Comtrol

[Rob Peglar]

I am posting this as a warning to those of you who previously have or
are considering purchasing products from Comtrol Corporation.  This article
is being cross-posted.  The entire article represents the opinion
of the author only and not any other person or organization.  If you don't
know about the multiport serial market and/or Comtrol, just hit "n" now.

This is a very sad story.  The year 1990 was a very tumultuous one for
Comtrol.  When I began 1990, taking the position of Manager, Software
R&D, things weren't looking so good.  I had four programmers and two
tech support people working for me, and while their work was quite good,
the overall perception of the company was, as our customers and competitors
put it, "asleep at the wheel".  And so it was;  Comtrol's sales were far
and away based on very old, non-intelligent (aka dumb) product;  although
Comtrol had one (the Smart Hostess line) intelligent product, the
competition had, by far, the lion's share of the intelligent market.
(note, the Ultra 186 was considered part of the Smart Hostess line, and
was in the process of being phased out by the (then unavailable) Ultra 8/16)

At that time, Comtrol was around 35 people.  It was fairly profitable,
since it tended to preserve 60% gross margins as a business priority.  
However, the competition was overwhelming Comtrol in terms of market
share;  while the pie was growing bigger, Comtrol was not growing as
fast as the stockholders would like.  So, the board decided to make
two things happen (at once);  grow the R&D staff, to design and deliver
new products during 1990, and also concentrate on (hopefully) growing
the international market by opening offices in Europe, using local 
(European) personnel.  Comtrol had previously controlled all international
operations from St. Paul.  

(in case you're confused by the terminology, Comtrol is privately held;
the stockholders and the board are one and the same family)

The first strategy, upgrade products/services, worked very well during 1990.
In software, I added three programmers (net), and one tech support person.
Thus, by August, Comtrol had seven programmers and two tech support people.
The hardware R&D group added three engineers and one lab technician.
Customers and competitors had noticed the new products (e.g. Ultra 8/16,
Multivision, etc.etc.) hitting the market; and here's a testimonial from
a real live UseNetter (John DeArmond) about Comtrol service.

--cut--
>From ns!noc.MR.NET!msi.umn.edu!umeecs!umich!ox.com!caen!sol.ctr.columbia.edu!emory!rsiatl!jgd Tue Jan 29 12:53:13 CST 1991
Article 7341 of comp.protocols.tcp-ip:
Path: ns!noc.MR.NET!msi.umn.edu!umeecs!umich!ox.com!caen!sol.ctr.columbia.edu!emory!rsiatl!jgd
>From: jgd at Dixie.Com (John G. DeArmond)
Newsgroups: comp.protocols.tcp-ip
Subject: Re: copy protection
Message-ID: <6207 at rsiatl.Dixie.Com>
Date: 29 Jan 91 09:04:38 GMT
References: <9101272223.AA08327 at desktalk.com>
Organization: Rapid Deployment Systems (making go-fast things and things that-go fast)
Lines: 190

(lots of copy-protection argument stuff deleted)

Customer Service will make or break your product.  You'd damn well better
plan for it as an integral feature of your product, fully as important
as the software not crashing.  Here's an example of how to and how not to
do customer support.  I have used 2 brands of intelligent async cards in
Unix systems for my customers.  One brand is Comtrol and the other is 
Stargate.  I no longer use Stargate because of customer support.

When I opened the first Comtrol box, the first thing I saw was a plastic gold 
card just like a credit card.  On this card was printed the 800 toll free 
support number AND the names and direct dial numbers for the General Manager, 
the Engineering Manager, the Hardware Tech Support manager, the Software
Tech Support manager, the Production manager, the Marketing manager and
the Sales manager.  Above this list of numbers is this statement:

	"Our committment to you doesn't stop with our products.  We give 
	you the support and the extra service you want.  IT's because your
	satisfaction is our #1 priority.  COMTROL is only a phone call away.
	You have full access to all COMTROL personnel.  For your convenience,
	primary department contacts are listed below:"

I've had one occasion to use the support number.  A board arrived one
evening DOA.  I called just at closing time.  COMTROL had someone drive
a board down to Delta DASH and I got it in a few hours.  They told me
to return the DOA one when convenient and not to worry about shipping
back the (very good) documentation.

