Sinclair and the 'Sunrise' Technology: The Deconstruction of a Myth (31 page)

Maxwell thought the agreement stopped Sir Clive from sloping off because of a ‘
five-year agreement which precludes him from doing anything for anybody elsewhere
’ (quoted in the Financial Times, June 1985). Sir Clive was quite clear that it didn’t stop him doing something for himself:

I was not going to remain with the company ... would have left and started another business ... Fifth generation. Part of the deal was that that project would leave with me. (Interview, 6 November 1985.)

He was also quite clear that making the agreement was not a matter of choosing an acceptable partner, but taking the only offer:

I signed it because I thought there was no choice. I regretted it in some respects because it was a loss of independence, but I signed it because we’d seemed to run out of time. I don’t think it was true that we’d run out of time, actually to the extent people thought, but that’s what we were told, (ibid.)

Maxwell lost no time in getting to grips with the situation, his first action being to set his own accountants to work to scrutinize the figures that the Sinclair accountants had produced for the last year’s trading. The crucial question was the valuation to be placed on the high stock levels. According to Microscope (11 July 1985) Maxwell also called in all cheque books, locked them in the safe, and issued instructions that they were to be used only with his authority.

The next questions were the choice of a new chief executive and some income. The latter hinged around a potential deal with the Dixons retail chain, with whom Bill Jeffrey had had some success with the televisions, and who, if the terms were right, would consider a huge order. The former seems to have been a bit of a saga. The candidate suggested by a Sinclair board member was seriously considered, but finally rejected by both Sir Clive and Maxwell, which enabled Sir Clive to put Bill Jeffrey forward. Accepted by Maxwell, there was now a new chief, who could set about putting the house in order. Apart from reports that Robert Maxwell wanted to sell Sinclair computers to the Eastern Bloc, all was quiet until 10 August, when the news broke that Maxwell had aborted the deal.

Maxwell's comments on the decision were particularly vapid:

We are sad that it was not possible to conclude the deal, but it just did not gell. There is no doubt in our minds, however, that Sinclair computers are a fine product appreciated by millions. (Financial Times, 10 August 1985.)

Hollis Bros was more direct:

After advice by merchant bankers Hill Samuel, the board decided that on the basis of information available to it, it could not recommend the acquisition to shareholders, (ibid.)

We can with confidence take this to mean that it didn’t think it was going to make any money on the deal. Sinclair Research put a brave face on it, announcing that Dixons was buying 160,000 Spectrums, QLs and flat-screen televisions over the next three months in a deal worth £10m, for an aggressive sales drive. Declaring that no rescue was now needed, Sir Clive was quoted as saying:

We no longer need rescuing. Three other people expressed interest in investing money in Sinclair Research before Mr Maxwell made his offer. We will now go back and talk to them. (Observer, 11 August 1985.)

As well as expressing optimism elsewhere because sales of the QL in the States were increasing ‘drastically’ (cynics might point out that from zero, any increase is bound to be dramatic), Sir Clive also suggested that the institutional investors might be interested in putting up more money:

They have not been fully briefed on the company’s position. I need to do that very soon. I believe if they knew what we had achieved lately they would be interested in buying more shares. (ibid.)

Sir Clive offered us no further information on the Maxwell pull-out when we interviewed him on 6 November 1985:

I quite honestly don’t know. He gave no reasons, really. It was looking as if it might be dubious for quite a while. He didn’t t like the Dixons deal, he didn’t want us to do it... I think, or suspect, that the reason he didn’t like it was that the company wasn’t in a strong negotiating position on it... I think he may have thought he’d bitten off more than he could chew perhaps.

He did however confirm that the ride into the Maxwell stable would not have gone ahead smoothly:

Having thought about it since, I think it would have been pretty difficult. The people who worked in the company were very worried about it, and that’s not a good start... I think he did find with Sinclair Research that he’d have a meeting and say, ‘Well, this is what I said’ and our people would say ‘No, that’s not what you said’ and he’s not used to that... he wouldn’t have understood the business, so I don’t know what would have happened.

