Once again highlighting the problems that typically beset a large company that has been run by a messianic founder once the succession has to be secured, Wang Laboratories Inc is in deep, deep trouble. Even Dr An Wang, recuperating from a cancer operation, acknowledges that his son, Frederick, may not have everything it takes to lead the company into the post-An Wang era, and the problems now facing Wang are mirrored in the troubles that hit Control Data Corp once the even more messianic William Norris finally retired, and, to a lesser extent, to Nixdorf Computer AG following Heinz Nixdorf’s untimely death. The contrasting rise and rise of Apple Computer Inc suggest that the company was saved and its future secured by the ousting of its co-founders once the business outgrew the vision that had created it. Compounding the problems of Wang is the fact that the good doctor was so wedded to his heritage and the concept of the Chinese family firm that the one aspect of corporate America that he found impossible to embrace was that of the truly public company constantly exposed to the attentions of fickle investors and professional manipulators after a fast buck. Never go public, Heinz, Herr Nixdorf was warned many times by his business mentor, and when the time came that flotation of some shares was the only appropriate way to raise new money, the Paderborner offered only non-voting shares, keeping all the votes safely locked up in Nixdorf family trusts. Likewise at Wang, the freely traded Wang Class B shares speak for only 20% of the votes, the controlling 80% being held under the protective guardianship of Dr Wang and his family. That means that no change of control can happen at Wang without the express support of the good doctor and his family – and the dynasty is too new for its members to start quarrelling among themselves, as often happens among the grandchildren inheritors of long-standing dynastic family trusts. Nevertheless, on its present course, Wang is going to hell in a handbasket, and one only has to recall the five-year passion of Control Data Corp and the regular false dawns that marked its passage to know that changes more radical than the debilitating rounds of cuts on which Wang is embarked will be needed to get the company back onto an even keel. Because with every round of cuts, the value of the company is reduced as good people follow the time-servers out of the company, and each cut erodes customer confidence further, leading to a new fall in demand for the company’s products, necessitating yet further cuts. In those circumstances there is no way that Wang will be given the breathing space to build its brave new business on the back of its innovative image technology. And that being the case, the least bad option for Wang is merger, now. As well as putting the fear of God up its existing customers, which can only be lifted by the backing of a wealthy company, Wang is critically short of new products with which to tempt its users to remain loyal. We suggested yesterday that the ideal backer for Wang would be a Japanese, or possibly European, major, but we can’t see the idea of a Japanese master going down well in Lowell. The suggestion of a merger with Xerox Corp has some attractions, but both companies are weak in products. NCR Corp has the products, but may not have the financial muscle to bail Wang out without burdening itself with excessive debt – and the bloodletting at an NCR-Wang would have to be of massacre proportions. Maynard minimaker Which leads to the exotic suggestion that as a Mas-sachusetts company, Wang should look to one of its neighbours for salvation, brandishing generous Massachusetts tax breaks as an inducement after all, the Cabots may talk only to God, but the Lowells do talk to the Cabots. With its plunge into Unix workstations using the MIPS Computer Systems Inc R-series RISCs, Digital Equipment Corp needs to raise volume substantially to keep its margins intact – the price-performance of the MIPStations is dramatically better than that of the VAX family, which means that DEC
has to sell several of the former in order to make the same unit profit as it made on one VAX sale. Moreover Wang is undeniably strong in office software, where DEC’s offerings are regarded as workmanlike but not overly compelling. The VS operating system has its attractions, but Wang no longer has the resources to keep pace with IBM’s AS/400, which means that the VS base is a wasting asset. In the medium term, running the VS operating system under Unix on big VAXes looks like the best solution, but as a top priority, converting Wang’s OIS to run under Unix on the MIPStations would be a top priority, at last offering a convincing replacement for all those acres of Z80-based distributed Wang office automation systems and creating a large new market for MIPStations. One compelling argument for getting into bed with DEC is that the Maynard minimaker will already be finding the Wang customer base a happy hunting ground: Wang can’t fight DEC – better to join it. Of course there is a question mark over DEC itself: what happens to the company when founder and president Ken Olsen finally quits…
