What You See Is What You Get: My Autobiography (55 page)

No. He insisted he wanted to go by public transport rather than be chauffeur-driven in a Rolls-Royce. Unbelievable, but there comes a point when you just give up arguing. I'm convinced that it was because he was getting the travel free of charge. I asked him to let me see his train ticket, but he was reluctant to show it to me - he must have thought I'd pounce on it and tear it up so that he'd
have
to go home by car. We ended up doing a deal whereby he'd allow my driver to walk him across to Brentwood station with an umbrella.

On another occasion, when he
did
accept a lift home, my driver told me that my dad had complained a bit about back pains. Over the years, my dad had been in hospital a couple of times - once to have a pacemaker fitted and later for a serious operation in the men's waterworks area. He was odd in that he would never tell anyone about it beforehand - he'd simply announce that he was going into hospital. This time we would soon learn just how serious the situation was.

Initially, when he started complaining of these pains, I got my private doctor to go and see him. He suggested that it might be a fault with Dad's pacemaker and he felt he should go to back to the Middlesex Hospital, who had fitted his pacemaker and had his records. The doctors and staff at the Middlesex treated him very well and at first they also thought it was a recurrence of his heart problem or something to do with the pacemaker. It wasn't until my second visit to see him there that a nurse took me aside to say that the doctor wanted to see me. He told me that my dad had cancer. It transpired that the operation he'd had two years earlier was for the removal of cancer which, in hindsight, I think was in the prostate gland. He'd never told anyone what his operation was about.

This issue has been the topic of many a debate with my brother and sisters. My sister-in-law insists that she knew it was a serious cancer operation at the time, but I don't think so because I remember visiting him at the London Hospital in Whitechapel and not being able get to the bottom of what he was doing there. He wouldn't actually spell it out and neither would the doctors when questioned, as apparently this would have been an infringement of patient confidentiality.

Even if we had known what was wrong, what could we have done? It was hard enough getting him to accept a lift in my Rolls. I had murders getting him to see my private doctor, who would attend at an hour's notice, as Dad protested strongly that he would rather go and see his NHS doctor. Can you imagine trying to take charge of his medical care and sending him to a top doctor in Harley Street? I know how that argument would have gone. 'Why should I?' he would have asked. 'I've paid for the National Health all my life.' Could we have preserved his life a little longer? I don't know and, of course, none of us will ever know now.

The doctor at the Middlesex told us the cancer was so advanced that, while they could give him a bout of radiotherapy to slow it down a bit, there was nothing more they could do for him. I moved him to a local private hospital in Redbridge, where he had his own room, and he hated every minute of it. He wanted to be back at the Middlesex Hospital on an open ward. On
reflection, I can quite understand how he must have felt. I wouldn't like being confined to a room on my own, knowing I'd got only a few weeks to live.

I remember visiting him there one day. He'd got himself out of bed and was staring out of the window with a glazed, worried look on his face. In the end, he pleaded with us to let him go home, which we did. I arranged for a couple of nurses to look after him in his own bedroom, in the comfort of his own flat. He was certainly much happier with that arrangement.

It's at times like this that business takes second place. From the time I first learned about my dad's back pains, I spent a nasty ten weeks watching him fade away until eventually he died on 7 May 1987. As with everyone, there comes the first time you lose a close member of your family. It's not until then that the harsh reality of such a loss hits home. Obviously it was a very sad occasion for my brother and sisters too.

Our attention turned towards the welfare of Mum and what she would be like afterwards. Although she was eighty, she was still a very capable lady and, bearing in mind that she lived close to Derek and Daphne and relatively close to me, she was never too far away from help. The funeral, obviously, was a terrible day and we decided that my mother should not attend. The traditional shiva was held at my house and went on for a few days. Hundreds of people passed through, expressing their condolences.

