The Rise and Fall of the Norwegian Computer
Once Upon a Time in the 1970s Norway had a growing domestic Electronics manufacturing industry a thriving mix of old and new manufacturers one of those companies norsk data grew to become Norway's second most valuable company for over a decade it was one of Europe's top computer makers but by 1990 Norway's electronics Industry laid in Ruins over a span of just four years Norse data the pride of the Norwegian I.T industry Fell From Grace and shriveled into nothing there are so many YouTube videos talking about what Norway has done right and how they've gotten so rich it is practically a meme now this ain't one of those videos today we're going to look at the collapse of the Norwegian electronics Industry and his crown jewel norsk data But first you guessed it the Asian Armature patreon Early Access members good to see new videos and selected references for those videos before the release of the public it really helped support the videos and I appreciate every pledge thank you and on with the show in 1946 Norway set up the Norwegian defense research establishment or ffi Norway's entrance into the NATO military Alliance kicked off a great deal of research money from the United States flooding into the defense research and nuclear energy spaces ffi had been one of the major recipients of that money and they used to develop military radar and electronics Communications Technologies Norway had long been quite good at radio communications driven by early market demand from the country's big Merchant Marine and fishing boats the country's big radio companies like tanberg who are Cornerstone of its early electronics Industry ffi would have a huge influence on the technology development of the country's electronics and computer Industries not particularly unusual for Norway but the government has long been a partner in shaping Private Industry in the late 1950s various Norwegian Public Services began the transition away from punched cards to electronic data processing in 1958 the Norwegian government acquired an English electorate Deuce Mark II to process public data electronically and the Ministry of Finance rented an IBM 650 to calculate taxes back then computers were in emerging technology difficult to program and hugely expensive so throughout the 1960s the ministry of Industry appointed four organizations to commercialize and develop domestic Norwegian electronics companies one such company was the state-owned manufacturer kongsberg Vapin fabric the company dates back to the 1800s but his biggest business then was producing Advanced rockets and command and control systems for the military at the urging of ffi they started moving into it products this name might sound a bit familiar it would make up one half of the infamous Toshiba kongsbury export scandal in the 1980s being at the Forefront of military research technology ffi attracted a great deal of talents this included the mathematician Jan garwick a professor at the University of Oslo garwick had contacts at the University of Manchester built up during his time in the UK during the early 1950s so in 1957 he pushed ffi to acquire a Mercury computer from ferranti called Frederick it cost 1 million Norwegian krone and was paid for with money left over from the war effort smuggled into Norway due to strange Customs regimes Frederick took up three floors of a building and its 2 000 vacuum tubes required a custom cooling system it used punch tape to input and output computer programs at the time of acquisition it was one of Europe's fastest computers one of its first jobs was to calculate the chemical composition of jalsberg cheese it later also helped sort the Norwegian seafarers union membership register Frederick inspired ffi's people to dive deeper into the computer space one of those people was ingvar Lun who had returned to Norway after a stint in the United States at MIT experience in the states and MIT in particular would be key to Norwegian computer development all of Norway's early computer makers learn hardware and software design at MIT there loon studied emerging Technologies like a transistor and computer programming and he met Ken Olson an MIT researcher and founder of the company digital Equipment Corporation Olson showed him the PDP a line of a new emerging category of many computers so named because they were still powerful but cheaper than IBM's hulking computers Upon returning to Norway Lund wanted to create his own mini computer working with two Engineers Lars monrad Crone and per bjorg London sought to build a powerful and reliable computer capable of doing signal processing tasks for the ffi's research completed in 1962 the transistorized Lydia computer was far more reliable than its vacuum tube counterparts made up of card shape modules Lydia set the stage for the simulator for automated Machinery or Sam first developed in 1964 the programmable Sam was originally produced for the penguin anti-ship missile program processing the missile's test data Sam 1 was the first of the Sam's series of computers built using the leading Technologies of the day by 1964 the Silicon planer process allowed manufacturers to put many