Elonex: the end of an era
IP riches sustain founders
Analysis The reaction of many people in the PC business to the news that Elonex Plc (UK) was in administration was a shrug: Elowho?
The brand name and some assets of the veteran PC were picked up last month by Afics, a cartridge recycling firm, which is still mulling over whether it will sell Elonex-branded PCs. So now seems an appropriate time to take a look at Elonex's achievements. Veteran computer journalist Tim Philips takes a walk down Memory Lane.
In recent years, Elonex has had to settle for a supporting role in the PC business as another of the UK's long line of nearly-men. It's easy to forget for a while in the 1990s, it seemed that Elonex was on the verge of matching IBM, HP and Dell.
Founded by German-born Israel Wetrin in his Finchley flat in 1986, Elonex rode the PC boom better than any other UK manufacturer. Wetrin's company was named by taking the last two letters of his sons' names (Daniel and Gideon) and combining it with "Export", and that summed up his approach: a private family man who reinvested his profits, and his time, into obsessively building up Elonex.
By the end of 1993 Elonex had no external debt beyond a mortgage on its London office (soon to be paid off), a contract to supply the Ministry of Defence, 200 employees, was establishing its own manufacturing in the UK, owned close to 200 patents, and was planning to float "within 24 months".
When much of the UK's computer business was a bubble filled with hot air, Wetrin seemed to have built something more substantial. There was no fluff, and few surprises, sometimes even perversely so: in 1994 Elonex had turnover approaching £100m, but it didn’t have a marketing director.
And then, the company hired Jamie Minotto.
One-time advertising executive, one-time bit-part Hollywood actor, many times PC company managing director, Minotto was a strange fit for a company that had until then preferred to let its technology do the talking.
Minotto declared at the time that: "Elonex has the potential to be a world-class player. I want to get it to the position where if any company picked the top three on its shortlist, then it would pick IBM, Compaq and Elonex."
At the time, every Elonex job applicant had his or her handwriting examined by a graphologist. Minotto, we can assume, has very smooth handwriting.
If this was an attempt by Elonex to be flashier, more open like Dell - its direct-sales equivalent – in the US, it failed. Nine weeks later, Minotto had cleared his desk. Other high profile outsiders that had been recruited at the same time also soon departed. The message seemed to be that Elonex preferred to do things its own way, and went back into its shell. The IPO never happened. Elonex stayed true to its North London roots instead.
With hindsight, its decision to sponsor Wimbledon football club – an upstart, rough and tough bunch who surprised everyone by sustaining their success in the big league, was a perfect fit.
If Minotto's job was to change Elonex's culture, it was too big a job for anyone. Like Amstrad, Elonex had based its success on doing things its own way. Alone in the UK market, it had taken Dell's strategy of building to order and carrying small inventories of stock, and made it work.
Working on margins of around 20 per cent – those were the days – its direct sales channel wasn't the only part of Elonex which was innovative. In an era when PCs were known as "clones" for good reason, Elonex boxes usually contained their own proprietary technology.
The company had a reputation for talking up its technical nous too. In the early 1990s, PC magazines liked to run huge group tests, employing small armies of reviewers to pull apart up to 100 desktop PCs at a time in the attempt to find anything interesting to say about what were, for the most part, identical products.
The young pup who was allocated the Elonex PC in the test had a poisoned chalice. On one hand, the inside would contain some unusual proprietary gizmo to write about. On the other hand, woe betide the reviewer if he decided to give it a negative notice, because Elonex finance director Michael Spiro would probably soon be on the phone to upbraid him fiercely for not giving his company's innovative PC the first prize.
There was a case to make too. Elonex PCs were of an uncommonly high standard. The company was breaking into the corporate and government sectors: when the UK government approved 12 computer resellers out of 120 applicants for its National Grid for Learning in July 1999, Elonex was there. It had its wish, because the only other PC manufacturer approved for the UK's schools to deal direct with was IBM.
"We will not tolerate learning institutions being charged excessive prices or having to settle for second best," said education secretary Charles Clarke at the launch.