My Stargate experience was a bit different.  I inherited my first card 
in some surplus stock I bought.  The card uses address decode PALs that
are specific for each OS.  My card was equipped for Xenix and I  needed a
PAL for ISC Unix.  I called up Stargate and reached a rather sullen tech
support technician.  I was told that a new PAL cost $150!!! I passed on
the PAL and obtained one from a friend but ordered a  driver disk for
ISC.  When it got here, it was accompanied by some Nth-generation xeroxed
dot-matrix printed documentation that was practically unreadable and it
would not install.  It did not meet the specifications of ISC's
installpkg facility.  I copied the disk onto the system and installed it
manually. 

Later, I needed to get an upgraded driver for a new version of the OS.  
I called Stargate for the upgrade, somewhat expecting to pay for it.
I was told that I would either have to write (!) to the sales department
who would investigate me as a customer and if I passed, would give me
the secret password to their BBS where I could download the upgrade.
Or I could write and include some money and get a disk.  Write a letter
in order to access a BBS indeed!  Could they have been afraid that I 
had wirewrapped a board in my basement and wanted to steal the driver 
to make it work?  Who knows.

Now both boards work pretty well equally.  But I'll never fool with 
Stargate again while I recommend COMTROL whenever the opportunity arises.
The difference is service.  I perceived a better value from COMTROL even
though it cost more.

(more deletions)

-- 
John De Armond, WD4OQC        | "Purveyors of speed to the Trade"  (tm)
Rapid Deployment System, Inc. |  Home of the Nidgets (tm)
Marietta, Ga                  | 
{emory,uunet}!rsiatl!jgd      |"Politically InCorrect.. And damn proud of it  


--cut--

Well.


As I said, the first strategy was working out.  However - the second was
not, and between it and one heckuva bad decision by the GM of Comtrol
during the spring of 1990 led Comtrol on an ugly downward balance sheet
spiral.  

The Europe strategy was a complete fiasco.  In terms of sales, the sales
numbers were almost dead flat from the international sector, while the
expenses increased by two orders of magnitude.  Despite the board's 
insistent cry that "it's good, don't worry, it will be just peachy in
long run"  the balance sheet was overwhelmed by the cash flowing out of
the company.  The board turned a blind eye toward this, prefering to think
that somehow, a miracle would turn it around.  In fact, things just got
worse.  The GM was replaced in July, but that was too late.  It's hard to
perform major surgery when you cannot stop the flow of blood from the
patient.  As the European office took more and more cash out - in fact,
the office space alone for the eight employees there was larger than the
space for the entire US operation ! - and the marketing expenses went 
through the roof - and the vendors got stretched out to 90, 100, 120, >120
days - and the credit holds started appearing - and the line of bank
credit was maxed out - and on and on.  It was the classic snowball effect.

Are you getting the picture?  Comtrol was going through the classic
small business phenomenon of having increased sales (around 10 percent
overall CY 1990) and going nearly bankrupt at the same time.  The bad
decision in spring 1990 was to order and build up a huge (2 times more
than Comtrol had ever spent in one month) product inventory, hoping that
sales would magically take off in 2H90.  The former GM failed to realize that
the summer is just the wrong time to rely on increased sales, especially
when you've only got three salesmen.  (US)  Well, the cash out was
heavy.  The products built in the spring did not sell (as fast as wanted).
Inventory carrying costs became a burden.  Most US and international 
distributors took a "wait-and-see" attitude, preferring to take normal
quantities of dumb and/or Smart Hostess product.  Cash flew out the door as
marketing bonanzas (like exhibition at Comdex) and $150/night Las Vegas
hotel rooms took their toll.  All the while, R&D costs were held steady as a
percentage of net sales, +- <5 percent.  Even though the company was running
in the red - bigtime - since July, the board continued taking cash out of
the company in the form of "contributions" at the same pace that they always
had.