more transistors on a single integrated circuit they bought from Philips a magnetic core array that gave Sam a memory of 4096 24 bit words and Sam would be Europe's first computers to use integrated circuits packaged with fairchild's newly introduced dual inline packaging technology in early 1967 Lars monrad KRON per bjorg and Rolf scar completed the Sam II a military computer built for detecting and tracking the propeller sounds of Russian submarines in Norwegian Waters they took the computer on a tour of several Norwegian research institutes and saw the good reaction elicited from people there feeling that they had a really competitive product they left ffi in 1967 to found norsk data friends and family were the First Investors and their connections helped the company get its first sales one of the founders College friends worked at a Norwegian company nor control which produced automation control systems for ships so they used that contact to see if those guys might buy a general purpose computer to help control their ships thus came the Nord one a mini computer based on the sam2 design the team had started on the sam3 before they left and simply took their work with them to norsk data apparently nobody complained it was capable of 500 000 instructions per second and ran a unique operating system called syntran this series of os's helped improve the developer experience and became a Norse data Hallmark the first Nord one was installed in 1968 on the bulk Freight ship Tamer where it extended the capability of the ship's radar system to automatically avoid collisions these systems were quite reliable and Norse eventually sold over a hundred of them in 1968 norsk data in kongsberg agreed to split the market between themselves kongsberg would focus on supplying many computers for the military Market while Norse data would have the civilian market for itself the two companies made up the heart of the domestic Norwegian computer industry Norse data benefited from preferential domestic policy its first computers were sold to public institutions like the University of Bergen or the Norwegian Air Force Supply service Norway's National research fund also helped bankroll the Tamer project both Norway's political parties and trade unions urged the government and its agencies to give purchase preference to domestic companies like norsk data or kungsberg such feelings occasionally annoyed the people who actually had to use the computer to competently deliver a public service and Norse data needed all the help it could get as a small computer maker with heavy Hardware costs but without access to venture capital funding they were chronically running low on money for instance they would have gone bankrupt in 1971 were not for a single 30 prepayment from the Norwegian meteorological Institute for a weather forecasting system North data's long-running weakness was in marketing and sales they erroneously believed that great products sold themselves and chronically underinvested in everything else they're technical people not totally unsurprisingly thought all salespeople were idiots after finishing the weather forecasting system Norse data had no more sales and started reassigning members of the technical team to marketing Norse survived these difficult days of the early 1970s thanks to a lucky break in software Rolf scar had hired a brilliant Swedish American software programmer named Beau luendall after graduating from UC Berkeley lewandall worked at a company called Berkeley computer Corporation there he developed a sophisticated time sharing system that supported up to 500 users simultaneously on a single mini computer system in June 1971 lewendahl proposed that norsk data produce a similar time sharing system for their Nord 1 mini computer during the company's three-week vacation in July apparently a Norwegian tradition lewandall created the whole software himself the Nord TSS allowed up to 16 simultaneous users on one nord1 system Norse sold many TSS systems to the Swedish University Market essentially saving the company it was also the first indication of their emergence as a global computer player then came the company's Big Break one of the company's shareholders worked for CERN the particle physics Research Institute in Geneva through him in 1972 Norse data was invited to bid on a contract for a computer to monitor cern's new SPS particle collider Ray cern's people preferred an American computer for this project they already before purchased a few pdp-11s from digital Equipment Corporation but political pressure pushed them to at least speak to a few European computer makers so they came out to see Norse data at first just out of courtesy the scrappy Norwegian company priced their bid to beat the pdp-11 proposal by 10 percent thanks to having access to the dec price list as well as adding a bevy of volume guarantees thusly much to everyone's shock Norse data won the 24 mini computer contract beating not only the Americans but the French and the Germans too one of the co-founders moved to Switzerland to oversee the project CERN eventually bought 50 Nord 1 and Nord 10 computers this massive win motivated Norse data to leave behind its