AST Research — BrandWiki

AST Research

Overview

AST Research, Inc.

trade name	AST Computer
founded	July 25, 1980, in Irvine, California, United States
type	Subsidiary
location	Irvine, California, United States
founder	Albert Wong Safi Qureshey Thomas Yuen
fate	Dissolved
defunct	February 28, 2001
num employees	6,000
num employees year	1995
parent	Samsung Electronics (1997–2001)

AST Research, Inc., later doing business as AST Computer, was an American personal computer manufacturer. It was founded in 1980 in Irvine, California, by Albert Wong, Safi Qureshey, and Thomas Yuen, as an initialism of their first names. Wong left the company nine years later, followed by Yuen in 1992, with Qureshey remaining until AST was acquired by Samsung Electronics in 1997.

The company began by making a circuit board for the IBM PC that boosted its memory storage. AST went public in 1984 and would be a manufacturer of boards and add-on expansion cards.[1] By the late 1980s, it had evolved into a major personal computer manufacturer with its line of Intel i386 based PC clones, and it was the first vendor to announce an i486 PC. In 1990, AST released an NEC PC-9801 clone in the Japanese market, becoming the first American PC vendor to market an NEC clone.[2]

AST had established itself as one of the known "alternative" brands of PCs in the United States while globally it had numerous plants[1]

PC compatibles and Apple expansion (1986–1989)

SixPak was so influential that one in six PCs and clones had one by the end of 1984; by 1986 multifunction cards were often called "SixPak clones".[19] AST's expansion card offerings faced imminent obsolescence by late that year, however, as IBM by this point had offered higher-end upgraded models of the IBM PC, chiefly the PC XT and the PC/AT, that integrated most of the features of AST's PC expansion cards. To keep from posting losses, AST laid off seven percent of the company's 890 employees in July 1986;[20] clandestinely, it also laid plans to introduce a line of PC-compatible computer systems.[9] The AST Premium/286, a clone of the PC/AT featuring an identical Intel 80286 microprocessor, was introduced in October 1986. To make the computer more competitive among a crowded PC compatible market, AST offered the Premium/286 in an optional package that included a discounted laser printer and image scanner, advertised as an inexpensive desktop publishing workstation. AST released an upgraded version of the Premium/286 with the 32-bit Intel 80386 processor—the Premium/386—in October 1987.[21] AST's products for Apple hardware were profitable enough in the interim. In 1986, AST even expanded its Apple support by introducing peripherals for the then-newly released Apple IIGS, with a pair of expansion cards: the SprintDisk 1 MB RAM Disk card and the AST Vision Plus, a real-time video digitizer card.[22] The Vision Plus was eventually sold to Silicon & Software and licensed to Virtual Realities (and sold through LRO and later Alltech Electronics). In 1987 it went on to produce a memory expansion card for the Apple IIGS: the RamStakPlus, a dual RAM/ROM memory expansion card.[23] AST Research also produced for the Macintosh line the Mac286, a pair of NuBus cards containing an Intel 80286 and RAM, allowing a Macintosh to run MS-DOS side by side with its existing operating system.[24]

By 1987 some AST employees thought that their company could achieve $500 million to $1 billion in annual revenue in the next five years, becoming Orange County, California's leading technology company. The Premium/286 accounted for half of the company's sales by July 1987,[25] but it was only a meager success for AST at first. In 1987, the company reported a net income of $13 million,[26] less than half the profit it had posted the preceding year.[9] AST had several setbacks in 1987, including flat sales of expansion products[25] and delayed shipments of a peripheral for IBM PCs in June 1987 that was a factor in a canceled stock call the following month.[9][27] That year, IBM sued AST over alleged trademark infringement of IBM's PS/2 product name occurring in one of AST's print advertisements for RAM, which was settled out of court.[28]

In late 1988, AST joined eight other major PC compatible manufacturers to develop the Extended Industry Standard Architecture as a viable competitor to IBM's closely guarded Micro Channel bus architecture. This consortium was known as the Gang of Nine, led by Compaq.[30]

