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APOLLO COMPUTER: NOT JUST ANOTHER START UP
by Ronni Sarmanian
"We expect 1984 to be a time when we become, truly, a major
enterprise in the computer business." These are the words of
Charles P. Spector, President and Chief Operating Officer of APOLLO
COMPUTER, INC., the Chelmsford, Mass - based company whose meteoric
rise to success gives credence to that statement.
In the computer business, where only one firm in twenty makes
it, four-year-old APOLLO went public a year ago and today boasts
profits of over $13 million and sales of $80.6 million. Sales that
have quadrupled in the last year. Why has this company done so well
and just what is the APOLLO difference?
One difference is the firm's management team. The average
age of the firm's Operations Committe is 45 -- a good decade older
than the average age of a start-up venture company. It's a management
team of eight -- three Prime Computer, two from Digital Equipment
Corp., two from Data General and one from outside vthe computer business.
Six of the eight are second-timers -- that is, six of them were founding
members of other successful venture start-up companies.
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APOLLO -2-
The company began in January 1980 with a 12-page, no-nonsense,
business plan, handwritten by Chairman and CEO John William Podska Sr.,
while on-route to the West Coast where he was to meet with venture
capitalists. In May, that year, APOLLO COMPUTER, INC. was incorportated
and the company produced its first system. The business plan scheduled
the first shipment for first quarter, calendar 1981. It was shipped
to Harvard University, Cambridge, Mass. in March 1981. Over 100 systems
were shipped that year for revenues of $3.4 million. In 1982 APOLLO
showed its first profit.
In March 1983 the company successfully completed its initial public
offering of 4,000,000 shares at $22.00 per share.
six international subsidiaries and a network of distributors. They have
shipped nearly 3000 systems.
A second APOLLO difference is its product. "We are a company that
brings a new product into a large, existing, yet high growth marketplace",
says Edward J. Zander, Vice-President, Marketing. "We believe we are
the successor teechnology to timesharing because we sell a sustem that
is a network of dedicated, computer systems."
APOLLO believes that people with heavy computative requirements no
longer need to depend on one central facility with many termianls
connected to it. Now they can have dedicated computer systems and
share resources, APOLLO says.
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APOLLO -3-
"The marketplace we serve is that of the technical professional",
Zander continues. "These are people who use the computer to enhance
their intellectual capabilities -- engineers, scientists, programmers,
people who design with computers and people who analyze problems.
This field has been served for a long time with timesharing systems
form IBM, DEC, Prime and to some extent, Hewlett Packard. APOLLO was
founded to bring a new type of technology to that marketplace."
APOLLO's product is called the DOMAIN Processing System -- an
acronym for Distributed Operating Multi-Access Interactive Network.
A DOMAIN suystem is a compact 32-bit, supercomputer or workstation.
The DOMAIN concept combines the power and high degree of
interactiveness offered by dedicated minicomputers, with the economy
of the shared-system resources of timesharing systems. Independent
superminicomputers, or the workstations, are interconnected in a
local-area network.
These workstations are designed to be used in a network, sharing
storage facilities and data. Trends in computer technology over
the past twenty years led to APOLLO's unique DOMAIN concept. Advances
in technology, including the developement of miniprocessors and random
access memory based on integrated circuits, resulted in the evolution
of minicomputers and superminicomputers, which offer computing power
comparable to earlier mainframe sustems at a fraction of the price.
Concurrently, the user of computers evolved from "batch processing"
by a few users on large central mainframes to "timesharing", in which
a number of relatively low-cost terminals are connected to the central
computer.
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APOLLO -4-
Because of their reduced cost, minicomputers can be dedicated to a
single user or task and permit a high degree of user inteeraction;
however, dedicated minicomputers don't let users share programs, data
or storage devices easily. Conversely, timesharing systems let groups
of users share these resources, but the responiveness and interactive
features of timesharing systems are impaired as the number of users
increases. -pg-
APOLLO has developed three key elements to provide this capability:
computer memory that appears to be larger than it really is -- or
"virtual" memory -- distributed over the network rather than localized
on only one computer; high-speed, precise (in computer lingo, bit-mapped)
graphics; and system software that directs and controls all the
activities of the network. These three elements enable each workstation
to handle large and demanding applications, such as those in the
engineering and scientific areas, at a fraction of the price of a
mainframe computer. In addition, potentially hundreds of workstations
can be connected in the networrk to form a single, powerful, computing
environment.
APOLLO was one of the first companies to offer "windows" on a
computer screen, which let users perform multiple tasks simultaneously.
It uses the Motorola 68000-series chips as the basis for its product.
