Given the sudden interest, here's a copy of the autobiographical article by
Dave Freeman, published in the June 7 issue of the Computer Collector E-mail
Newsletter. (Shameless self-promotion: the intentionally primitive web site is
http://news.computercollector.com)
-- Evan K.
------------------------------
The Beginning
Advanced Computer Products, Inc. (ACP) was founded by me, Dave Freeman, in the
summer of 1976. While working at Fairchild and National semiconductor, I
experienced first-hand the development of the basic monolithic integrated
circuit into a microprocessor chip. In 1975, General Instruments developed an
integrated video pong chip that minimized the number of parts required to build
a video game. This sparked a massive video game war that included unlikely
participants such as Ingersoll, Interstate Electronics, and other companies
that got involved in building Pong machines.
Before GI started shipping the AY-3-8500 video game chip, I negotiated an order
of 25,000 pieces to support the hobbyist market via mail order. I convinced GI
that this was a viable market that required extra support, and they agreed to
set aside enough chips to support our needs. I developed a video pong kit and
started advertising in Popular Electronics and later in Byte. The kit was
available for $39.95, and the response was overwhelming. After two months I had
over $80,000 in the bank. I still had a job with a semiconductor distributor,
but I built and shipped pong kits at night.
Then the unimaginable happened: GI reneged on my video pong chip orders! I had
thousands of dollars of hobbyists' money and no chips to complete the kits. The
demand for the video pong chip was so high that GI took another step placing
the chip on allocation and shipping to only five manufacturers worldwide. Many
video game manufacturers invested big on getting this chip. Many went out of
business or lost substantial cash due to their inability to get the chip.
I contacted the manufacturers that were getting parts and came across a contact
in the Philippines that was willing to sell me ships via the gray market for
cash. The only problem was the parts would have the part number and date code
shaved off and the price would be a whopping 20 bucks each! This was four or
five times the going price in the market. I arranged to meet this gentleman at
Los Angeles Airport and purchased 1,000 chips at a time for $20,000 cash, and
the parts were delivered in cigar boxes. He would then fly back to the
Philippines. Fortunately for me, the parts were genuine and I was able to
deliver the kits to our customers. This was the start of ACP. This was also the
last time I would have a good night's sleep.
Early Life in a Garage
I quickly resigned from my position as vice president of the semiconductor
distributor and concentrated full-time on supporting the hobbyist market via
mail order. I worked out of a garage that had one light socket that we
octopused enough lines to power the equipment required to process and ship
orders. My brother Tom joined me at this time and we were in business. We added
more integrated circuits to our mail-order ad such as the [Intel] 8080
microprocessor, and our mail-order business continued to grow. Soon we
increased the size of our Popular Electronics ad to a full page and added Byte
magazine. This was a huge decision at the time as one page in Popular
Electronics cost $3,000. We decided to go for it and it worked. Our mail-order
business doubled each month for the next six months.
ACP Computer Retail Is Born
I had a vision that the new personal computers just introduced into the market
were going to be purchased from retail stores. I also believed that everyone
would have a personal computer in their home -- a vision not shared by many
during this time. In November 1976, we opened a retail store with 3,000 sq. ft.
of retail and warehousing space. Our original name was Advanced Microcomputer
Products. We eventually changed it to Advanced Computer Products due to a
cease-and-desist order from Advanced Micro Devices (AMD).
ACP was one of the first 10 computer stores in the nation and still holds claim
being the oldest operating independent computer retail location on the planet.
We quickly added computers to our offering and became dealers for Imsai, Apple,
Processor Technology, TDL/Xitan, Smoke Signal Broadcasting, and Vector Graphic.
In the early days, I recall trying to convince friends and business clients
that there would be a personal computer in every home in the USA. They were not
convinced and I spent several years talking about how personal computers were
going to change the world. In those days, my early competitors in retail were
The Computer Store of Santa Monica, owned and operated by Dick Heiser, The Byte
Shop of Orange, owned and operated by John French and Hal Lashley (also George
Tate of Ashton-Tate fame got his roots here). There was also Byte Shop of
Westminster, owned by Marty Rezmer and their top salesman was Vern Raburn, who
later held top management positions with Microsoft, Lotus, Vulcan Venture
Capital, and who now builds airplanes in New Mexico.
