What You See Is What You Get: My Autobiography (47 page)

I remember Nick Hewer standing with me and commenting on this while Jose once again pulled his fake paparazzi trick, with a few photographers flashing cameras at him. Other people were looking on, wondering, 'Who
is
this important man?'

I told Nick, 'Don't worry, we're still being paid by letter of credit.'

By now, Jose Dominguez was not satisfied just selling Amstrad computers in Spain; he also wanted to sell our audio equipment. The design of our tower systems had changed quite a bit by then - it was more compact, with twin cassettes and the newly invented CD player.

Imports of audio equipment to Spain from the Far East were on very strict quotas, but they couldn't ban the importation of equipment assembled in the UK. And while our tower system chassis were from the Far East, they were assembled into cabinets in England, with British-made BSR record decks and British-made speakers, so due to the high content of British material, the product could be classified as British-made and we were free to ship to Spain.

When Jose visited our factory in Shoeburyness, he spotted a small micro hi-fi with twin cassettes and a pair of speakers. We had managed to engineer it down so that it sold through UK mail-order companies at PS99 - quite amazing. He said if he could sell this item in Spain for 29,999 pesetas, it would be a big hit. I wasn't going to argue with him as long as he could pay.

He gave me an order for 50,000 units and sold them to El Corte Ingles. Unbeknown to me, the 29,999 pesetas price point was an incredible breakthrough in the Spanish market, which had been heavily protected until its entry into the European Community. We were the first to exploit the fact that by assembling the products in England, we could classify them as British, so we were first to market.

Jose was right - these things sold like hot cakes. There were unbelievable queues outside El Corte Ingles in Madrid, Barcelona, Valencia and Seville. He sent me a video of a TV clip showing people swarming to the stores as if they were giving away gold bars. I believe he bought 150,000 units over the next six months. Of course, as usually happens in business, other people caught on. Nevertheless, we exploited that moment in the market, which is what I love about Amstrad. Jose came up with a phrase to describe our series of successes - the Amstrad Effect.

By now you must be getting the picture that Jose Luis Dominguez was no longer a man to take lightly and it's true to say that he had more of an audience with me each time he came up with an idea. However, his next idea was a disaster.

He had been contacted by an old friend of his, Jaime Pero, who was living in Chicago and allegedly was some kind of computer expert. He had seen the success of Amstrad in Spain and, being of Spanish-South American descent, he had read a lot of the Spanish computer magazines talking about Amstrad. Pero wanted to represent Amstrad in America. I told Dominguez that this was a total, absolute joke. The Americans had already forgotten what we'd yet to learn about microcomputers and they were moving on. The CPC464 and CPC6128 would be laughed at in the American market. I told him to forget it.

Jose was not the type to give up. He threw my philosophy back in my face. 'Why are you arguing, Alan? If we can get a letter of credit from the marketplace,
you
don't have to worry. Pero is very confident he can sell the CPC6128 in America.'

It was difficult to argue against this reasoning. Even though I knew the product would bomb in America, if I was being paid by LC, I couldn't argue. Reluctantly, I agreed to meet Pero on one of my visits to Chicago for the CES exhibition. Jose had flown in, as indeed had Malcolm Miller, and we set up a meeting.

Jaime Pero was a very convincing South American character, taller than Dominguez and older - in his fifties, I would guess. If you'd been a fly on the wall in that meeting, you'd have seen a bizarre sight - Alan Sugar trying with all his might to talk people
out
of buying his product! I put up every obstacle, explaining that this was a disaster waiting to happen, that the CPC6128 was no great revelation as far as America was concerned. I told them that nobody would buy this thing and I didn't want them to walk into a hornets' nest and get lumbered with all the stock.

I had also found out that in order to ship to America, products needed to comply with very strict American technical specifications known as UL and FCC. To pass these very tough tests would require a lot of additional engineering, which would cost a lot of money. I was not prepared to get involved in developing a model for the US market because I knew there would be no longevity.

These arguments were combated by Dominguez and Pero. 'How much will it cost for the engineers to develop a new model?'

I answered, 'I don't know, maybe a hundred grand, two hundred grand, who knows? It's a very big job.'

'We will pay,' they said. 'We will pay - no problem.'

Despite my protestations, I reluctantly agreed to move forward and develop the CPC6128 for America on the basis that we would not lift a finger from a technical point of view unless we received PS250,000 up front for development which I would refund to them over a period of time if they purchased 100,000 units. If ever there was a go-away offer, this was it. But they accepted and, sure enough, PS250,000 arrived with us a week later.

Being in Chicago also meant it was time for the quarterly summit meeting with Emperor Otake and his crew. As ever, Otake had booked himself into a very royal penthouse suite at the Conrad Hilton. Itakura and his other slaves were there, including the engineers from Japan who worked on Amstrad projects. The meeting took the usual form. Otake pretended
to ignore the fact that I'd even walked into the room (there were about ten to fifteen of his staff in there, plus three or four of mine), then he looked up and said, 'Ah, Sugar-san! I didn't know you were coming! I am surprised!'

Total bullshit. He knew perfectly well I was coming.

He continued with his charade, 'Ohhh, I don't know if I have any time to discuss business with you. I didn't know you were coming. I'm so busy with my VCR business and my TV business. This computer business is really not big business for me - I do it just to help you.'

Now, anybody who knows me would be very proud of the fact that I just sat there and let him ramble on. The fact of the matter was that twenty fax messages had been exchanged setting up this meeting, specifying which of his slaves were coming and what we were going to discuss. Everyone in the room knew what we were there to talk about. Mr Ogami, Orion's chief engineer, was chuckling to himself knowingly.