And it offered Bell Laboratories' UNIX* System III software on its
products early on. These three inovations of product design positioned
the company apart from competitors from the onset.
* UNIX is a trademark of Bell Telephone Laboratories Inc.
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APOLLO -5-
"Our strategy has been to bring higher levels of performance
to the user, in terms of computer power and graphics capability at
the same or lower prices", President Spector says. "The evolution
of APOLLO price/performance over the past three years reflects our
commitment to provide -- every 18-24 months -- twice the performance at
the same price or similar performance at half the price. Today, we
offer users seven times the system performance of the first DOMAIN
system at about the same price."
APOLLO has found a market niche. Since the beginning, the firm
has not strayed from its focus on the technical professional. APOLLO
developes the tools for supporting these applications and depends on a
number of established, third-party software companies to provide
"application" software. Today, over 200 vendors have converted their
software packages to operate on DOMAIN systems.
All indications are that this market niche was a good choise.
In the U.S. alone there are about 525,000 mechanical engineers, 44,000
electrical/elctronic engineers, 550,000 software engineers, 400,000
scientists/biomedical specialists, 250,000 graphics/publishing
professionals and over a million other types of engineers. This totals
about 3.5 million potential users. The average cost of an engineer is
between $120,000 and $150,000 per year including salary, fringe, floor
space, travel and entertainment. APOLLO claims that a $30,000 system
can double each persons productivity. With 3.5 million people using
systems that cost $30,000, that amounts to a markerplace of about $105
billion. "You con discount that as much as you like for external factors
or other technologies, but even 10 percent that number says that the
marketplace today for just the technical professionals is some $10
billion. And we we'd be happy to have a substantial share of the $10
billion marketplace." Zander says.
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APOLLO -6-
The company's strategy, market focus and product is so timely,
APOLLO has become over the past two years -- the target firm to beat.
At least four new start-ups have attempted to imitate the product and
attack the very same market. -pg-
But APOLLO is still the critics choice. Industry computer analysts
at DATAQUEST, San Jose, Califonia note that "APOLLO's ability to keep its
product designs flexible while incorporating available technologies has
been significant in positioning itself as a leader in workstation
designs." Financial analysts at Adams, Harkness, Hill: "We hope our
audience does not tire of our enthusiasm for this company. We remain
just as positive, if not more so, regarding APOLLO's evident commitment
to providing high-speed, high-performance workstations and more
importantly, network capabilities to the technical professional."
Industry observers at the International Data Corporation note "...APOLLO
continues to demonstrate productive R&D spending and a knack for staying
a step ahead of its major competitors."
And it's a nice place to work. The company's guiding principals
are justice, fun and excellence. CEO Poduska explains: "We demand the
best that our employees can give us. We do not allow lack of performance,
enthusiasm or commitment to the company. We deal with our employees
justly. When we began this company, we set a goal to spread the available
stock widely across the company. We have over 80 percent employee
participation and ownership in our company.
After all, we do a good thing in building computer systems to help
other people use their brains. We don't burn forests or pollute rivers
-- we really do something that is ultimately worthwhile. As maudlin
or syrupy as that sounds, alot of folks at APOLLO COMPUTER believe
those words and I am at the head of that list.
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APOLLO -7-
And there's a bit of fun while we are doing it. There is
nothing quite so successful and fun as success itself. Seeing 1300
people at APOLLO doing their thing regularly is a good feeling for
all of us."
Hopeful employees flock to Chelmsford doors. A recent "open
house" packed the corporate lobby with over 600 people responding to
an ad for manufacturing positions. The company provides free coffee
and tea to its employees all day, it offers competitive benefit
packages, has a well euipped gymnasium and showers, and even a "mothers'
10 - 3 shift".
The number of people on the payroll is expected to double by the
year's end. When the move to new corporate headquarters is complete
this month, the firm will occupy 400,000 sqare feet of space. And
another building under construction is slated for APOLLO occupancy in
the fall, increasing total square footage to nearly 500,000.
Technology-driven and market-oriented, APOLLO's plans for 1984
are ambitious, but not unrealistic. The firm re-invests over 10 percent
of its revenues in research and developement to deliver on its commitment
to produce systems with industry- leading performance at low entry-
level prices. And because the firm has planned for its rapid growth
with automated manufacturing, quality teams and an in-house network
of over 500 workstations handling product design as well as adminis-
trative tasks, APOLLO stands to accept the challenges of a major
enterprice.
When asked why he left Prime to found APOLLO, CEO Poduska likes
to say he wanted to have Badge Number One. But that's not the only
Number One he got.
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