ACS Heritage Project: Chapter 29

Preamble

The Australian Computer Society (ACS) was formed 50 years ago, when the various state computer societies joined forces.

To mark the occasion, the ACS has initiated a heritage project to honour the many individuals who have contributed to the growth of the ICT profession in Australia.

At the heart of the project is a history of computing in Australia. It is not just a history of the ACS, but the history of a profession.

Australia has the longest computing history of any country, excepting the US and the UK, and CSIRAC in the Museum of Victoria is the oldest computer still in existence.

Chapter 29: ‘Plug compatible manufacturers’ take on IBM

In the mainframe’s glory years, many companies made copies of IBM’s mainframes. Some were successful for a time, but none of them lasted beyond the 1990s. With the massive success of IBM’s System/360 there was an increasing demand for processors and peripherals compatible with IBM's mainframe range, but offering better price/performance. These suppliers went under the collective name of Plug Compatible Manufacturers, abbreviated to PCMs.

Because IBM's pricing was ‘functional’ rather than cost-related, many of these suppliers were able to supply peripherals and add-on memory much less expensively than IBM, despite having nothing like IBM's economies of scale. The S/360 PCM industry was born.

The most successful of all the PCMs was Amdahl. Its machines consistently offered superior price/performance to IBM, and beat Big Blue to the punch with many innovations, particularly in storage and memory management. The other major PCM, at least in Australia, was Hitachi Data Systems (HDS), which we will look at next week.

IBM had great difficulty throwing the PCMs off its tail. After its antitrust suits it was wary of indulging in business practices that might be seen as monopolistic. IBM always said its competitors had the same advantages and disadvantages as it did, and it never indulged in unfair marketing practices.

But a dispassionate reading of its position in regard to its competitors, and anecdotal information from its competitors and customers, and from IBM itself, indicates that it played the game very hard, though with increasing degrees of subtlety after its experiences in the anti-trust suit.

Amdahl Corporation was founded by legendary computer designer Dr Gene Amdahl, the man who led the team that designed the IBM System/360. Frustrated with IBM's unwillingness to back his design for a more technologically advanced mainframe design, he struck out on his own and formed the company which bears his name, in October 1970.

Gene Amdahl in 1975 with a model of the 470/V6. Source: Amdahl Corporation

The S/360 had been very successful for IBM, but more because of its introduction of the concept of a consistent computer architecture, rather than because of its inherent performance advantages. Almost before the S/360 had been released, Gene Amdahl realised that it could be made to operate much more efficiently by using more efficient chip packaging.

But he was told the System/360 was doing quite okay. There was no need to rush into new technology when people were still quite prepared to pay for the old. The longer old technology could be sold, the more profitable it would become.

Gene Amdahl knew that there was a lot of sense to this argument. Variations on it had made IBM the world's most successful computer company. But the engineer in him rebelled against such reasoning. Finally, unable to persuade IBM's product planners of the commercial merit of his case, he reluctantly decided to leave IBM and seek finance to found his own company to realise his dream. That would mean competing against IBM, of course, but he saw no alternative.

Gene Amdahl's background, and his obvious dedication and sincerity, convinced the Japanese computer giant Fujitsu to back him. Fujitsu took a 47 percent stake in the fledgling company. The rest of the money came from a variety of US institutional investors.

Amdahl's first computer was around 40 per cent more powerful and 20 per cent less expensive than the IBM alternative. Amdahl's reputation for price performance was established. Called the 470 V/6, it was the first large mainframe to be air-cooled, and the first to be field upgradeable.

It was built using the new technology of large-scale ECL (emitter-coupled logic) chips, which substantially reduced physical size and power consumption. By 1977, Amdahl had installed 40 computers, and annual revenues had reached US$200 million. The company went public in 1976.

When Fujitsu set up in Australia as FACOM in 1973, it had difficulty competing against IBM mainframes. FACOM Australia needed a product with which to compete in this market, so in 1975 Managing Director Mike Rydon visited Amdahl’s headquarters in Silicon Valley and arranged for FACOM to distribute Amdahl systems in Australia, where Amdahl was not represented.

This enabled FACOM Australia to enter the IBM compatible market. The first sale, of a 470 V/6, was made to Qantas in 1976. Many other large private and public sector organisations followed. Gene Amdahl visited Australia for the first time in 1977, as keynote speaker at the NSW branch conference of the Australian Computer Society.

In 1982, Amdahl set up its own operation in Australia. For the next decade it did very well. Two enormous sales were to Department of Social Security in 1983 and to the Australian Tax Office in 1989. Both were for massive re-equipment programs that involve multiple mainframes spread across the country.

Other major users in Australia included the State Electricity Commission of Victoria, Repco, Comalco, Shell and Nissan. By the end of the 1980s, Amdahl Australia estimated that it had equipment in half of Australia’s larger mainframe sites. It moved strongly into professional services, and began sponsoring seminars and retreats for senior management on topical issues.

But in the 1990s, the mainframe market started to decline. While Fujitsu was making the successful transition into a services company, Amdahl saw its market declining. It attempted to diversify, buying French-Canadian services company DMR in 1995, but it was too late.

In 1997, Fujitsu acquired the 53 percent of Amdahl it did not own, and in 1999 Amdahl became a division of Fujitsu in Australia and New Zealand. The Amdahl name became part of computer history in 2002, when Fujitsu made the decision to not try to compete any longer directly against IBM’s new generation of mainframes.

Veteran ICT journalist Graeme Philipson is researching and writing the Heritage Project book, which is due for release on the 50th anniversary of the formal incorporation of the ACS, on 3 October 2017.

The project also involves the creation of a ‘virtual museum’, cataloguing hardware and other artefacts, and collecting and curating documents on the history of the industry, including oral histories of as many people as possible.

Please get in touch with Graeme if you would like to contribute, at graeme@philipson.info

Do you have early memories of the ICT industry in Australia? Help us make history by sending us your story! Record or write your memories to be included in our historic ACS Heritage Project. Details here.

Previously published:

Chapter 28: The rise of Fujitsu

Chapter 27: ICL

Chapter 26: The rest of the BUNCH

Chapter 25: Honeywell in Australia

Chapter 24: A 1970s snapshot

Chapter 23: ACS at home and abroad

Chapter 22: The early years of the Australian Computer Society

Chapter 21: Other Australian universities

Chapter 20: University of Melbourne and Monash

Chapter 19: Sydney University and UNSW lead the way

Chapter 18: Computing in the Australian Government