roots and custom systems for large customers and go head to head with the American mini computer makers as Europe's National computer Champion the company began opening sales offices around the world over the next 14 years after winning the CERN deal in 1973 Norse data experienced incredible growth sales and profit grew at about 40 a year on average International sales made up a substantial portion of that Norse sold systems to Sweden where they controlled nuclear power plants and the U.S Department of Defense where they held power the f-16s pilot simulation software in 1975 the Norwegian government debuted their National plan for their electronics Industry despite Norse data success Norway's domestic electronics companies struggled the 1970s heralded the Norwegian oil boom stimulated by the oil crises of the Middle East all this oil money caused price and wage inflation fundamentally changing cost structures and hurting Norway's other exporting Industries today I believe economists would call this Dutch disease the Norwegian government sought to alleviate these pressures on its young electronics Industry by consolidating the entire electronics Industry into three Cornerstone companies tanberg the storied radio company now seeking to compete in the global Marketplace by shifting to producing colored televisions electric Bureau a partially state-owned telecommunications equipment company and kongsberg Vapin fabric the state-owned weapons Factory turned computer maker The 1975 plan would have Kong's bird buy up all of Norway's other computer manufacturers for instance the aforementioned ship automation company nor control throughout the 1970s the Norwegian government repeatedly pushed Norse data to sell itself to Kong's bird promising big grants if they did so but their leadership never entertained the idea in a later interview co-founder and later CEO Rolf scar said that he and norsk data never had any issues with Norway's taxes nor its higher salaries Norse data's mini computers sold with 75 gross margins and hardware and 100 in software so not only were they growing extremely quickly their products were incredibly profitable there were also a very technically oriented independent-minded company with little patience for time-consuming formality the company's Spirit had been described by someone who had been there as being do whatever you find most efficient to obtain our common goals and make sure to adjust your activities with the others when needed considering this it is no big surprise that the hot young Norse data would have no interest in marrying an old dodgy military contractor like kongsburg was it the right decision as it turned out none of the Cornerstone companies would have a good time after taking the government's offer tanberg had been one of Norway's Cornerstone electronics companies the epitome of Scandinavia the venerable company had been very technically proficient its CEO claimed that its people knew the technical aspect of colored TV production far better than their Japanese competition but their people did not work as hard as the Japanese and cost more tanberg known for having great relations with their laborers is skewed the obvious idea of laying people off the company's legendary founder V tanberg deeply loved his people giving them a 42-hour work week three weeks of annual vacation and free health care he and the rest of the board refused to back a reorganization instead they sought to innovate their way out of the crisis Ergo the color televisions such a tactic had saved them before in 1950 when they invented the reel to reel tape recorder the Norwegian government backed them 100 in this effort with subsidies and state ownership one can argue that the whole 1975 National plan was for their benefit but despite the construction of a color TV Factory a market downturn finally took the company down in 1978 tanberg filed for bankruptcy a Titanic event that sent shock waves through the political establishment founder tanberg fired from his job by his shareholders and ashamed committed suicide his company was split up and sold to others Norris data bought tamberg's Training Division and Oslo facilities the Norwegian government offered a big 105 million Krone subsidy and a discount on those Oslo facilities if they would take majority control of tanberg and run it they accepted but that was a mistake tamberg's inefficient operations lost money and their people rebelled against the idea of being run by a clan of Engineers it ended up being a huge distraction and the division was spun off in 1981. tamberg's collapse in 1978 despite all the subsidies had long lasting political effects the government's perceived mishandling of the situation LED Norway to largely end the interventionist and domestic favoring I.T industrial policies from then on the government would lean more towards Market mechanisms the money from their Bounty of oil sales would be invested abroad rather than domestically the now famous government pension fund of Norway this turn away deeply affected the government's other 1975 Cornerstone company electric Bureau the Telecom equipment manufacturer for half a century electors Bureau provided the