My Life with Apple
Early in 1977, I got a telephone call from Gene Carter, national sales manager
for National Semiconductor, inviting me to come up to Silicon Valley for a
visit. Gene proceeded to pick my brain about the personal computer revolution.
His main interest was Apple Computer. I told him it was for real and he
immediately joined Apple as one of its first managers along with Mike Markkula
and Phil Roybal. Phil had joined National as the result of my arranging an
interview for him. Mike Scott, Steve Jobs and Steve Wozniak were already at
Apple. I then became one of Apple's first dealers. ACP grew its Apple sales to
over $5 million per year and actually set up a series of technology centers for
the Greater LA Schools to train teachers.
Still an independent, we were one of the top Apple resellers in the country.
Other Apple dealers in the Southern California area included: Wabash Computer,
Priority One and Computique. Apple quickly let their early success go to heir
heads and started changing the policies and procedures for resellers. Apple
tried to control the entire market and unfortunately forced many resellers to
exit the retail computer business. Apple management became more and more
concerned about dealers selling their computers via mail order.
My good friend, Gene Carter, whom I helped to decide to join Apple and become a
mega-millionaire, sent all Apple dealers a new contract. This contract would
add the condition that Apple had the right to change the contract with only 10
days notice. Within days a new contact was sent out giving all dealers 10 days
to be out of the mail-order business. All Apple sales would require a
"face-to-face" meeting with the end customer!
ACP had just distributed its new mail order catalog with a 12-page Apple-only
color insert. This represented a major capital commitment on the part of ACP.
We basically bet our business on future Apple business we would get from the
new catalog. Unfair, that is an understatement! ACP joined with five other
dealers such as Olympic Sales to sue Apple for its mail-order ban based on the
Robinson-Patman fair trade agreement. Unfortunately for us, Ronald Reagan was
in power and big business was protected by his administration. We lost in a
summary judgment. (About this time we received a call from the White House and
they ordered 15 memory upgrade kits via mail order. We gave them open account
and received payment in 180 days!). All of the other mail-order companies
involved in the Apple lawsuit went bankrupt. ACP survived but lost millions of
dollars as a result of the Apple decision.
It's fair to say ACP was not the only one to become a victim of the arrogant,
self-serving decisions to be made by Apple in the future. Ironically, Apple is
now a big player in the mail-order business and at the time of the lawsuit
Apple had a small software mail-order business as well. Trying to adhere to
Apples policies of prohibiting sales of computers outside our approved ZIP
codes and requiring face-to-face meetings, I recollect calling Apple one day to
see if we could handle an order for 20 Apple II computers for an education
center in Katmandu, Nepal. They approved this transaction and ACP was the first
to introduce computers to Nepal. I never understood this decision and never
will. In 1986 we ceased to offer Apple products in view of their desire to only
sell to major chains such as Businessland, Sears, Computerland, and others. The
personal computer had become big business.
Operating a Computer Retail Store
Operating a computer retail store in the early days from 1976-1980 was a real
test for any businessman. Cash flow was generated by selling computers for cash
(usually cash in advance.) The problem was in those days that all
manufacturers demanded cash in advance for computer purchases. Credit lines
were non-existent! Distributors were also not yet founded. Imsai, one of the
first personal computer manufacturers, would make us send cash in advance plus
order significantly more computers than we needed. Our salesman was Bill Lohse,
who went on to be the publisher of PC Magazine and executive for Ziff Davis.
The toughest decision we made on a weekly basis was how much cash to send
computer manufacturers and will they go out of business before they complete
our advance orders.
Market Driven by Computer Shows
In 1977, ACP participated in the first West Coast Computer Faire, founded by
Jim Warren. This became the foremost showcase for new personal computer
products and we were part of all of them. Apple introduced its Apple II at this
show and wowed the computer hobbyists with a live demo of "Breakout". Mike
Scott personally handled the demos!
