Tandon Banks on New Disk Drive to Help Keep Its Momentum
Tandon Corp. Chairman Sirjang Lal (Jugi) Tandon has never been one to refrain from bold predictions.
Last year, he predicted that the Chatsworth maker of personal computers and disk-drive, data storage devices would be selling $1 billion in products by 1988. Meeting that goal will take some doing--the company had only $214 million in sales in the fiscal year ended Sept. 28.
Last week, the company he heads made another bold prediction in bicoastal press conferences in New York and Culver City. Tandon unveiled a portable disk drive that the company said would “change the way the industry thinks about personal computing.”
But computer industry analysts have their doubts. “Cute,” is how James Porter, head of Disk/Trend Inc., a Los Altos market research firm, described the Tandon product. “It’s not going to set the world on fire,” he said.
Tandon President Dan H. Wilkie said the disk drive cost $10 million to develop, $6 million of which came from Xerox. Xerox has the right to buy the product at a discount, he said, but has not yet committed itself to doing so.
In another announcement Monday, Tandon said it agreed to sell $50 million of its conventional 3 1/2-inch, 20-megabyte, hard-disk drives this year to Amstrad, one of Great Britain’s largest personal computer makers. Wilkie said it is the largest single order the company has ever had for hard-disk drives.
These developments seem to be renewing investors’ faith in Tandon. The company’s stock has climbed over the past week from $3.50 to $6.50 a share, and has been one of the most active stocks in over-the-counter trading.
Tandon’s new product is a portable box weighing 2 1/2 pounds, containing a disk drive that reads and writes computer data from a 3 1/2-inch-thick disk and is about the size of two videocassette tapes stacked atop each other. The drive is inserted in a personal computer in much the way a tape is inserted into a videocassette recorder.
Traditional disk drives are installed in the base of a personal computer and can’t be removed without considerable effort. But the new, portable Tandon product allows a user to remove the stored data from one computer and insert it into another computer. Besides being convenient, Tandon argues, this provides better security for computer files, especially in defense work, because the drives can be removed and stored in a vault.
A Tandon personal computer system that uses the portable disk drive--compatible with IBM’s PC AT personal computer--is expected to cost nearly $3,000 when it reaches computer dealers in a few weeks. Individual disk drives, called the “Personal Data Pac,” are expected to cost less than $400.
The Tandon executive primarily responsible for the new product is Chuck Peddle, president of the company’s Tandon Computer Corp. subsidiary. Peddle, 49, considered a father of the personal computer business, helped design Commodore International’s computer back in the 1970s. He later founded Victor Technologies, a personal computer maker in Scotts Valley.
Durability Demonstrated
Peddle contends that the new product is more than a mere disk drive. “This is a personal computer,” he said, holding the disk drive in the air during the Culver City press conference and dropping it on the floor to emphasize that it can withstand knocks.
Analysts concede that the new disk drive is technically impressive. Less certain is whether Tandon can sell it.
Two other companies, Iomega, based in Ogden, Utah, and Miltope Group, based in New York, Porter said, make products that essentially do the same thing by allowing users to remove hard disks or high-storage floppy disks that cost about $70 each.
Most personal computer users don’t need the special disk drives in order to transport data between home and office computers, Porter explained. “If someone is going to work on a document, the information is going to fit on a floppy disk a majority of the time,” he said.
Success Not Assured
Steven L. Ossad, who follows Tandon for L. F. Rothschild in New York, believes that the new product is a good idea but that it is too early to tell how it will sell. Critical to the product’s success, he said, is Tandon’s ability to persuade other personal computer makers to adopt the same format, which Tandon hopes to do through licensing arrangements.
The new product shows a renewed emphasis by Tandon on disk drives, which helped Jugi Tandon build his company in the late 1970s and early 1980s before it shifted its emphasis in late 1985 to making IBM-compatible personal computers.