Despite Sir Clive’s caginess, it became quite clear what had happened. The Dixons deal had saved the company from immediate liquidation, and an agreement with Terry Blood Distribution was set up to allow the same terms to other retailers, gaining another £4.5m of fairly certain cash flow. The cost was in halving the value of the QL stocks, since the retail price had been cut from £399 to £199.

The picture from the accounts, when they finally surfaced for public scrutiny, was unpromising, as apparently Hollis Bros had felt it to be, and formed the background to some hectic activity in the third week of August, when Research met with its major creditors. Jeffrey persuaded the creditors that his proposed reorganization would place Sir Clive firmly into his role as R&D supremo and chairman, and back this up with a firm management structure. They agreed to support Sinclair Research until the peak Christmas sales Period was over.

With the affairs as of March 1985 showing that writing stocks down to ‘net realizable value’ cost £17m, and debts of £34m due within the year, the company’s future looked extremely bleak. At a time when Sinclair Research desperately needed a new and exciting product, all it had to look forward to was Christmas. While the corporate crisis was sufficiently pronounced to preclude any dangerous optimism, Dixons’ significant investment in Sinclair products gave Sir Clive a much needed straw to clutch at as he grappled with the demons of a potential liquidation. While in most respects the odds seemed stacked against him, Sinclair could at least be certain that a corner of the high street would be rooting for him for the duration of the festive season. This said, the fruits of the Dixons deal were already spoken for, and the only real hope was that the chain store’s promotion would spark off renewed interest in Sinclair products in other sections of the market.

In the event, the vested interests of the high street ensured that Sinclair products were promoted to good effect. During this brief but critical period, chainstore support coupled with developments in the export market (in the shape of the Spectrum 128) enabled the company to boost sales and win an encouraging chunk of the market. But it was a case of too little, too late. The slight increase in sales failed to make much of an impression on the crippling mountain of debts that daily threatened to turn terminal. Nevertheless, the response to the Dixons promotion was encouraging, and as early as November 1985 Sinclair was claiming that the chain was already reordering stock items depleted by an early burst of Christmas enthusiasm.

In February 1986, against all odds, Sir Clive Sinclair was still in a position to inspire caution in those anxious to herald his demise. Thanks to the hard sell in the chainstores, when he emerged to face his public at the beginning of a new year, Sir Clive was able to confirm that his company’s products still accounted for 40 per cent of the home-computer market. With the cool calculation of a brinkmanship veteran, he made every effort to encourage the impression that the tide was about to turn for his ailing flagship. Any attempts to question such an impression would, with luck, be smothered by the mess of real and simulated corporate activity that was regularly leaked to the press at this time. There was the Pandora portable micro, the cellular ‘under-£100’ telephone, and the wafer-scale breakthrough. The deadwood was cut away somewhat by selling off worldwide marketing, sales and distribution rights for the flat screen pocket TV to Timex in January. The price went down to £79 at the same time. Furthermore, now that the company was freed from the constraints of the Dixons deal, Sinclair Research was able to promote the UK launch of the Spectrum 128 on 13 February 1986. Although it’s unlikely that anyone expected the Spanish machine to cause much of a stir on the home market, its arrival was presumably intended to encourage the impression of a going concern with a developing product range. In bleak contrast to the anticipation and excitement surrounding earlier launches, the arrival of the Spectrum 128 passed unnoticed by all save the fanzines and trade press. No one wanted to know, especially since the price, at £179.99 for a machine without a joystick port and lacking the Spanish version’s separate numeric and cursor keypad, brought it close to the QL price.

Nevertheless Christmas sales were presumably faintly promising, and the launch of the Spectrum 128 provided a welcome distraction for the increasingly apprehensive workforce at Sinclair Research. However, in spite of his bullish PR stance, it seems unlikely that under the circumstances Sir Clive could have fostered many illusions about corporate stability. If the history of Radionics is anything to go by, it seems likely that while part of Sinclair would have doggedly refused to concede defeat, Clive the Survivor would have coldly used any respite to consolidate resources and plot his renaissance. As we shall see, in the end it was the survivor who won the day (but not without a fair amount of prodding from the creditors).

