20 years ago this week, Microsoft just about killed Australian PC manufacturing

Gateway 2000 to the rescue

Gateway 2000, a PC-maker that in 1997 was a top tier player to rank alongside the likes of Dell, was looking for new territories to conquer and swooped in to buy Osborne. It inherited all manner of entanglements created by the backlog of orders and update pledges.

I attended the meeting at which Gateway's management presented the acquisition as a fait accompli. Disgruntled buyers waiting for the one PC on which they'd spent a sizeable sum mixed with trade creditors. All were worried if they'd ever see a cent of their hard-earned again. Months of complaints and allegations followed, providing lots of lovely follow-up stories that, like much Osborne history, happened just before online reporting became commonplace.

Gateway named its local outpost Osborne Gateway 2000, although the local name didn't last and nor did much of the company's way of doing business.

Gateway did honour those who had pre-paid for new Osbornes but replaced the lifetime warranties with phone support. Alex Kidman, now an IT journalist (and good friend to The Reg on his site fatducktech.com) worked on the Gateway 2000 help desk in 1997 and recalls several calls from Osborne owners seeking to invoke their warranties or inquiring how to get their promised upgrade from a 386 to a Pentium. Most, he says, took the news of Osborne's demise well, though customers with problematic Gateway machines were harder to handle.

Kidman says photocopied Osborne manuals were a prized resource in the Gateway call centre, as they at least could offer third-party repairers an inkling about what was wrong with machines they'd been asked to fix.

Osborne was arguably the last Australian PC maker of note. Components specialist Hypertech had a go at the market a year or so later, but quickly floundered. Ipex and Optima struggled on for a few years. None ever matched Osborne's retail presence. Before long, the likes of Compaq and HP built their own assembly factories in Australia, their openings marked by ministerial praise.

Microsoft's licences attracted the attention of the US Department of Justice and while Redmond escaped that stoush largely unharmed, by then its sharp practices meant it had painted a target on itself. The rest of the 1990s saw US authorities chase Microsoft hard, even threatening to break it up.

It's impossible to say if Osborne could have survived had Microsoft behaved differently. But even if Redmond had been kinder, it's hard to see how Osborne could have thrived. For one thing, Windows 95 arrived a few months after Osborne went into receivership. Bill Gates was kind of a de facto head of state for technology at the time and Windows 95 was a runaway success. It's hard to see how Osborne could have survived selling OS/2 PCs.

And then there was Dell, which in 1996 opened a factory in Penang, Malaysia. Gartner searched its archives for us and found its last mention of Osborne came in 1997 when the company noted: “Australians are not known for their preference to buy products via telephone or mail-order catalogues.”

Dell changed that, selling PCs at prices local manufacturer couldn’t match even though it was shipping them in from Malaysia. Before long, Australian buying habits changed, mass-market retailers started selling PCs and dedicated computer shops were pushed to the margins. Where they remain today.

Osborne's John Linton went on to found TPG, which brought data services to regional areas. He also established ISP Exetel. In both companies, he wrote on his blog at Exetel, he built regional presences to ensure country Australia wasn't under-served by technology.

Those posts survive Linton, who passed away in 2012.

But Linton's Osborne clearly created a legacy, at least for one former employee. Jeremy James says he remembers Osborne's management styles and approach “as the best I have ever been in. The company was extremely forward thinking.”

Skills he gained at the company set him up for a long IT career in the finance and healthcare sectors.

“It was a good place to start out of university,” he says. “It showed the potential of IT. Other than the last month or so, every memory I have Osborne was that it was a very positive time in my life.” ®