Then Otake said, 'Okay, let's see . . . Itakura, please telephone Mr Dieter Latha, my German distributor, and tell him we now delay our meeting with him until tomorrow just to accommodate Sugar-san here.' Otake turned to me. 'Sugar-san, in future please make sure you make appointment with me!'

Whenever the discussions started to get technical, Otake would get up and walk out of the room. He didn't like it when he was out of his depth or couldn't control the meeting. Business ought to be fun sometimes, and it was fun to listen to Otake's nonsense. It actually used to relax us, so I managed to keep my mouth shut while this little game went on. I have to say, I do miss those days. I miss playing games with this nutcase and massaging his ego. And in the history of Amstrad, he was one of the greatest manufacturers I've ever used.

This time, I explained to Otake that we wanted to get the CPC6128 approved for the American market and he gave me the name of a company who specialised in getting things approved for UL and FCC.

We spent a painful few months with the company NATS in New York, who tested our products and advised us how to pass the regulations. Eventually, we obtained full approval for the colour-screen version of the CPC6128.

I realised that apart from the PS250,000 Pero had paid, I had not yet seen an LC for mass production. I put this to Pero and, after cutting through a load of his bullshit, he informed me the
actual
importer of the product was going to be the giant Sears Roebuck group.

Sears, who have department stores throughout America, had apparently set up a separate division known as Sears World Trade. The purpose of this division was to import goods and sell them to the retail trade in general - not
necessarily their own stores. This newly formed division was going to import the CPC6128 on behalf of Pero, though it would be Pero's responsibility to sell the goods into the marketplace.

Again, this sounded a crazy idea to me. It must have been one of those decisions made by some brain surgeon inside Sears Roebuck who, not being satisfied with Sears simply buying stuff from suppliers and selling it in their department stores, now wanted them to become distributors as well. They believed that they would be able to sell to other retailers like Target, Best Buys, Bloomingdale's and Burdines. Absolute blind naivety Never would retailers in the marketplace buy from, effectively, another retailer - you may recall Michael Hollingbury of Comet telling me that years earlier.

However, it seemed that Pero had managed to stumble across them at just the right time. Sears World Trade had not started business with anyone yet and Pero's proposition was one of the first.

Sure enough, we received LCs from Sears World Trade and started to ship CPC6128s to America. Pero took an exhibition stand at CES in Las Vegas that January 1986 and invited me along as some kind of guest of honour. He'd also arranged for press and media coverage and had decided to plaster the Amstrad brand all over the stand. People I knew from the industry were walking by. It was pathetic - I was feeling a bit of a dickhead. Most of the people who knew me were saying, 'What are you doing, Alan, trying to sell this technology in America?'

As I predicted, the launch of the CPC6128 in America was a total flop.

And Burning the Harvard Business School Manual

1985-6

By summer 1985, we were working on another project which was to make the PS20m profit we'd just announced look like small change.

I was walking around Akihabara on one of our regular Far East visits in February 1985, when my attention was drawn to a bizarre-looking electronic typewriter in one of the shops. It looked like a computer screen with a printer mechanism on top. We had been asked many times if there was a printer available to complement the CPC464 and CPC6128, but I wasn't interested in the printer market. We would simply recommend a printer produced by Seikosha (known today as Epson).

But now a sense of excitement came over me and I had the spark of an idea. While flying from Tokyo to Hong Kong, Bob Watkins and I started to discuss the possibility of making a custom word processor using the Amstrad all-in-one philosophy - plug in and go. On the back of a Cathay Pacific serviette, I sketched what is known today as the PCW8256 word processor. I envisaged a keyboard connected to a monitor which also contained the floppy disk drive and a built-in printer mechanism on top.

When we got to Hong Kong and discussed the concept with Vitus Luk and Isaac Ip, it was clear that having the printer on top wasn't a good idea for various reasons. And so our mini-committee agreed that our word processor package would take the form of a keyboard, a monitor with a floppy disk drive and a separate printer module. The monumental challenge here was to get a printer manufacturer to sell me the printer mechanism only (which they used in their finished printers) - they would obviously think I was out to compete with them in the printer market.

Most of the printer manufacturers were Japanese. I contacted Seikosha
and, by a stroke of luck, met a young man who I thought had been seconded to me to get rid of me quickly and give me a bit of lip-service. Typical of the Japanese, this young man sat very quietly in the meeting alongside a more senior official who was probing for more details, in particular quantities, while I explained that I wanted to buy the mechanism only. I showed them my concept for a complete word processor and assured them that it wouldn't affect their business. I offered to sign any legal agreement they required to say that I would not use the mechanism to produce a stand-alone printer.

I had their attention, but I also had to make another difficult request. Not only was I trying to convince them to sell me their mechanism, I also needed them to give me the technical details that would enable my software engineers to drive the heads that printed on the paper. Asking for the mechanism
and
the software codes was effectively asking them to give away the whole shop! I kept reminding them that I was never going to be a competitor.

As is typical of Japanese meetings, they said they would come back to me, but when I left I didn't feel very confident. I knew how I would feel if someone asked me to buy the PCB for the CPC6128 to allow them to stick it into something else
and
to give them the operating system software at the same time - no chance. Without a printer mechanism, we'd never get a word processor off the ground, so I virtually ditched the idea.

Then, a few days after my return to London, I received a call to say that two Japanese gentlemen from Seikosha were staying in the Great Eastern Hotel at Liverpool Street and wanted to know if they could come and see me.

'Shouldn't we go and collect them?' Bob asked. 'They're in a huge city in a strange country - how are they going to find their way to us?'

'Listen, Bob,' I said, 'their grandfathers found Pearl Harbor. Trust me, they'll find Brentwood.'