Those clever people at Real Time Control Plc have come up with one of those ideas that every now and again appears and which, though simplicity itself, stands a good chance of making somebody a lot of money. Real Time has since the mid-1970s been making computerised point-of-sale equipment first for the wholesale, and then retail, sectors. Until now it has been marketing its own design of hardware, but with IBM stepping up its product offerings for the market last year, Real Time has spotted a niche it can fill. IBM has the reputation of being second-to-none in marketing, but marketing starts with conception and design, areas where IBM’s performance is decidedly uninspired. And last summer IBM introduced a new generation of point-of-sale terminals, the 4680, which left considerable margin for improvement.
For small, high-tech businesses like Real Time, whenever a megalith like IBM endorses a market but fails to provide adequate coverage, the pickings can be rich indeed. The 4680 system does not have as wide a range of available software to run on it, and what is worse, a network of 4680s needs the back-up of an IBM Personal AT which can become very expensive for cost-conscious retailers. For an average small-to-medium retail outlet’s needs (and that is Real Time’s market) – which, typically may mean four terminals – IBM would need to supply the four 4680s, as well as two expensive ATs (necessary to ensure continuous processing); total cost around UKP25,000 plus. Real Time will supply this if desired, but if price becomes a sticking point can offer two of its own alternatives, still based on IBM kit (still with a nice IBM logo stuck on the front), but with some nifty home-grown technology which does away with the need for an expensive AT. What Real Time has done is to devise a plug-in board – the Smartcard – for the 4680 terminal which enables the terminals, at the end of a working day, to communicate with each other, so that one of them to play master and consolidate all the day’s takings and stock changes from the other terminals on the network. Cost for a four terminal system, UKP14,000. If one terminal does go down, of course, it won’t pull the rest down with it – they carry on as normal. Real Time will also offer a slightly more sophisticated configuration, which demands the use of the Smartbox. A Smartbox is a small piece of hardware that interfaces between a network of terminals with Smartcards in place, and an IBM XT, much cheaper than the AT, which allows degrees of continuous processing and thus real-time functions such as stock control. The cost of such a configuration (again, four terminals, Smartbox and an XT) is approximately UKP17,500 – still substantially cheaper than the IBM offering. IBM will deliver the first 4680s only in April, and then not in great numbers – so sales of what is an IBM box with a host of price-cutting improvements from Real Time will not start until the financial year beginning in April. Real Time has also taken the opportunity to implement its range of existing software applications onto the IBM 4680, so the prospective Real Time customer will immediately have an array of packages to chose from. The leverage of the IBM name and product line is exactly what Real Time has been in need of since it started in the mid-1970s, selling into the wholesale point-of-sale market. The company was small and customers were typically reluctant to commit the necessarily large proportions of their capital expenditure budgets to a company as small as Real Time. Having the IBM dealership behind it as well as being able to pack its own product behind IBM’s has reduced Real Time’s marketing problems ten-fold. This recent allegiance to IBM will make a material difference in the next financial year (to March 31 1988), but not the current one. Interims delivered to the public last month showed that even without this addition to its effective product range, Real Time is delivering the goods. Sales were up 42%, pre-tax profits by 189%, and earnings per share up from 0.9p to 2.9p – almost thre
e times. Two factors underlie this growth: the more obvious is that costs have been held effectively in check over the year, while sales have grown strongly. The bulk of this sales growth comes not from the point-of-sale business but from Real Time’s other activity, that of its terminal keyboard manufacturing subsidiary Rotec. Rotec supplies a number of leading manufacturers with standard Qwerty and customised keyboards – customers include ICL, Ferranti and Pericom. What characterises Rotec’s business is the lumpy nature of order intake, and to counter the effects of this, the small company has arranged a sub-contracting system whereby out-workers take on, when necessary, the assembly of key mechanical components. This has been a major help in avoiding additional fixed costs at Rotec, which has seen sales growth of 40% over the last 12 months, so that it now accounts for 60% of Real Time’S business. This growth is backed by healthy order books, the company claims, which will sustain the present level of business for at least the next 12 months. In the meantime, the point-of-sale business should pick up quickly once the machinery is forthcoming from IBM itself (probably during the coming summer).