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Technology / AI and automation

PRIME COMPUTER LIKELY TO BE DRIVEN TO SCALE HARDWARE BACK, BECOME SOFTWARE FIRM

With some kind of announcement almost every day on the battle for control of Prime Computer Inc, any comment on the current state of play can only be a snapshot likely to be overtaken by the next event. But if it is assumed that the leveraged buyout proposed by venture capital fund J H Whitney Co succeeds, what future is there for the Natick minimaker? The first answer is that it will likely have to drop that title – not because there are any plans to move the headquarters from the Massachusetts township: the plans are to keep them there – but because the company will have so much debt to service that it is likely to be forced to abandon or greatly slow its development effort on new models in its 50 Series. The reason is that a company saddled with debt after such a takeover traditionally sells assets to find the cash to put its finances on a sounder footing, and it is difficult to find anything substantial within Prime that the company could sell. It had anyway decided that the days of the proprietary Primos operating system were numbered and that it would have to major on Unix systems in the future: the question now arises of whether it should make those systems itself or increase its programme of buying in hardware OEM. Its two main assets are its computer-aided design software, both the base of programs it built up on its own account and the ones that it acquired with Computervision Corp; and the base of office and networking applications that it developed for its Primos operating system. Under the new regime, it is likely that Prime will find itself forced to devote all its – somewhat straitened – development efforts to converting everything that doesn’t already run under Unix to the AT&T operating system. Over time, it is likely to have to convert itself into a software and systems integration company not saddled with the expense of developing and manufacturing its own hardware. As a private company it will be under a lot less pressure to perform dramatically quarter to quarter, but it is unlikely to see much volume growth over the next several years, although Whitney will be looking for steady growth in profits on its investment.

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CBR Staff Writer

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