*

In spite of the success we were enjoying with our computers, I was determined not to ignore the old core business of Amstrad - consumer electronics. I was being pestered at the time by a Japanese company, Funai, an OEM specialist in the audio and VCR market, which was eager to break into the UK market with VCRs. The problem was that their pricing was miles out. I persevered with them and after negotiating for a few months, they eventually agreed to supply me with VCRs at a price which enabled us to undercut the giant Japanese manufacturers and, more importantly, the Matsui-branded VCRs being sold by Dixons (and manufactured by Orion).

The boss, Mr Funai, was a completely different character from Emperor Otake. He was just as you would expect a Japanese person to be - very polite and humble, and anxious to do business with Amstrad. But he was no pushover, for sure. He tended to step back and allow his staff to conduct the discussions and instantly report back to him. At one of our meetings, he sat in an office a few doors away while they ran backwards and forwards telling him what was going on. That way he didn't lose face in matters of negotiation.

Funai's chief of sales was Frank Matsumoto, who was assisted by Mr
Yamamoto (we never
did
get round to finding out his first name). Funai's main interest was to try to convince me to take the computer business away from Otake - they were obviously business enemies. One of the side benefits of dealing with Funai was that I could wind up Otake by telling him what nice people they were, how co-operative and keen to learn about new technology. In truth, I wasn't about to take computer production away from Otake, but I did do a deal with Funai to produce dual-speed VCRs.

I'd noticed the American VCR market was tending towards these dual-speed VCRs. Effectively, this meant that an E120 videotape (which normally had a maximum recording time of two hours) could accommodate four hours of recording in long-play mode. I knew this would be a big selling feature if we could introduce it to the UK market.

At the time, the only dual-speed units available in the UK were sold by JVC, the original licence owner of the VHS system. Their method was expensive. Again not to be too technical, it meant that the VCR had to have four heads instead of the two heads found on normal, single-speed VCRs. My engineers found that if you ran the two-head VCR at half-speed, you could record and playback twice as much and the picture quality was certainly acceptable. However, when one used fast-forward or rewind to skip through things like adverts, the picture would have fuzzy stripes across the middle. I was sure this would not be a problem for consumers, as they could easily see when the adverts were over and the programme had restarted and then they'd simply press the play button and the normal, good-quality picture would be restored.

I instructed Funai to make me some samples and I showed them to Nick Lightowler at Comet. His technical people weren't happy, believing that the fast-forward/rewind issue could create a lot of problems with consumers thinking it was a fault. My solution was to state in the instruction book that the stripes were a normal part of the technical operation of the product. In this way, the consumer would accept it. On top of this, I suggested that if we printed the same warning on a big red label and stuck it over the face of the product, we would pre-empt any consumer enquiries. In his usual way, Nick signed on to this. He was still quite cautious, but he agreed to take some stock and try it out. In our advertising, we displayed our low price with a large bomb-blast flagging the main feature: 'Now you can record and playback up to four hours on one tape.'

We hit it off again. It was a great success and we started to take a big share of the VCR market in the UK.

Inevitably, this dual-speed feature became the industry standard after
about a year or so and people like Orion followed suit, but we'd already taken a grip on the market. Due to our advertising, Dixons
had
to buy these products - reluctantly, of course - because the Amstrad brand name was now much stronger than their own Matsui brand.

You might remember the days of VCR and just how difficult they were to set up and program. One of the things that Amstrad was famous for was keeping things simple. We came up with a new idea for the remote control, which we sub-branded 'User-Friendly VCR'. On these machines, by following a few simple steps, it was easy to set the timer to record. At the time, this was a godsend, certainly for the older generation.

We also made VCRs for the French market, which was difficult to break into, as France had a different television system, known as SECAM (most of Europe has the PAL system). To further complicate matters, some broadcasts in France (in particular near the borders with Germany and Belgium) were in PAL, so to get into the French market, you had to produce a dual-standard product known as PAL/SECAM. We did this and became a big player in the French VCR market. But another problem was looming.

European manufacturers were up in arms about the dumping of Japanese VCRs. Our French cousins, bless 'em, came up with a very innovative solution. They could not break any trade agreements with Japan for the free flow of merchandise, so they decided that all non-European VCRs had to be imported through one small town - Poitiers.

