and fondly remember the experience and the product, which was pretty well done, IMO.

    Worth noting.. the early adopters were all taken by the time that the Kaypro came out, and they were the machines of choice for students, homemakers, and second tier professionals. The dynamics of the market changed, and I left Denver anyway to pursue my engineering career, but I use this experience to illustrate to people what a little risk, small capital, and timing can do for your income/self-employment dreams. RIP, Adam O. I think you and your company rocked.

  12. Harry McCracken Says:

    I always wanted an Exidy Sorcerer..

  13. Minogaade Says:

    Yes! Bundling dBase was heaven for me–the bundled software was unbelievably powerful for its day. I know, I'd bought an IBM selectric typewriter the year before, just to have access to variable fonts.

  14. Scott Mace Says:

    I covered the introduction of the Tandy Model 100 for InfoWorld during a trip around Texas in 1983, and by the time I got to Ft. Worth, the Osborne 1 I had lugged from InfoWorld had died and instead I wrote and filed my news story on a borrowed Model 100.

  15. Bob Stepno Says:

    Thanks for this, harry. I'm writing on a screen about half the size of my old osborne — a Droid . but I'm using this speech to text to save my eyes and create amusing typos I was 1 of about 40 faculty members and grad students who bought osborne ones at wesleyan university in 1982 after the university put some faculty ideal personal computer specs out to bid.

    The case keyboard and small screen looked a lot like a portable terminal people have been using at the hartford courant for a couple years. I think it had a cassette tape drive built in and was compatible with the newspaper's atex system. Teleram?

    At wesleyan the software bundle was the primary selling point for the osborne. I recall an apple too if you added to floppy drives and all of that software would have come and add easily double the price we paid for the osborne dbaseII supercalc wordstar mbasic cbasic , the original adventure game mychess and I forget what all else

    By that time december 1982 when we took delivery the bundle also included an external monitor which would double the 52 columns screen making 104 columns great for spreadsheets, double density disk drives and a 300 baud modem… or maybe the modem was extra.

    I do remember that the computer center hacked together cables we could use to plug an osborne directly into the d e c 20 mainframe as a terminal and do file transfers. Doing document conversion transfers between our mainframe editor and wordstar was another thing.

    I also went to work for the university av wizard Bob White, who physically hacked the insides of 24 inch classroom tv monitors. I recall the trick involved cutting some sheet metal rolling it into 8 tube and putting it over the back end of the picture tube. (Ymmv)

    I became editor of the wesleyan osborne group newsletter And shared the osborne in a lab to get a discount on a 1983 summer computer course at wesleyan with the amazing russ walter of "secrets guide to computers" fame . ..starting me on the way to a second masters and my 1986-88 hypertext research.

    Russ's courses and the newsletter plus some other how to things I had written for the Wes computer center got me my first job in the computer industry 1984 at MultiMate–also due for a 30th anniv soon) ultimately leading to working for you at IDG

    So it's all thanks to adam. :-)

  16. Kathleen M. Barnard Says:

    Interesting site. I bought an Osborne when I retired from teaching in 1982. As I recall, a month later the Company went into bankruptcy. (The article indicates that it was 1983 before the compay was in that situation?) At any rate I had purchased from Dayton's in St Paul. I called and they told me they would take over the guarantee offered by the Osborne. Which they did until I replaced the "Ozzie" (my name for it) with a hmmm____now I can;'t remember!

    "Ozzie" got a lot of use from our son in college and my volunteer work on things like a membership committee (records kept on paper lists and paper cards and in three locations!), newsletters–I belonged to a lot of things. Amazing the amount of information and work you can do with just two little floppies–even more with the 3' successor!.

    However in 2006 we had to condense a five bedroom house (with full basement) into a two bedroom apartment–so lots of things had to go!

    "Ozzie" and our son's Kaypro are now somewhere in the BSan Francisco Bay area with an electrical engineer who was interested enough to pay transportation. (I couldn't bear "putting Ozzie down" by sending him to the dump–and the closet floor dind't care–it would support anything placed there without complaining.

    But the replacement was a Windows machine–and I struggled with those (Yes, I had to reinstall and defrag and all those things and wait for the blankety blank window to open again!) until January of 2010 when at age 89, I finally got smart enough to take my grandson's advice and purchase an IMac. And now I'm set up with a wreless net and a Macbook for portability. (ANd currently swearing at all the passwords I'm expected to remember!

