Tuesday, November 23, 2010

Exxon Office System Shrinks, Part II:

{I began this story yesterday, about the two biggest divisions of Exxon Office Systems.}

Vydec and Qwix were singularly ill-equipped to run, or be a major part of, a 1980’s office systems company. Vydec’s great success was a hard-wired word processor machine. Costing $14,000, it had an incredibly clear screen. It stored documents on floppies, and had a decent word processing program. And again, although it’s hard to believe this: it was entirely hard-wired. There was no CPU in the base product, and no software in it. People loved to use a Vydec, if they could afford it; until they could buy a PC for $3,000 and a word processor for $300 to replace it.

Vydec’s managers saw that the future of word processing belonged to computer software. Since they were all hardware people, they did a terrible job of building a software division to stay on top of their market.

Qwix made intelligent typewriters that cost (I think) around $3,000. The typewriters had a 40 character display, and incredible firmware within. The Qwix division made analyses of productivity and determined that a secretary who switched from a manual typewriter to a Qwix lost productivity for – on average – eight months, while she or he got the hang of all the keyboard commands necessary to operate it efficiently. After that, productivity loss continued in an entirely different way: managers learned how cheap it was to request minor document changes, since the typed pages were stored in the Qwix. Secretaries spent more and more time revising documents instead of catching up on their workload. Many Qwix’s were sold, and I pity the companies who relied on them.

EOS sold its products for more than the leveraged manufacturing cost. As they liked to say, they lost money on units, but made it up in quantity. Eventually, business was so bad that the sales people were paid a living salary. You want sales people to live off commissions, as an incentive to make sales. EOS’s sales people couldn’t make that living. Instead, some of them were incentivised to – get this – draw a salary from EOS while surreptitiously making commissions for selling some other company’s products.
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