Imagine one customs bloke with his dog in a hut. I'm perhaps exaggerating, but that was the idea. Hundreds of containers of VCRs had to be cleared at Poitiers and, of course, the customs officials were on a work-to-rule, so just one or two containers got through every day. This was the French way of imposing import restrictions. Meanwhile, European-made VCRs were able to flow freely. There was pressure mounting in Brussels to impose antidumping duties on all VCRs coming into Europe from Japan in order to protect the so-called European manufacturers.

The only way to overcome this would be to set up production in the UK or another European country. Orion, for example, had set up its own factory in Wales. I never visited it, but from what I understood it was a 'screwdriver plant'. Basically, they imported the modules that made up a VCR, then screwed them together and finished off the unit. They could then say, 'Made in Wales' and ship them around Europe.

I suggested to Mr Funai that we should start assembling VCRs at our Shoeburyness plant. To fast-track the story, in May 1987 we formed a company - Funai-Amstrad. Because of the impending anti-dumping duties, a lot
of the British retailers immediately turned to Amstrad, desperately seeking supplies, knowing that their former Japanese suppliers were toeing the party line (as instructed by MITI, their equivalent of the British Board of Trade) to keep the quantities low.

In those days, the rental market was big. Companies such as Rediffusion, Granada and DER were massive buyers of TVs and VCRs. Granada gave us a very large order, the first to be produced in the Funai-Amstrad factory. This turned out to be a bit of a disaster. It seems that Mr Funai's idea was that he would sell the individual modules to Funai-Amstrad
at a profit,
and that Funai-Amstrad, which was financed by us, would assemble them and sell them to Amstrad for Amstrad to sell on to its customers.

I have to say that I took my eye off the ball in this negotiation. My understanding was that Funai-Amstrad would get these modules at cost price and make their profit by selling to Amstrad. This would result in the same cost to Amstrad as if we'd imported them from Japan.

Mr Funai was no schmock - he was laughing all the way to the bank. Amstrad financed the purchase of the materials; meanwhile, he'd effectively made his profit on the modules he shipped to Funai-Amstrad from Japan. The fact that the factory in England had to assemble them and ship them was a mere technicality in his mind. The whole venture turned out to be a fiasco. We were unable to supply Granada with the quantities they required, as Funai were late in the shipment of parts and were also slow in the assembly process at Shoeburyness. They had accepted the orders with no regard to the logistics of being able to fulfil them.

After a year or so, the penny finally dropped with me. I told Mr Funai we were shutting this business down. What's more, the arguments coming from the European Community manufacturers were waning - they realised they were losing the battle and many of them gave up their own production in Germany and France and started to import fully assembled VCRs from the Far East. All mention of anti-dumping had magically gone away. Even Poitiers was shut down. That was the final nail in the coffin which led to my decision to end the Funai-Amstrad fiasco. Nevertheless, to give you some idea of how we plundered the market at the time, we sold 450,000 VCRs in 1987.

We reverted to importing fully assembled VCRs. Having made a mistake with Funai-Amstrad, we walked away and wiped our faces! This Funai-Amstrad outing had cost us a lot of money and Mr Funai got off very lightly.

So, was I losing my touch? You have to remember that up to this point, pretty much every business decision I'd made had worked out. When you've
experienced this, you start to think you can walk on water and it's difficult to imagine that your next move will go wrong. In some ways, Funai-Amstrad was my first warning that in the not-too-distant future, many things would start to go very wrong. But in June 1987, as we announced we'd doubled our profits yet again to PS135m (on a turnover of PS511m), I had no idea that these normally reliable instincts of mine were going to start blowing up in my face. It seemed like business as usual as, once again, we proved we could successfully and quickly adapt to the ever-advancing technology of the PC market by producing computers which now included a hard disk drive. These were massively expensive at the time, costing in the region of $300 for a 20MB hard disk drive. Consider, most cheap computers you can buy these days have a 500GB hard disk drive - that's 25,000 times the capacity of the machines back then!