equipment for Norway's Telecom Monopoly but in 1983 they lost a critical contract for Norway's first digital switch likely because of this shift and it costs electric its independence they're eventually sold to abb's Norway division norsk dodged a bullet by not getting too cozy with the Norwegian government in the 1970s but the 1980s brought a new challenge that the company ultimately could not overcome in February 1982 Sun Microsystems opened its doors Sun leveraged open hardware and software components to produce a powerful but very cheap computer system the workstation workstations quickly began disrupting the mini computer Market workstations cost just a fraction of the mini computer each of Norse data's nd500 series systems cost over one hundred thousand Norwegian krone a sun system on the other hand would be in the range of 8 000 to 20 000 USD Max workstations were also nowhere near as profitable remember that Norse data had 75 margins on hardware and 100 on software meanwhile Sun's Hardware system sold at about 50 gross margin basically priced at Cost Plus a little margin rather than at value and because they used the open Unix OS the software profits and vendor lock-in that Norse data so heavily relied upon would no longer exist yet because it leveraged those very same open standard hardware and software a certain workstation was capable of matching on technical performance especially since that quote-unquote openness allowed customers to tailor the product to a particular use case this was not exclusively a North data thing by the way DEC and all the other mini computer makers were affected by workstations and later PCS many of this type of computers are what we now call networked servers Norse data found itself trapped making and selling these workstations would annihilate their existing product line and since profits from selling them were so much lower doing this would require an extremely painful downsizing they Instead try to poo poo the end of the mini computer era turning their eyes away from it has sun rocketed to the Stars nor status stumbled towards its do in 1986 and 1987 Norse data reached its peak they were widely seen as one of the world's most successful computer companies they were ranked as a 75th largest I.T company and the third most profitable after Microsoft and crate research they had 4 500 employees generated 2.5
billion Norwegian Krone in revenue and were the second largest company on the OZO Stock Exchange only the oil company North Hydro ranked higher but in 1986 the workstation Revolution really started to ramp up north data launched their own Unix variant and dicks which few software developers adopted it also did not work very well and you needed all new hardware to use it customers began to defect in October 1987 management announced that the company would not reach its sales goals and that it needed to sell stock the stock crashed and would continue to decline the year after that in 1988 the company Froze all hiring suddenly they were really flailing they hastily announced a plan to transition their products to Open Standards like Unix without porting the software it was not until at the press conference that they realized that their announcement had nuked their entire current product line they burned their Bridges with their old customers and any new potential customers can't buy because the Unix products were not ready yet in 1989 after turning a considerable Financial loss Norse data announced a massive reorganization as predicted the switch to Open Standards like Unix caused many jobs to become irrelevant some 800 people were dismissed the computer production division was spun off has a company called dolphin it failed too the only profitable part of the business serviced existing customers a melting iceberg attempts were made to sell the company off to a bigger vendor but none of them worked and as I mentioned earlier the Norwegian government had by then already decided to leave the industry to Market forces there would be no White Knight and the business sunk in 1991 Norse data lost 810 million Krone about a year after that the company sold itself to its creditors for the tax losses the end of Norse data spelled the end of Norway's hopes for dominant computer industry but several smaller Norwegian companies like Simrad and kongsberg survived after undergoing painful layoffs and finding a niche servicing the oil industry it was not easy kongsberg suffered badly after the Toshiba kongsberg scandal in 1987 the Norwegian government refused to inject any more money forcing the company to radically restructure today kongsburg is one of Norway's biggest high technology companies its products are deeply tied to either defense producing anti-ship missiles or oil producing Maritime navigation and other automation systems Norse data is now largely forgotten but it is interesting to consider how for a few years the center of the European Computing world had been all the way out in Norway and how the small company beat the odds for so long all right everyone that's it for tonight thanks for watching subscribe to the Channel Sign up for the newsletter and I'll see you guys next time
2023-06-11 00:08
