TANDEM celebrates its 20th anniversary this year, and has managed to mark the event with a record quarter: record revenues, record earnings, and a record number of processors shipped. The company's outlook is excellent, particularly in this part of the world, and there is a lot the company has to look forward to in the burgeoning China market, where massive infrastructural projects have seen Tandem's mainland sales boom. Tandem's latest set of financial results - a net income of $71 million for the company's fiscal fourth quarter 1994 to the end of September - are quite remarkable when one considers the situation the company found itself in just a year-and-a-half ago. At that time, Tandem was bleeding red ink. It was at the bottom end of a product cycle. Its critically acclaimed fault-tolerant machines on which it had built 18 years of success were still as reliable as ever, but they were wildly over-priced, simply unable to compete with the newest generation of increasingly reliable UNIX servers from companies such as Sun Microsystems, Sequent and Pyramid. The company found itself badly out of step with the market, misreading the massive industry swing toward 'open' architectures. Tandem found it increasingly difficult to pitch its high-priced - if super-reliable - proprietary architectures against low-cost RISC/UNIX machines. The results were disastrous, with the company posting a loss of more than US$517 million for fiscal 1993. At that time, Tandem was seriously in danger of going under. After 18 straight years of strong growth (Tandem was something of a darling on Wall Street for a time), the company was in real trouble. It is amazing the difference that 18 months can make. According to the company's product management and product marketing vice-president, Bill Heil, Tandem has virtually re-invented itself in that time. In fact, the Tandem of today bears little resemblance to the Tandem that existed two years ago. The story is a familiar one. Tandem, like so many computer companies of its era, had long survived, and even thrived in the era of IBM. The company had a set of products complimentary to that dominated by the centralised computing model, based on IBM mainframe architectures. When the glass-roomed centralised computing architectures began to hit the skids in the last '80s and early '90s, so too did Tandem fortunes. Numerous other high-fliers of that era have been through (or are going through) the same trauma's, some more successfully than others. Unisys, Digital Equipment Corp, Wang Laboratories, and Prime Computer are good examples. According to Mr Heil, Tandem turned its entire product focus and marketing strategies virtually upside down overnight two years ago, reducing pricing by a factor of six, and immediately developing new systems based on open architectures. The new business model was based on four basic premises, Mr Heil said. 'First, we needed to be open. Secondly, we needed scalability. Thirdly, we needed reliability. And finally we had to be low cost,' Mr Heil said. 'We think we have now made that transition from the IBM mainframe model, and somewhat more successfully than others. We are back into growth.' The target markets remain largely similar, with the focus on those industries that offer a lot of customer services that generate high volumes of transactions within the computing environment. Its traditionally strong markets include health care, telecommunications - particularly in back-office billing systems as well as in digital switching - banking and financial institutions, and retailing. Those core industry strengths, are precisely why Tandem has found itself in a pole position in China. China is largely devoting its energies to infrastructural projects, building the telecommunications and computing backbones to drive banking, finance and service industry infrastructures.