    Interesting magazine you are publishing. I shall look forward to reading it–if I ever figure out how to subscribe!
    Cheers!
    Kathleen M. Barnard,

  17. Norm Says:

    I loved VP Planner 3D – everything Lotus 123 was plus a great deal more. 3 dimensional spreadsheets you could rotate! Easy installation off of one floppy. Virtual memory (made a difference when all you had was 640K) Multiple graphs on the same page. much more.

    It was a great injustice, imo, when they were litigated out of business by Lotus.

    imo

    Norm

  18. dan Says:

    I loved my Osborne (I think it was an Osborne 2). I also had a Kaypro (got it out of a dumpster, fixed a broken wire, and used it for two years). My Compaq rounded out the set. I also had a Timex Sinclair, but to be honest, I did not use it much.

    In many businesses is seems the early pioneers died blazing the trail. The same spirit that made them go forward into the wild made them vulnerable as well.

  19. Bill Says:

    I bought my Osbourne in March of 1983 and what really made the deal so sweet was the bundled Dbase program. Back then you had to make your own programs to print labels for mass mailing … it beat the old "address-o-graph machines" … or making your own labels using a copy machine, wax paper, and spray adhesive backing then cutting them in strips. It was an incredible leap because this computer did something that was unheard of — sort on zip codes! It was a dream come true. Wonderful memories!!!!

  20. SuperG Says:

    What heady days those were.

    My dad was the primary developer of SuperCalc and was one of the people who worked the booth at the Osbourne's initial demo at the WCCF. They stayed up all night the night before getting the units ready. They found that the knobs that manipulated the brightness and horiz/vertical control broke easily. They glued the knobs to McDonald's straws which were in turn glued the display board and they made it through the show. I got to hang out at the booth and cruise the floors of the show. It was awesome.

    They couldn't spring for a booth in the Civic Auditorium like Apple. But, they had the first booth at the bottom of the stairs from the auditorium leading into Brooks Hall.

    My dad still had one of the demo units for years. I think he eventually donated it to a museum or something. But, I'd hack up cbasic programs on it. In the Spring of 82, I wrote an 8th grade history paper in WordStar printed on an Epson printer about Robert Oppenheimer.

  21. Harry McCracken Says:

    Great stuff!

    –Harry

  22. G R Balleisen Says:

    Nice piece and great research. You seem to have interviewed a number of the right people who were either intimately involved (Lee) or aware of the history (all the press guys). Adam and his invention was a seminal part of the PC/ micro-computing evolution whose impact is still apart of the DNA of current technology.

    I still have one of the original six prototypes that were shown at the WCCF and after reading this article, I dragged it out and amazingly it fired right up and booted after 30 years…a feat Adam hadn't included in the original product plan…

    BTW, the knobs that were hot-glued with drinking straws are alow still in place

  23. dholyer Says:

    I remember the Osborne 1 starting the mobile computing industry. I actually enter the field in 1986 when I traded my Atari 800XL system in for a NEC laptop. I converted all my floppys to 3.5" disks that the NEC had two of. And in IBM PC format. My Atari had software to use a 3.5" floppy and format an write PC format disks. I may not have been able to use the software going from 8bit to 16/32bit but the data (or to me the inportant stuff) did move.

  24. jas Says:

    Our Osborne 1 brought me kicking and screaming into home computing. We bought one "to help me" type my husband's PhD dissertation. I did that, and became so addicted to the durn thing that I lugged it on the airplane (with a baby and two children under 6 years) from NY to TX on vacation…by myself! I will never forget all the tips and dirty tricks learned from user group magazines, and the thrill of seeing words flash across that dinky screen the first time I connected with a BBS via 300 baud modem. All I ever learned about relating to computers I learned from Ozzy. Thanks for the memories.

  25. Bill Says:

    Still have my 2nd generation 01 that I bought in 1982 after graduate school (present to myself). My first job was compiling survey results for my father's work using SuperCalc. My wife also used the O1 for law school and still teases me about the 52 column screen. The machine is in my home office closet in the original box with all software, manuals (even the tech manual), purchase receipt and external monitor.

  26. Eric Says:

    What a great read, this was truly an entertaining article.
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  28. Bohdan Steplewski Says:

    I read the article with special interest – I met Adam Osborne while being a foreign exchange student at Delaware University, Newark DE. We became quite close friends, and my wife and myself visited Adam in !975 and 1982 while keeping in touch till the very end of his life (still have his last letters from India).
    He was a visionary, leaping forward into future and overtaking his contemporaries by two lengths., with razor sharp bright mind. Always full of optimism that allowed him to find the way to overtake any technical obstacle.
    Pity we lost him so early.

  29. Julien Says:

    Nice read! I am glad I stumbled upon it.