James Ousley, chief executive of the new Control Data Systems Inc that Control Data Corp plans to spin out, says that Control Data had been looking for additional capital for a number of years, but was not able to tempt any investors to bankroll an organisation with interests as diverse as proprietary mainframes, Unix, military […]
James Ousley, chief executive of the new Control Data Systems Inc that Control Data Corp plans to spin out, says that Control Data had been looking for additional capital for a number of years, but was not able to tempt any investors to bankroll an organisation with interests as diverse as proprietary mainframes, Unix, military and government software and services and a lottery business. In the heady days of 1988, when Control Data had revenues of some $3,600m, the company had three main revenue streams: the Commercial Credit consumer financing arm, the Magnetic Peripherals Inc OEM disk drive business and the computer systems, services and software arm. None was big enough to become the core business of the company, Ousley says. Founder William Norris had acquired Commercial Credit in the hope that it would prove counter-cyclical to the computer business, which worked for a few years, but declining sales of Cyber systems coincided with a dull spell in consumer financing and Control Data divested Commercial Credit and sold its disk operation to Seagate Technology Corp some three years ago. The remaining third has now effectively been chopped into two pieces with the formation of a computer systems arm, Control Data Systems Inc, and Ceridian Corp, the rump of its software and computer services business. Once the firm had voiced an intent, within the industry, to perform an amoeba-like separation, there was no shortage of interested parties, Ousley claims. CDC’s talks with its OEM RISC Unix system supplier Silicon Graphics Inc – which is now to take a 10% stake in Control Data – started (unbeknown to CDC at the time, Ousley claims) in parallel with Silicon Graphics’ negotiations to buy its chip supplier, MIPS Computer Systems Inc. Ousley is quite happy with the way it has all panned out because MIPS didn’t have the wherewithall to do all it said it could. The R6000 ECL RISC was late, and that affected the R4000, which was a year late. Indeed, it was Silicon Graphics’ proposed acquisition of MIPS that finally lead CDC to the altar. We probably wouldn’t have signed if it had been just Silicon Graphics, Ousley says. When CDC’s intention became clear, it was approached by a variety of potential partners, Ousley says, and came very close to changing its decision (Hewlett-Packard Co being seen as the jilted suitor). As for MIPS Computer, well they’re just another proprietary RISC vendor now, says Ousley, who is nevertheless full of praise for the way the company, via the Advanced Consortium Environment initiative, publicised its RISC architecture. ACE got Bill Gates to commit to MIPS – I give Bob Miller (MIPS president) accolades for it.
Cutting the apron strings
When it comes to cutting the apron strings, Control Data must still consider the 1,800-odd users of its Cyber mainframe series. Control Data is committed to suporting that hardware until at least the year 2000 – it still builds and sells them though there will be no further additions to the series. However, the Cyber operating system will continue to be enhanced with new networking and input-ouput features, Ousley says. Moreover, revenues from the Cyber line are crucial to Control Data. Only this year will revenues from its open system products begin to outstrip sales of Cyber kit, even though mainframe revenues are decreasing by around 25% a year and sales of open systems rising by some 100% a year. The agreement by which NEC Corp, the second investor, will take around 5% of Control Data Systems, is expected to be finalised by the third quarter. NEC is also expected to buy in Control Data and Silicon Graphics’ MIPS products for the Japanese market under an OEM agreement. Ousley says that Control Data is very interested in some massively parallel project that NEC is currently working on, though that won’t see the light of day until the mid-1990s. Control Data is also evaluating its software options and Ousley says it is looking to acquire – or do joint ventures with – two companies, one in the computer-aided design arena, the other in data management. Contro
l Data starts life with 3,500 employees, and should have around $125m in cash once all the sums are done.