Risk in Innovation: A Tale of Two Luggables

I like to read obituaries. On Sunday mornings, coffee cup in hand, I peruse the obituaries section in The New York Times to learn about people, many I’ve never heard of, who did some truly remarkable things in their lives.

It is because of this weekend ritual that I found out about Andrew Kay, a pioneer in computing and inventor of the Kaypro II, who died in August of this year at the age of 95. I’ve written about technology for years, and I’m embarrassed to report that until I saw his obituary, I don’t recall reading about Mr. Kay or his significant contribution to the computing world. I knew about his competitor, Adam Osborne, who introduced the Osborne 1 computer in 1981, a year before the Kaypro II hit the market. I suppose I should’ve known about the Kaypro II because it far outlasted the Osborne 1 in the marketplace. But more on that in a moment. Both computers were known as “luggables” — early portable computers that were enormous by today’s standards, weighing well over 20 pounds. They featured squint-inducing screens and supported remote working provided you were near an electrical socket. They look a bit silly now in our age of smartphones, tablet computers and snazzy wearable devices like Apple’s new iWatch. But in the early 1980s, these machines with their very basic computing abilities both had some serious “wow factor.” They also sold for a bargain-basement price of $1,795 (about $4,705 in today’s dollars). So, they were relatively affordable, considering that owning your own computer at that time was a bit of a luxury. Something else the Kaypro II and Osborne I had in common: Both required risk in innovation to create. After initial and impressive success in the marketplace, they would both fail to survive — victims of innovation, in different ways. Here are their stories:

The Osborne 1

In 1981, if you wanted a computer for word processing and spreadsheet creation that would fit under an airplane seat (and help build your biceps as you carried it through an airport), the Osborne 1 was it. Its features included a 4 MHz Zilog Z80 CPU, two single-sided floppy drives, 64K of RAM, and a 5-inch monochrome CRT display. In its first year on the market, about 10,000 units of the Osborne 1 were selling per month, and by September of 1981, it had reached $1 million in sales. So, things were going quite well for the Osborne Computer Company. Then, in 1983, Adam Osborne made an error in judgment: He announced that the company was innovating, and that several next-generation computer models far better the Osborne 1 would be introduced in the future. The problem with this well-meaning bulletin is that none of these computers were in production. Sales of the Osborne 1 fell sharply afterward, more than likely because people did not want to spend thousands of dollars on technology that soon would be obsolete. By September 1983, the company was bankrupt. Osborne’s misstep — taking a necessary risk to innovate but telling the world about it too soon — has left us with the concept of the Osborne Effect, which “refers to the unintended consequences of announcing a future product ahead of its availability — and its impact upon the sales of the current product.” Some industry experts observe that fear of the Osborne Effect is what has led to the technology industry’s addiction to secrecy when it comes to discussing innovation.

The Kaypro II

As The New York Times notes in Andrew Kay’s obituary, the demise of the Osborne 1 and the Osborne Computer Company benefited sales of the Kaypro II. (The computer, which reportedly had more robust features than the Osborne 1, is also credited with having a “profound influence on the tax and accounting practice” by providing that industry with a productivity tool much more powerful than a simple calculator.) By 1985, Kaypro Corporation had earned revenue in excess of $120 million. But within five years, it, too, went bankrupt. By 1992, Kaypro was no more. What happened? It seems Mr. Kay did not react swiftly enough to sweeping innovation transforming the computing industry. Like the Osborne 1, the Kaypro II initially ran the MS-DOS operating system. IBM, with its groundbreaking Microsoft-developed software platform, simply took over the marketplace. By the time Kaypro tried to adapt to an IBM-compatible world, it was too late. While the Osborne 1 and the Kaypro II are long obsolete, and both went from fame to fizzle, it is important to understand that these two luggables left an indelible mark in the history of computing. Their inventors recognized even in those early days of personal computers that people need and want access to their devices anytime, anywhere. So, thank you Mr. Osborne and Mr. Kay, for your vision, and taking a risk in innovation that has helped to shape our modern, mobile world.