ACP also participated in the world's second computer show held in Trenton, New
Jersey (the first was held in Atlantic City a short-time earlier). Computer
shows became very popular through 1979 as we traveled to Boston (Wayne Green's
Shows), Toronto, Philadelphia, New York, Houston and many other venues to show
our products. The key show and the most significant show however, continued to
be the West Coast Computer Faire in San Francisco.
In 1977 the first Comdex show was held in a back room at the MGM Grand Hotel in
Las Vegas. I was there and it consisted of about 50 booths, and who would of
imagined that Sheldon Alderson would turn Comdex into the success that it has
enjoyed over the years!
Let's Build It
In 1977 ACP developed one of the first 4K memory boards for the Altair, Imsai,
and other S-100 bus computers. Our card solved the instability and quality
problems other 4K cards had and our sales took off. We then added other S-100
cards. We then developed the Z-80 Softcard for the Apple and a 256K memory
card. We negotiated an OEM agreement with Microsoft and built more than 250,000
of each card sold under the Microsoft name. Our manufacturing business became
so big we spun it off under Vista Computer and added more upgrade cards for the
Apple and the IBM PC when introduced in 1981.
The World's First Computer Superstore
In 1981, ACP opened two new stores, one in Tustin the other in San Jose,
California. Our San Jose store was named ACP Technology Center, and it was the
first "Computer Superstore" in the country. Our objective was to open Computer
Superstores in 12 major cities within a two-hour plane ride from Santa Ana. We
hired industry executive Tom Anthony to roll out, obtain financing, and secure
authorizations for our expansion program. We invested over a million dollars in
opening this store. ACP Technology Center was an instant success.
We then tried to obtain authorizations from Apple and IBM to sell their
computers. The general concept of computer retail at that time was to have a
store on every corner a la Computerland. IBM was really focused on getting an
IBM medallion placed at every corner of the country. A Computer Superstore did
not fit their model and we were too early to market with our concept.
Six-months later Businessland convinced IBM that the way to go was computer
superstores and IBM bit on it hook, line, and sinker. The rest is history. In
fact IBM became so selective and restrictive as far as their computer resellers
that the price of an IBM computer store medallion soared to over $150,000 for
one location.
First Computer TV Show
In 1982 we produced the first TV show for personal computers on channel 48 in
San Jose. "The Computer Show" was hosted by our store manager, Manny Lucero,
and featured special guests and new product introductions for the first 30
minutes and the remainder of the show took call-ins from the viewers. Guests
included Steve Wozniak, a real supporter of the show and the store even though
his brother had his own computer store in Cupertino, as well as Steve Jobs,
Philippe Khan, Paul Terrell, and others. The show continued for two years and
we were forced to go off the air as the costs increased dramatically and it was
difficult to get marketing funds from manufacturers at that time to support a
TV show.
Collecting PCs
I always knew there was something special about the genesis of the personal
computer revolution. I started early collecting PCs and remain an avid
collector today. The PC Museum has over 700 computers at the present time and
our objective is to someday create a venue where this memorabilia can be
displayed to the public. Our website is at www.thepcmuseum.net.
Donations
If you have anything to donate please let us know as there are still some
computers that we do not have. The short list of computers we need includes:
Sphere, Ithaca, Byt-8, PolyMorphic Systems, Heathkit H8, Cromemco, TDL/Xitan,
Smoke Signal Broadcasting and Apple I. We also need all the memorabilia and
photos that we can get related to the history of personal computers. If you
have historical information about the systems we have online, we invite you to
submit the information to share with our website users.
It has been a special 28 years for me. Just surviving the unpredictable changes
in the personal computer field, which has been a roller coaster ride, it is
simply amazing that we are still here today. The memories we have of the
industry and people we met and worked with has made it all worthwhile. Our
customers have also given us many rewards from their continued support and the
friendship we have enjoyed over the years. I am sleeping a little bit better
these days!
(David Freeman is founder and CEO of Advanced Computer Products Inc. Dave
attended Long Beach State and the University of Southern California. He has a
bachelor's degree in electrical engineering.)
Received on Fri Sep 10 2004 - 23:09:05 BST