Osborne Computer Corporation

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This article is about the American computer company. For the Australian company, see Osborne (computer retailer).

The Osborne Computer Corporation (OCC) was founded by Adam Osborne in 1980 based on a product of not just personal computers but portable computers. Adam Osborne asked Lee Felsenstein to develop his portable computer with the result being the Osborne 1.

The Osborne 1 featured a 5 inch (127 mm) 52-column display, two floppy-disk drives, a Z80 microprocessor, 64k of RAM, and could fit under an airplane seat. It could survive being accidentally dropped and included a bundled software package that included the CP/M operating system, the BASIC programming language, the WordStar word processing package, and the SuperCalc spreadsheet program.

The package included $2000 worth of retail software alone, but the Osborne 1 personal computer with everything included shipped for a mere $1795 in 1981. It was the $1795 price tag that set market expectations for bundled hardware and software packages for several years to come. The peak sales per month for Osborne 1 personal computers over the course of the product lifetime was 10,000 units, despite the initial business plan for the computer predicting a total of only 10,000 units sold over the entire product lifecycle. Osborne had difficulty meeting demand, and as production increased, quality control became more and more of an issue.

Despite early success, Osborne struggled under heavy competition. Kaypro Computer offered portables that, like the Osborne 1, ran CP/M and included a software bundle, but Kaypro offered larger 9 inch (229 mm) screens. Apple Computer's offerings had a large software library of their own and with aftermarket cards, could run CP/M as well. IBM's 16-bit IBM PC was faster, more advanced, and offered a rapidly growing software library, and Compaq offered a portable computer that was almost 100% compatible with IBM's offering. Osborne's efforts to raise $20 million in capital to rush an IBM-compatible computer to market were unsuccessful.

According to proponents of the Osborne Effect, the final blow occurred in 1983 when Adam Osborne boasted about an upcoming product months before it could be released, killing demand for the company's existing products. It is unclear whether this boast was about the Osborne Executive, which was released in May 1983 for $2,495 and featured a 7 inch (178 mm) screen and did not sell as well as its predecessor, or, more likely, the Osborne Vixen, a smaller portable that promised to offer compatibility not only with earlier Osborne models but also with MS-DOS, allowing it to run software designed for IBM and Compaq computers. Dealers rapidly started cancelling orders for the Osborne 1.

Unsold inventory piled up and in spite of dramatic price cuts - the Osborne 1 was selling for $1295 in July 1983 and $995 by August - sales did not recover. Losses, already higher than expected, continued to mount, and OCC declared bankruptcy on September 13, 1983. This marketing blunder came to be known as "Osborneing" and the phrase circulated in Silicon Valley for the next decade.

Osborne repairman Charles Eicher has refuted this version of events, claiming that the machine boasted of by Adam Osborne shipped and put the company back into a healthy profit until a single executive built up serious debt trying to complete the assembly of older stock. (See The Osborne Myth.)

When it was apparent that the company would be closing down, a company meeting was held with all employees. The first round of layoffs involved sales staff, production staff, and most mid to low-level clerical support. These employees were presented with their paychecks, accrued vacation pay and two-weeks' severance pay. They were also given an Osborne. The second round occurred within the month when the remaining employees were given the same severance package.

Nine days later on September 22, a group of 24 investors filed suit against OCC and several individuals, seeking $8.5 million in damages for masking the company's true financial situation and accusing several directors of the company of insider trading.

Osborne emerged from bankruptcy in the mid 1980s and finally released the Osborne Vixen, a compact portable running CP/M, in 1985. However, the company never regained its early prominence.

Commercial rights for the Osborne brand name were later acquired by the Finnish clone PC maker Mikrolog Ltd which is until this day marketing its products (server and desktop PC:s) domestically under that once world famous name.


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