More than most youthful industries, the burgeoning U.S. computer business is dominated by giants—IBM, Philco, Sperry Rand. A notable exception is an aggressive young Minneapolis firm with the electronic-era name of Control Data. In four years, Control Data has risen from the brink of financial ruin to such strength that on occasion it can even push the big boys around. The formula, explains professorial William C. Norris, Control Data's 50-year-old president, is disarmingly simple: "Aim for a piece of the market and then do a better job than anyone else."
So far, Control Data's aim has been so true that its sales have soared from $625,-756 in fiscal 1958 to $20 million last year. Earnings hit $842,000 in 1960 and Control Data stock, originally issued at $1 a share, is now traded at about $42 after a three-for-one split.
The Deserters. Control Data was born when Norris and eleven colleagues deserted Sperry Rand in a body, touching off one of the electronics industry's bitterest Donnybrooks. Norris and his engineering team had had their own research firm from 1946 until 1952, when Remington Rand bought it. After Remington Rand merged with Sperry in 1955, Norris became a vice president and general manager of the Univac division, but his research team was dismembered. When his men asked him to lead them in setting up a new company, Norris agreed.
The new company barely survived its birth pangs. To get plant space, Norris & Co. bought Minneapolis' overextended Cedar Engineering Inc., but they badly miscalculated the funds they needed to turn the company around. To ward off ruin, Control Data's top 20 employees took a 50% salary cut.
What saved the company was a breakthrough by Engineer Seymour Cray in the emerging field of solid-state computers. By using transistors instead of vacuum tubes, and cheap printed circuits instead of miles of intricate wiring, Cray developed Control Data's reliable and relatively cheap ($1,250,000) 1604 computer, thus enabling the company to introduce its solid-state computer on the commercial market neck and neck with the industry giants. But with success came new headaches. Sperry Rand, alleging that Norris & Co. were using pirated Sperry Rand trade secrets, sued to enjoin them from capitalizing on any more of the know-how they had picked up before the mass decampment. Norris' rebuttal: in the fast-moving electronics industry, there is no such thing as a meaningful trade secret.
Through the Heavens. The Sperry Rand suit remains unsettled, but Norris and colleagues are confidently pushing ahead. On the strength of the 1604's immediate success, Control Data raised the money to develop two desk-size computers and one medium-size one. Also under development is Control Data's most ambitious effort yet—the huge, advanced-design 6600 computer which will sell for between $8 million and $12 million.