Normally, it doesn’t bother us much when our watch refuses to keep good time. After all, if one must know precisely what time it is, one probably cannot afford a Rolex. But of late, we had become acutely aware that we were walking around with a bum ticker. So when a link on the bracelet gave way, we brought the old timer to the shop for an overhaul. Estimated charge for repairs: $255.47. A Rolex emphatically asserts that time is money. Next stop, Chinatown. Canal Street is where New Yorkers shop for cheap watches that look an awful lot like expensive ones. It is lined with uniform timepiece boutiques, each consisting of a bridge table strewn with baubles.Two or three technicians are required to manage each tiny enterprise. The taipan handles negotiations from behind the table. Number two patrols the street side of the establishment; most likely armed and certainly fleet of foot, he attempts to foil the ever-present shoplifters. The optional third player keeps watch for representatives of the government, who just might want to license or tax the entrepreneurs out of business. All collaborate in locating prey like us.

Hondling

We were prepared for this. Having observed a trade with similar practices for many years, our next step was obvious. We tried to differentiate among dozens of nearly-identical machines priced at radically different and often preposterous levels by individuals we did not trust any farther than we could heave a Bosendorfer. The three best choices were all ersatz diver’s models. Least appealing among them was a $23 Hong Kong fake with a quartz movement. Bad look and feel. For five bucks more, we were offered a Taiwanese unit, also using quartz technology, that was much more carefully finished. But it ticked every second, while our genuine but temporarily disabled mechanical Rolex had a sweep hand that appeared to move continuously. The winner was a watch with a Taiwanese case and a Japanese self-winding 21-jewel movement. Alas, it cost $50, and then only after a buyer vigorously participated in the price-adjustment ritual Oriental merchants call hondling. Later that day, we realised the watch was showing the wrong date. In our haste to reset it, we unscrewed and pulled out the winding stem with unaccustomed vigour – unaccustomed by the watch, that is. The gizmo popped right out into our hand. The next day, we went back to Chinatown, intent on upbraiding the vendor and getting a different timepiece. To our dismay, but not entirely to our surprise, where once dwelled a bustling tabletop jewellery shop there was now only a vacant patch of sidewalk. Our connection to the far Pacific had taken on the character of users’ ties to Atlantic Computers Plc. Yes, even on Canal Street, boulevard of shrewd and cynical survivors, businesses cannot live on borrowed time – which Atlantic had done for years. It is also what other now-defunct lessors had done in the past. And it will happen again, eventually, leaving customers and investors in the lurch. If there is a lesson here, it isn’t one that’s confined to computer leasing. –

By Hesh Wiener

For even though Atlantic’s failure occurred in that trade, the company’s unravelling was not a consequence of its speciality. Rather, the demise of Atlantic is just an instance, a case in which a company couldn’t get away with unsound and unethical practices forever. Atlantic’s financial sins are endemic to the whole realm of finance. They are a common, unwanted side effect of prosperity. During every business boom, there are operators that ride markets upward, convincing investors that their speculation in real estate, stocks and bonds, computers or commodities is the result of brilliant insight and masterful strategy. These players may be hard to distinguish from similarly inclined, competent and legitimate participants. Sometimes the bunco artists seem more appealing than the straight shooters. The less the observer knows about the nitty-gritty of a particular financial speciality, the more effective are scoundrels’ acts of illusion. In the fullness of time, however, the

villains often get their due. Eventually, business conditions grow more arduous. And when the wheel of fortune turns, these schemers are wiped out, taking their investors along with them. Computer leasing is only one business that’s going through a difficult period, and probably not the most significant. US real estate these days is a house of cards. The losses are so devastating that the government has stepped in. It is trying to pay for the mass looting of savings and loan institutions by fools and knaves. It has taken out a 40-year bond-backed mortgage on the Second Great Depression. Last we looked, the Administration was trying to get the Japanese and Germans to buy this peculiar deal and discovering to its dismay that neither had a yen to be a mark. Computer lessors often use a pint-sized version of this strategy to bridge downturns like the current one. They roll their problems forward, using front-end profits from current transactions to pay for back-end losses on prior deals that went sour. This is not a strategy confined to incompetent leasing companies. Even the best lessors must weather trying times every so often.

Preposterous

But a strong lessor will ride out the storm that causes weak ones to capsize. When good times return, the survivors will prosper all the more because they will have fewer competitors putting pressure on profit margins. In addition, customers favour time-tested leasing companies. Even in good seasons, the computer leasing business has some peculiar characteristics. To begin with, the very idea of fighting IBM for a dollar is, on the surface, preposterous. IBM gets machines wholesale and sells or leases them at retail. Third parties buy them at retail and then have to market them at wholesale. Nonetheless, computer dealers and lessors have, in the main, prospered. Most lessees don’t appreciate just how fundamentally sound the computer leasing trade is, just as they never seem to learn that it is cyclic. They confuse leasing’s volatility with fragility. They don’t seem to realise that IBM cannot destroy the leasing business without causing itself great harm. Customers – however great their investments in software – do not like being at the mercy of a monopoly. It’s difficult enough for them to accept the dominance of a single supplier, however earnest. But the prospect of having only one place to sell unwanted equipment is too much for users to bear. Eventually, they would bolt. So the leasing business will survive – and within it not only the well-run firms but some that play fast and loose with others’ funds. There will always be customers who don’t realize that a deal that seems too good to be true probably isn’t. But just as surely, there will be prudent lessees who will direct their trade to worthy lessors. These users won’t have to hear the words of a bankruptcy trustee presented with a pre-petition obligation that will no longer be honoured – coincidentally, the same words used by a peddler on Canal Street asked to take a broken timepiece in trade: It wasn’t on my watch.Copyright (C) 1990 Technology News of America Co Inc.