Although we should be wary about drawing glib parallels between the histories of Sinclair Radionics and Research, such a comparison became irresistible when, in March 1986, Sir Clive announced the sale of his Kensington town house. After all, back in 1979 it was the sale of his house and ‘collector’s Rolls’ that provided Sinclair with the finance for the embryonic Sinclair Research. However, although the portents were there for all to see, they didn’t offer any hint of the sensational circumstances under which this critical chapter of the Sinclair story would be resolved. On March 1986, Sir Clive stunned the trade by announcing that he had sold his existing computer business to his arch rival – Amstrad! For many years Amstrad was essentially a one-man show, and the company logo takes its letters from his name and forte - Alan Michael Sugar Trading. From the moment Amstrad made its move on the microcomputer market, Sir Clive seemed to take the new competition to heart, and a bitter rivalry developed. Products apart, the personalities involved were built for conflict. In many respects, Sugar is the consumer electronics maverick Sinclair has spent so much of his career trying to be. The difference between the two men is that while Sugar has always been content to see himself as simply a well-honed marketeer, Sinclair’s marketing nous has often been impeded by his scientific and intellectual pretensions. While both are dominant figureheads for their respective companies, it’s only Sir Clive who wants to be thought of as an inventor.

In contrast to most of the early market leaders in home computing - e.g. Commodore, Apple, Acorn, Oric, etc. - Amstrad didn’t start out selling micros. The company was formed in 1965 and for a while struggled to make ends meet as a one-man enterprise. In the early days, Sugar made his money selling car aerials from the back of a van. In 1968, Amstrad launched into the low-cost hi-fi market, and over the next decade developed a range of music systems that consistently undercut the opposition. By 1980, Sugar had an acknowledged brand name in the chainstores, and a solid place in the high-street electronics market. When the company went public in 1980 it was valued at around £8m Today, Amstrad claims a 35 per cent share of the UK hi-fi market.

By the end of 1983, Acorn and Sinclair Research had loosely defined the bottom end of the UK home-computer market, while independent software and peripheral development illuminated additional consumer demands and the shape of things to come. While at this time the market could hardly have been described as stable, Sugar clearly considered it sufficiently well delineated to mount his own challenge. In 1984, manufacturers of low-cost home computers were legion, but it is unlikely that the volume of competition would have bothered Sugar. After all, there were an awful lot of hi-fi manufacturers around in the 1970s, but they didn’t prevent Amstrad from making its mark. Sugar’s gung-ho catchphrase, constantly hurled at Amstrad’s notoriously effective sales force, maintains that the company’s secret is that it ‘has the right product, at the right price, at the right time.’ However, perhaps the key to Sugar’s success is that while he has confidence in his products, unlike Sir Clive they don’t for him represent any kind of emotional commitment. Although it went against the grain as far as the hardcore hobbyists were concerned, Amstrad made it clear from the outset that if their computers didn’t reap an acceptable return fast enough, the range would quite simply be dropped. In addition, Sugar publicly acknowledged that he had no interest in initiating developments to advance the technology of microcomputing. His objective was simply to create a product that would satisfy the market he had identified, and he demonstrated that such a machine could be designed around existing technology. Maggie Brown had this to say about Alan Sugar’s style in an article contrasting the fates of Sinclair Research and Amstrad:

Sugar would never have pioneered a chancy new market as Sir Clive did brilliantly in 1980 when the first Spectrums hit the colour magazines. Yet Sugar showed his opportunistic style when he subsequently shifted Amstrad, the hi-fi company he has turned into a £521m hot property, into the established home-computer niche two years ago ... He did it with such professional ruthlessness that Sinclair and his newer QL computer were outpaced, overtaken, and then beaten at their own game. (Guardian, 8 April 1986.)