Wang goes bang in the hi-tech fast lane: The pioneer of word processing failed to respond to changes in the market, writes Mary Fagan

OF ALL the disaster stories to come out of the troubled computer industry, Wang's is probably the saddest.

The company credited with bringing word processing to the world filed last week for protection from its creditors under Chapter 11 of US bankruptcy law, less than two and a half years after the death of its founder, the remarkable An Wang.

At one stage, Wang was a highly profitable company with revenues of over pounds 3bn. It employed 31,000 in its heyday. Last week, announcing the Chapter 11 filing, Wang said it would cut 5,000 of 13,000 remaining jobs in an effort to restructure.

It lost dollars 139.2m ( pounds 72m) after tax following restructuring charges last year, compared with a loss of dollars 385m the previous year. By last March, the company's debt had risen to an estimated dollars 540m. Last-ditch attempts to find new sources of funds failed.

This state of affairs is a far cry from the days in the 1970s and early 1980s when word processing irrevocably changed the lives of office workers and companies throughout the world.

Wang's rise and fall began when An Wang fled mainland China to escape the invading Japanese during the Second World War. He went first to Shanghai and then to the US. At Harvard University, he played a big role in inventing magnetic core memories, a computer revolution in their own right. His patents allowed him to make enough money to break into the commerical world.

Wang Laboratories was born in 1951, and then grew on the back of another invention attributed to An Wang - the electronic calculator.

An Wang, known as 'the Doctor', was rare in being a technological genius and entrepreneur who knew how to run a business. It was his decision to leap into the world of electronic offices.

Wang became a leading manufacturer of minicomputers - smaller than mainframes but large enough to support many users at once - competing alongside the likes of Digital Equipment Corporation. It was also renowned for its word-processing software.

The evolution of the computer industry spawned personal computers and powerful workstations, however, which began to eat steadily into the market for minicomputers. The changes in the computer world began to throw up problems for Wang, which was still locked into its traditional business. It seemed unable to respond.

Wang was not alone among the big computer companies in failing to keep pace with the personal computer revolution and the move to 'open systems', which allow customers to mix and match computers and software from different manufacturers.

Nixdorf, the German minicomputer company, was an early casualty. Others, including the giants IBM and DEC, have had their problems. The difference between them and Wang is that most accepted the shift in the market and attempted to adapt before it was too late.

An Wang could not have seen what was coming. He was nearing retirement and increasingly filling his days with his other interests, ranging from education to tennis. In 1983, when the company was still thriving, he handed over control to John Cunningham just at the time industry watchers were saying that Wang needed to pull another technological rabbit out of the hat.

As computing technology moved still more rapidly, it seemed that Wang was refusing to realise that it was falling behind in terms of what the buyer wanted. By 1988, Mr Cunningham had left - only to be followed by the equally unsuccessful appointment of An Wang's son, Frederick.

An Wang can be forgiven for wanting to hand over the reins to his son, who became president in 1987. In his mid-30s, Fred Wang was considered by some to be young for the position, and he was not a universally popular choice within the company or on Wall Street. Pamela Stone Bliss, an analyst with Dataquest, the US consultancy, said: 'The problems were compounded when An Wang moved his sons (he had two) into lines of succession over more competent senior executives.'

Fred Wang failed to conjure up the family magic and the problems got worse. Within three years, after friction with his ageing father, he was unceremoniously ousted.

In August 1989, An Wang returned at the age of 69 and after cancer surgery to try to turn the company around. But as his own health deteriorated, he appointed a new president, Robert Miller.

Yet again, however, the change failed to work the much- needed miracle. By the time An Wang died in 1990, the industry was wondering how long the company could hang on.

There were attempts at resuscitation, including marketing and technology deals with IBM, part of which involved a cash injection of up to dollars 100m by the US giant. But the relationship is understood to have disappointed IBM, and the larger company refused to invest any more.

Mr Miller tried to find a buyer for Wang, but with the industry in a prolonged downturn, it was always a long shot.

Determined to see it through, Mr Miller now aims to focus on software and services, where margins are higher, and to become a 'smaller and more competitive company' with revenues of dollars 1.4bn instead of the current dollars 1.9bn. This involves reducing manufacturing, although final assembly of Wang's VS minicomputers will stay in-house. The company will also sell computers made by rival companies, including IBM. Its 30,000 to 40,000 remaining customers are fiercely loyal, and Wang is bent on living up to that trust.

No one doubts Wang's technological abilities - it has more recently made a name for itself in image processing. Its trick is to match that with marketing nous. Other giants of information technology - Philips, for instance - have also found that success in the laboratory will not necessarily stop them plunging into the red.

The Dataquest team are less than optimistic about whether Wang can start again. They believe that the goal of establishing Wang as a viable player in the technology market will prove more elusive than ever. Wang simply cannot afford to make any more mistakes.

(Photograph omitted)