Evolution of the reseller, Part II: A big Byte out of Apple
Fleur Doidge finds out more about the early days of the US channel from industry veteran Paul Terrell. The second in a series on the channel's evolution
Come gather 'round people, wherever you roam
And admit that the waters around you have grown
And accept it that soon you'll be drenched to the bone
If your time to you is worth savin', then you better start swimmin'.
Or you'll sink like a stone. For the times they are a-changin'.
Bob Dylan, The Times they are A-changin', 1964
Paul Terrell opened his first Byte Shop, on 8 December 1975, on El Camino Real, Mountain View, California - a location right by the spot in the future Silicon Valley where Steve Jobs had sold him the first 50 Apple 1s. Terrell went on to develop what he believes to have been the first chain of computer stores in the world.
"I was in an interesting position to see how the various channels of product distribution emerged," says Terrell. "As a matter of fact my brother Rick founded one of the first distributors, Microware, that focused on the regional distribution model - as opposed to the big national distributors, like Ingram Micro, which won out in the end."
Microware, a major Novell player, went head to head with the likes of Tech Data, Ingram, and Microage, says Terrell. "Also, my other brother Mike replaced John Ingram at Ingram Micro in Europe for two years," he adds. "And my other two brothers, Pat and Robert, were in the business as well - at Leading Technology and Byte Shop. ComputerWorld magazine called us the first family of personal computing."
Terrell still enthuses today about the way the opportunities played out in the 1970s; the only way was up for an embryonic industry, and it only seemed to get better and better. Computer stores started to show up all over, as more sales reps did the maths and worked out there was money to be made. It really was a kind of gold rush, with Paul Terrell opening 58 Byte Shops in his first year, and eight each month by the time he sold the business in 1978.
He was followed by IMSAI marketing manager Ed Faber, who left the vendor to start ComputerLand Stores for Bill Millard - the owner of IMSAI, who eventually closed his computer manufacturing operation to concentrate on ComputerLand.
"The times they were a-changin' - and there wasn't even a killer application created yet. It would be another year before we would have a spreadsheet or word processor to validate the PC for every-day people," Terrell says. "VisiCalc [a spreadsheet app] made Apple, and Byte Shops sold a bunch of both."
In such ways, the reseller channel, including retailers and distributors, has been the crucial link that enabled success for the manufacturer and vendor. Yet it is the latter that have garnered most of the acclaim, with the resellers remaining the largely unsung heroes of the industry.
"Every Byte Shop had a mural of the moon in the display room marked with the words of Neil Armstrong, ‘one giant leap for mankind'. And, as history will tell, maybe the PC was bigger than the moon landing," suggests Terrell.
Byte Shop was where enthusiasts and hobbyists - as well as the plain curious - went between Home Brew Club meetings to mingle, show off their creations, or display their expertise. Many went on to found their own businesses or market products of their own, says Terrell.
"The whole country was buzzing and clubs and stores were popping up everywhere," he says.
Byte Shop after Terrell went through several owners, and parts of it hived off to form other companies - such as Micro Age in Arizona. He went on to found software-only retailer Software Emporium and manufacturer Exidy Data Systems - whose Sorcerer computer with its programmable character sets suitable for the international marketplace attracted attention from Franz Hetzenauer and Robert Romaine, owners of Dutch distributor Compudata.
"We even did an Arabic Sorcerer," adds Terrell. Compudata sold Sorcerers to the Dutch government for small business use, and from those roots a license deal was done and the Dutch manufacturer Tulip Computer was born.
He also may have prefigured today's cloud computing trend with his last ‘retail' effort, ComputerMania - a ‘try before you buy' software provider. "It didn't take much sitting on software inventory that I had paid for on delivery to realise the real model for the industry might be more like video. If I could recover some of my cost of the software by renting it, I might actually make a profit in the business.
"Couple the idea of expensive software that might not be exactly what you wanted or it was too difficult to understand or operate with the IBM clone hardware not being completely compatible."
However, the US government thought otherwise - ruling by Act of Congress that the renting of software in such a way was illegal. And Terrell then decided to leave the IT retail arena.
A parallel universe?
In the UK during the 1970s, the development of the channel proceeded on an almost parallel course. Demand for product was already so expansive in the US that few early manufacturers bothered to look abroad. A US vendor could sell everything it made, for cash on delivery. Few saw any benefit in lines of credit or payment terms - especially since there was no shipping delay, allowing a fast turnaround of inventory.
One of the first international vendors to look beyond US sales was Commodore with its Pet machine, and later on the VIC computer. Commodore started out making calculators and had been building its product offshore and shipping internationally from the start.
The founder of Commodore, Jack Tramiel, passed away aged 84 on 8 April 2012, in California - but Terrell says Tramiel was the one who realised that he could "just change the dollar sign to a pound sign and get 2.5 times the price" if he sold his machines in the UK.
"Of course, when he established that precedent, other US manufacturers followed suit and soon markets were growing all over the world," Terrell concludes. "Rest in peace, Jack, You were a hard-driving businessman that the personal computer industry needed in the 1970s."
Our next instalment - A Trade in Transition - will take up the story in the UK and Europe again, hearing from the likes of SCC's Sir Peter Rigby, Midwich and IBM.