Beginning Production

Late in 1978 I was on my way to Europe. I stopped off in Boston to talk to some customers. I didn't have time to see Bill McDonald, but talked with him by phone. He was my classmate and had worked for me for five years in the 1950s. While we talked I found out that he was involved in microprocessors attached to milling machines. Before I could ask him if he would come and work for me again, he asked if I had anything for him to do, and I said by all means. He moved west and was onboard by the spring of 1979.

We began to look at what was being developed in microcomputers. We bought some, tore them apart, and I asked, "Can we build these things?" Bill said, "Yeah we can build computers, but where would we sell them?" And that scared me enough that I put this on the back burner. Then in the spring of 1981, I read in Time Magazine that Radio Shack sold 120,000 computers in their first year out. And I said, what have I been waiting two years for? In the meantime, since Bill started working for me again, we had put microprocessors into some of our instrumentation, so we had developed the engineering expertise to build our own computers. I said go.

We had our first unit ready the following year, which we introduced at the West Coast Computer Faire, in San Francisco, in April of 1982. Although we were taking orders, I decided to hold up production for one month while we re--engineered the floppy controller logic to support the double-density format instead of the single-density format. Our engineers said it was simple to implement. I'm referring, of course, to single-sided drives. The availability of double-sided drives was still a year away. It was a good move because it gave us a competitive advantage over the Osborne computer that had just been released, which also was a transportable. Osborne never was able to do this successfully.

While we held up production, we also decided to put both floppy drives on the right side of the case, instead of having one on either side of the CRT. A visiting customer from Switzerland told us that computers don't seem to work too well when you did that. The EMI emanating from the flyback transformer and the cathode display created a powerful magnetic field that resulted in erratic disk read/writes. We scrapped the first 20 chassis, moved the drives to one side, and the system worked just great.

(Andrew Kay, Computer Shopper, Aug 1989, pg 412)

David turned his focus to another product. One of those he had argued for was a portable personal computer. Andrew had begun fiddling with the concept back in 1978, reasoning that the Apple - with its separate monitor and central unit — was an awkward cumbersome design. A startup venture, Osborne, had launched its own portable and was receiving considerable media and consumer attention. With its tremendous consumer appeal, the computer appealed to David as a product with an infinitely larger market —and thus much greater profit potential - than test equipment. What's more, marketing technical products to a lay audience was something David figured he understood. He decided LS should take its prototypes, then still in devel-opment, to a 1982 San Francisco computer show. But he met with intransigence on the part of NLS engineers, who didn't want to be rushed. Andrew, who believed the computer (later known as the Kaypro II) could be completed through the usual development channels at NLS, wasn't much help, David says.

So his son resorted to guerrilla tactics, leaning on his sister Janice to help design the graphics and bringing in a friend to spray-paint the machines on the company's lawn. NLS was swamped with 300 dealer orders in San Fran-cisco, and the company — with no semblance of a production line — suddenly had to deliver. Yet portions of the software still had to be written, and the NLS engineers weren't cooperating. "We don't have a product," said one.

Five years later, that comment still rankles David. "Here it was," he says, fuming, "the most promising thing we'd ever done. And this guy says it's not a product." David beat the San Diego bushes for a software writer, landing someone who cranked out the code in a record three weeks as opposed to the six months David had been told the job required. While Andrew didn't directly stand in his way, he did believe, so David says, "we could have followed procedure a little more closely."

Meantime, David began urging Andrew to change NLS' lackluster name to something zippier, a simple company name that would match the product name, making the word easier for prospective buyers to remember. That too met resistance. But several weeks later, Andrew relented, and Kaypro - the Kays' second choice after Kay Corporation —

The nascent personal-computer manufacturer soon turned into what Andrew aptly describes as a scene from M*A*S*H: Unable to secure requisite permits for a new manufacturing facility, Kaypro resorted to storing computers inside a sprawling circus tent.

(The Executive (Southern California), August 1987, pg 20)

The Kaypro wasn't born in a garage like the Apple, and it wasn't given life by a high pressure multimillion dollar corporate crash program, like the IBM PC. The Kaypro was conceived because an Apple II almost gave Andrew Kay, David's father, a backache.

Andrew—a graduate of MIT, inventor of the digital voltmeter, owned Non-Linear Systems, near San Diego. In 1979, his daughter and son-in-law, who ran an architectural firm, had just bought an Apple computer. Andrew was helping them program it. After a time he became annoyed at lugging the three different pieces of the Apple from their house to his, several times a week. Then came a marketing man's inspiration: why not a small, low-priced computer in one container no bigger than a sewing machine, that can do almost anything the Apple can? Why not? Development began in mid-1980, and a prototype was ready the next year. Then there was potential disaster in the form of Adam Osborne, the flamboyant writer and publisher of computer books, who announced he was ready to market a portable computer.

"It made us very nervous," David Kay admits. "But when we saw Osborne's brochures and the specs for his computer, we knew we had a great advantage. We had the better machine."

The Better Buy Wins

When the Kaypro was ready to be introduced-almost a year behind the Osborne and six months behind the IBM PC-the big question was how to turn Andy Kay's light bulb idea into a product concept.

"It had to be positioned as a full-feature complete, system all in one portable unit," David Kay says, "and available at a lower cost than other machines that were able to do the same things as ours but that were much more expensive. We would be the low price leader, the price/performance leader in a full-feature computer."

As part of that strategy, the Kaypro was priced at exactly the Osborne level-$1,795—but Kaypro offered a better computer, with a screen capable of a full 25x80 display, disks that could hold twice as much data, a rugged metal case instead of plastic, and several other improvements. And, following Osborne's lead, Kaypro offered a software "bundle" —programs worth $1,000 retail, at no extra cost.

(Computer Advertising News, March 1984)