From July to November 1988, AST introduced seven models of premium computers,[9] and in early September 1988, they announced a $2.2 million television advertising campaign, the first commercials of which premiering during the 1988 Summer Olympics that month.[31] The television commercials comprised roughly 20 percent of AST's $12 million advertising budget and were supported by a line of memorabilia, including pins, posters, and video tapes, tying in with the Olympics and offered at computer dealer shows.[9] By the end of 1988, AST's restructuring and advertising efforts were successful, with year-to-year sales increasing 100 percent to $412.7 million.[32] AST was now third place in sales among manufacturers of PC compatibles, behind IBM and Compaq.[33]

In late 1988, Wong was ousted from AST after a heated boardroom debate with Yuen, in which Wong had complained about the company's recent turbulence.[9] In January 1989, the company laid off 120 employees, or six percent of the workforce. In early 1989, AST reported its first quarterly loss, totaling $8.9 million. The technology press speculated that the loss was due to AST ignoring Intel's development of the i486 while the company was busy restructuring and boosting its advertising. When Intel released the i486 to the public in early 1989, AST was one of the few PC compatible manufacturers which did not announce a i486 computer in the pipeline contemporaneously. Slowing sales led to crowded warehouses of AST products, leading to strain for AST in the form of storage costs.[6] To recoup its losses, in April 1989, the company spun off Camintonn, relinquishing control to the division's managers, and in mid-1989, the company sold its Apple-related products to Orange Micro.[9][34] In 1989, AST was ranked as the ninth largest personal computer manufacturer in the United States with a 2% market share, despite being a relatively late entry in the market.[1]

Turnaround (1989–1994)

In 1989, AST introduced Cupid, the trademark for a method of making computer systems forward-compatible with upgraded microprocessors and memory chips. This works by having the motherboard be a passive backplane, with no processor and memory which are instead located on a Cupid expansion card, to be plugged into the backplane and replaced as upgrades became available.[36] Although the expectation for all AST customers to upgrade their purchases this way was unrealistic, Cupid technology enabled a successful marketing scheme, by eliminating customer hesitation over immediate obsolescence. Such concerns were prevalent due to the rapid increases in computing power in the early 1990s.[9] Using Cupid, AST marketed systems based on the latest and fastest clock-speed revisions of Intel's processors almost immediately—simply by replacing one card in the system—making it possible for AST to price its computers between ten and sixty percent cheaper than competitors.[6]

In April 1990, the company announced the Dual SX/16, a clone of NEC's PC-9801 computer, to be sold exclusively in Japan where the PC-9800 series had flourished.[37] This venture into Japan posed a risk for AST, as the company lacked a large dealer network in the country, but the company's executives, especially Qureshey, were persuaded by the vastness of Japan's business computer market during this time—second only to the United States in size. As it had done in the United States, AST offered the Dual SX/16 with more features and lower prices than domestic competitors. Unlike in the United States, AST developed bespoke brand names for its Japanese computers, in an attempt to fit in the market; the company was also negotiating with Sharp Corporation to market variants of the Dual SX/16 under the Sharp brand.[38] Likewise, AST began marketing computers in former Soviet bloc countries and in India.[38][39] This push toward foreign markets was another attempt by AST to recover from lost market share in the United States in the early 1990s;[9] by 1995 its share was larger outside the country than in the domestic market.

These developments and more led to a quick financial recovery for AST, and in 1990 the company's stock price had risen roughly 260 percent in concert with its sales and earnings growth. Firmly entrenched as the third-largest PC manufacturer, sales reached nearly $1 billion by the end of 1990.[9] AST was sourced as original equipment manufacturer (OEM) by other computer companies such as Unisys, Tandem Computers, Digital Equipment Corporation, Texas Instruments.[40]

AST were also highly successful in the People's Republic of China where it dominated the PC market in the first half of the 1990s. The company announced its first Chinese factory in 1993.[41][42]

Success continued in 1991. Industry leader Compaq and several other competitors announced steep price cuts in direct response to AST early in the year. A few months later, when Intel released the low-cost 80486SX desktop processor, AST announced a i486SX-based computer system the next day.[6] That year, AST beat Compaq for a contract to supply over 1,600 laptops to AT&T's sales department during a time when AT&T was selling its own laptops and other computer systems.[43] By early 1991, 65 percent of the computer systems supplied to Fortune 500 companies had AST as OEM.[9] AST engineers Tom Ludwig and Tom Craft had secretly designed the company's first portable computer against their managers' wishes; it provided about 30% of the company's $688.5 million in revenue in fiscal year 1991.

