As a technology journalist I have been intrigued by The Apprentice on the BBC, which has a crew of inconceivably hopeless candidates endure a range of mundane tasks in the hope of being hired by Sir Alan “You’re Fired!” Sugar to work at his ‘technology’ firm, Amstrad.
The Apprentice started in the US, where successful candidates got a job working for one of Donald Trump’s companies and a $250,000 salary. The last winner of the UK version was rewarded with a £100,000+ salary, but they also had to go and work at Amstrad. Is it worth it?
I wonder why anyone in their right mind would want to work there. But then having watched a few episodes – which I do not deny are entertaining – I came to understand that few of the candidates are in their right mind anyway. Someone needs to tell them they are competing to work at a company practically in a death spiral.
In the technology sector, Amstrad is not considered much of a threat to anyone these days. While it may boast revenue for the six months ended December 31 of £40.6m, it’s not looking too healthy. Sales were down 18% year on year. Profit was down from £8.7m to £7.5m.
In that period it generated £4.3m cash from operations, down from £15.7m in the year-ago quarter. At latest count it had £28.3m in the bank. A year ago it had £49m in the bank. Do the maths, it’s not pretty.
Then there is its “technology”. Aside from set-top box and audio product segments which are competing in a largely commoditised area and by its own admission facing “downward pressure on prices”, the only innovation Amstrad has given us since its games consoles of the 80s is its e-m@ailer phone, which Sir Alan hoped would bring email, Web access and SMS to “the masses”.
The e-m@ailer was so successful that Amstrad has now dumped it. Which is what anyone who still has one on their hall table should do with theirs, too. Not everyone has, seemingly: in its latest figures the firm said it would make around £6.4m annualised revenue from ongoing e-m@ailer charges.
The e-m@iler will not be sorely missed. While the up-front purchase price may have been only £100 for even the top model, the devil was in the details. Sending or collecting even a single email cost 20 pence. The machine checked your email every day, for 20 pence a time, whether you wanted it to or not.
Quarterly, you had a minimum of 90 separate 20p bills. More if you wanted to check email more than once a day. To add insult to injury, you were sent adverts that appeared on the phone’s screen, that you had to delete manually. Want to surf the Internet? You can only see low graphic content sites, and even for those you had to pay 5p per minute. Want to send an email with a photo attached? That’ll set you back 25 pence. SMS? 50 pence. To send a fax? £1.
It’s incredible the firm managed to sell even the 507,000 units that it did. Be seduced by a low up-front cost and then pay over the odds to send an email or a fax: they should have called it the blackm@iler.
I cannot deny that Sir Alan Sugar has shown considerable flair for business over the years. He ranked 71st on The Sunday Times Rich List 2006 in Great Britain, with an estimated worth of around £800m. But he’s taken his eye off the ball somewhere along the line. Maybe he’s spending too much time in front of TV cameras.
The company’s spectacular lack of meaningful innovation to show for the £1.2m it spent on product development in its latest six month period, and the cynical nature of its e-m@iler pricing, makes Amstrad the last place on earth I would want to work. Which is just as well, because I am sure that I am not the sort of person Sir Alan would want to hire.
In its financial results Sir Alan talked about “driving down the overall cost of manufacturing”, maintaining margins, and “research[ing] the smartphone market”. But looking at Amstrad’s latest performance, there is only one thing Sir Alan should be putting in his chairman’s statement: “I’m fired!”