Research Machines Ltd, the Oxford-based specialist in microcomputers for the educational and computer aided design markets, has announced turnover for 1989 up 37% to a record UKP53.4m, with pre-tax profits coming in at just over UKP3.0m. But although operating profits rose by 36% to UKP3.3m, they still only account for 6.1% of sales, a reflection of the fact that RM is one of the few UK firms with a commitment to actual manufacturing of its microcomputers, with a current volume of around 3,700 machines a month. This admirable but costly commitment has already forced Apricot Computers into looking for a buyer – possibly Mitsubishi Electric – for its manufacturing division, but RM claims that it has the considerable advantage over someone like Apricot in that it is not selling into the neurotically price-sensitive high-street and commercial markets, and so can afford the costs that its manufacturing and quality procedures entail; moreover, unlike Apricot, whose relationship with its resellers is problematic because of the continual price revisions that Apricot feels it needs to make, RM only relies on dealers for its operations in the computer-aided design market, which represents less than a quarter of total turnover. RM claims that the educational market, which brings in about 75% of total sales, is still doing very nicely thank you, but is intending to diversify more into the corporate and government markets where it sees more potential growth. It has sold around 500 of the Intel 80486-based personal workstations introduced last September (CI No 1,269), and is expecting increased interest in it, especially from the computer-aided design market. But RM’s main strategy as it prepares to float on the Stock Exchange within the next two years will clearly be to increase its activities as a supplier of computer networks. Over 70% of the 40,000 computers sold by RM in 1989 were supplied as part of a network, and this is where RM’s most attractive margins are derived: if this area remains profitable, a concerted push into networks will do much to make the Research Machines flotation a success.