As with many other computer companies, AST struggled in 1992 due to a fierce price war started by Compaq.[44] Ludwig and Craft left for another company. During plans to restructure AST yet again to minimize operating costs, Yuen left the company early that year, leaving Qureshey as the sole remaining co-founder.[45][46] Qureshey and his executive board set out to maintain AST's third-place status and keep on top of developments in the computer industry.[9] In November 1992, the company introduced the PowerExec 4/25SL Color Plus, one of the first laptops with the portable-specific 80486SL processor. It was released shortly after Compaq released the LTE Lite 4/25C, which is the first laptop with an i486SL.[47] In 1993, AST announced a joint venture with Grid Systems, a subsidiary of Tandy Corporation, to develop a pen-

Yuen (but not Wong), Ludwig and Craft, and numerous others who had become top executives at other companies were among 300 AST alumni who attended an Irvine reunion in December 1992.[49] Fiscal 1993 revenue of $1.4 billion was the first billion-dollar year. In mid-1993, AST acquired both Grid Systems and Tandy's computer division for $105 million. The company incurred a loss with this purchase but gained four PC manufacturing plants—one in Scotland, the rest in Texas—and a litany of patents and software copyrights that had been registered to Tandy Corporation. The Scotland plant was later shut down, to afford building another factory in Ireland, and by 1995 only one of the Texas plants remained operational.[50] In January 1994, AST announced its agreement to sell PenRight and FieldNet—pen-based software development tools included in AST's previous acquisition of Grid and Tandy—to the Telxon Corporation.[51] The deal was finalized in April that year.[52] The company reported fiscal 1994 revenue of $2.4 billion and $53.5 million in profit.

Decline and sale (1994–2001)

By the mid-1990s, AST had severe problems in the highly competitive PC market. According to The New York Times, AST's prospect shrunk due to the strategy of offering premium models in an increasingly competitive personal computer market, while Compaq and other top manufacturers slashed prices in direct competition with the cheapest clones.[53] Samsung paid $378 million for 46% of AST in 1995, providing badly needed funding. Sales grew slightly in fiscal year 1995 but the company lost $99.3 million. In August Tandy, which provided 18% of revenue, said that it would sell IBM computers in its Radio Shack stores. By the time former Apple executive Ian Diery replaced Qureshey as CEO in November 1995, AST was no longer the largest computer maker in Orange County; Toshiba Information Systems, which only made portable computers, sold 154,000 more computers in the United States that year.[54] Revenues for 1996 were $2.1 billion, down from 1995 revenues of over $2.3 billion.[55]

In 1997, AST Research was wholly acquired by Samsung.[56] At the time, Samsung owned 46 percent of AST and had offered to buy the remaining common shares. Prior to this move, Samsung had already owned a substantial stake and provided considerable financial support to keep AST going. By December, the number of employees was down to 1,900. In 1999, Samsung was forced to close the California-based computer maker after a string of losses and a mass defection of research talent.[55][57][58][59] Samsung had invested US$1 billion in the company.

The AST trademark was sold to Beny Alagem, co-founder of Packard Bell, on January 10, 1999; Alagem also gained an exclusive license to the company's intellectual property. The deal was estimated at around $200 million in value according to one person familiar with its details.[60][61] Alagem additionally invested $12.5 million[62] into the formation of AST Computers, a separate, "Internet-driven" joint venture based in Los Angeles, with Alagem holding a 65 percent stake and Samsung holding a 35 percent stake;[63][64] however, the venture failed to gain traction as the computer market slowed in late 2000, becoming moribund by 2004.[65] Meanwhile, Samsung restructured the original AST as ARI Service[66]