So, in late November 1990, in a classic, uncreative, knee-jerk, Control
Data-type reaction, the board forced the GM to "eliminate positions" (the
phrase that was used on me), a.k.a. chop heads.  Of course, the R&D groups
were hit hardest; no marketing heads rolled.  Although never stated, the
board clearly took the tactic of eliminating senior (read: decently paid)
people.  Three hardware people were gone.  One SW person (the most senior
in terms of career) was axed; three more (SW) were transferred to different
divisions; the entire production group, whose only flaw was obeying orders,
was dismissed; one (of the two) tech support people was booted.  In all,
around 15 people (out of 55) were chopped.  

Ironically, these changes leave Comtrol almost exactly where it was to start
1990, as we start 1991.  Thus, a whole years' work was discarded.  Sure, the
new products are "there" - but there is hardly anyone left to continue.  In
no way can the current staff maintain the 1990 pace.  Comtrol is certain to
revert back to its "sleepy" posture in the market.  The R&D engine was gutted.
To continue the automobile analogy, the car is now coasting.  1990's rapid
acceleration is now lost; the car will slow down.  It may take a few months,
but it is inevitable.  Comtrol is still in the red, according to internal
sources.  

The board lacks either the foresight, gumption, or ability to raise the 
necessary working capital from either themselves, a public equity or debt
offering, or third-party financing.  Without these sources of working
capital - the banks are now quite wary (side story - the bankers were in
the building on November 26, 1990 "Black Monday".  anytime you see the
bankers in on such a day, it is not a good thing) - Comtrol cannot continue
to provide the level of products and services that Mr. DeArmond came to
know and enjoy.  To use a well-worn cliche, "the party's over" for Comtrol.

>From a customer point of view, I would heartily recommend products and
services from either DigiBoard, Equinox, or (esp. internationally) Specialix Ltd.  All have proven themselves to have directors that realize the value of
employees and know how to run a business.  In fact, Digi stock has recently
soared;  they are splitting 2 for 1 (in the form of a dividend);  their
revenues are up 71 % for the most recent FY quarter relative to last years'
same quarter.  There is talk of Digi buying Arnet.  This is not an accident.

People like Gene Olson at Digi, John Pettit at Specialix, and Craig "Wolf"
Kozel at Equinox are fine people.  They won't steer you wrong.  In contrast,
hear a (paraphrased) quote from a current Comtrol employee about the Comtrol
GM:  "every time I talk to (him/her), I feel like I'm getting the big run-
around".  If this happens with employees, what about you, the customer?

Don't get me wrong, now.  The people that are left, for the most part,
at Comtrol are wonderful.  I especially want to tribute the remaining engineering
people - both HW and SW - as their work is top shelf.  There just isn't enough
of them now to maintain what was, what is, and what should be.  The tech
support is one person.  The people that Mr. DeArmond mentioned in his
testimonial - the "gold card" people - are for the most part now gone.
Five out of the seven.  A HW engineer is trying to manage the SW group.  The
entire production load has been transferred to Artist Graphics, where one
can only assume that Comtrol product will get not just second, but Nth banana.
All in all, it is a true shame.

Now, if you are lucky enough to enjoy the tradition of superior Comtrol
service, now and in the future, terrific.  I am quite happy for you.  I
am only saying that the probability of such service is rapidly diminishing.


Moral?  When business turns south - and expenses rise - act immediately.  
	Use your people creatively.  People are not one-dimensional.  
	Engineers can be great salesmen.  If what you need is increased
	sales, make everyone a salesman.  Flexible organizations can
	always survive business downturns - if the board has the fortitude
	and foresight to let change occur.  Chopping 30% of your payroll
	does not solve the problem when the payroll is only 30% of the problem.
	Go after the 70% first - like high inventory, slow sales, super-
	fluous plant, offices, and equipment, unnecessary marketing
	campaigns.  Find the necessary working capital to finance growth,
	People will almost always accept pay cuts rather than layoffs.
	An across-the-board 30% pay cut would have been much more effective
	than a 30% reduction in staff.  The customer ends up suffering.


Absolute truth - don't expand faster than your cash flow allows.  QED.

-- 
Rob Peglar			Network Systems Corporation
Internetwork Group		7600 Boone Avenue North
robp at anubis.network.com		Minneapolis MN 55428	(612)424-4888 x1028