AL SHUGART ADDRESSING THE DATAQUEST DATA STORAGE CONFERENCE
JULY 27, 1993 IN SANTA CLARA, CALIF.

I've got two pieces of good news for you. The first piece of good news is that I don't have any slides. The second piece of good news is that I am not talking til five o'clock. (laughter)

I also have some bad news for those of you who sold Western Digital short. They announced their numbers today and they had a horrible loss which means their stock will go up of course. (laughter)

I looked at the title of what I was supposed to talk about. I saw the title yesterday for the first time and I didn't understand it so I didn't pay any attention to it. Hope you will accept that explanation. I had to correct Tom Gardner. I listened to his presentation. He's a young guy. He doesn't really understand all the industry yet. If you're going to record with a bent nail, it has to be rusty, and don't forget that. (laughter)

I thought I would talk about the good ole days cause I guess I'm the sort of historian of the industry. I get credit for everything that has been done. It's really neat, cause I never done any of them. I'm relatively good at being in the right place at the right time. I'm relatively good at judging people and that's all part of being lucky and I'm very, very lucky.

When I was in the IBM Company and I was there for—as Phil (Devin—Dataquest Mass Storage Analyst) said—I guess 18 years or so, those were the good ole days. What were the criteria (back then). Well there was minimal competition. Actually in the early days there wasn't any competition. That was what was neat. And high gross margins, I mean really high gross margins. I remember we had one of our disk pack-—our early disk pack drives—the product cost was $1,500. We sold for it for $26,500. How'd you like that. And that was without a disk pack. (laughter)

There was relatively full employment for all the type of people who are gathered here. You could always get a job. And there was lots of time for product development. Product development cycles of four or five years were not unusual at all, which was really kinda neat. It gave you lots of time to do lots of things, fool around.

I got credit for everything as I said. I got credit for inventing the floppy disk drive. I almost did. I almost invented the floppy, but the guy I showed the idea to—I didn't know it was a floppy when I show it to him. His name was Ed Knapp (spelling?) Some of you old timers from IBM might remember Ed. He was a packaging mechanical engineer doing the packaging on a disk drive product that I had and he had finished his assignment and was looking for something else to do and I had a big strip of magnetic tape behind my desk and I was talking with him one day and I cut a big circle and I said to him "why don't we use this flexible magnetic tape material and rotate it and we'll have a disk” He didn't like the idea so he didn't do it.

And I dropped the idea. I didn't know if it was any good or not. And sure enough, the floppy disk was eventually done several years later but not by Ed Knapp. And I didn't do it. The guy that invented the floppy disk drive was actually Dave Noble from IBM. He was the real inventor. He was the program manager. There were two engineers, Herb Thompson and Ralph Flores, who worked for him that really did all the work and made a breakthrough in floppy diskette. They put the permanent envelope around the outside that had the dust collector and so forth and without that I don't think the floppy disk drive would ever have been born. They were three guys, but I got all the credit.

And I got the credit for working on the first RAMAC disk drive. That's not true I did not work on it. I worked on the CPU (central processor unit). All my experience at IBM in the early days was working on computers. All my patent applications at the IBM Company were related to computer logic design. One of the computers I worked on was the 1620. That number means nothing to you, but it was the first scientific computer that IBM ever put together, a small scientific computer. We did something different on this computer. For the first time we did not have an arithmetic unit at all, it was all table look up no adder or anything like that. The name of the—the code name within IBM for that computer was Cadet. And the acronym was for "Can't Add Doesn't Even Try" (laughter)

I can't believe that after working on computers all my life that I'm still not computer literate. I have two computers in my office behind me. I get the stock market quotes and I get First-Call and I'm on E-mail, but I have a lot of trouble. That's one of the big failings right now with computers is that they are not really friendly. They are friendly for a lot of people, but not friendly for enough people. And I don't think the computer industry is going to make a lot of progress until they are an awful lot more friendly than they are right now. They have to get so friendly that I can operate them and I can't yet.

In the early days of RAMAC, I came to San Jose with IBM in 1955 to work on the computer in RAMAC. This was the first application of disk storage. Reynold Johnson was the lab manager for IBM at the time and he usually gets the credit for the RAMAC. And Rey was a great guy, but he wasn't the inventor. And Lou Stevens was the RAMAC program manager. And Lou Stevens was a great guy, but he wasn't the inventor either.

The inventor was a guy named John Haanstra. John was the guy you might call the project manager. And the fellow who worked for John, Bill Goddard, got the basic patent on RAMAC, but you don't hear of John Haanstra or Bill Goddard. In fact, John Haanstra probably influenced my professional life more than any other individual. He was made president of IBM Product Division but then he got put into the penalty box for doing something wrong. I don't remember what he did but he got demoted. Two years later he got promoted to president again and he did something wrong again and got put back in the penalty box and he finally said "screw it" and quit and he went to work for GE.

GE decided with John Haanstra they could be a big force in the computer business. They started to make progress but a couple of years after he joined GE, John, who was a pilot, got killed in a plane crash. GE decided, on the basis of John Haanstra's early death, they were going to get out of the computer business. Now, isn't that amazing power for one guy can have. He was really a fine guy.

The inventors of modern day disk storage. I think the real credit has to go to Jack Harker, Al Osterlund, Russ Brunner, and Ken Houghton. (Spelling?) And these were the four IBM scientists, who while at the IBM research center in 1958, published all the fundamental work on slider bearings. You don't hear much about them, but these four people really were the guys that did all the work. Jack Harker made the disk drive business really go because he was the program manager of the 1311 and 2311 removable disk pack drive that Tom Gardner talked about.

Another guy who made disk storage really go was Ken Folger, an IBM market planner. Without him the disk pack drive would have never surfaced and I think that Ken Folger deserves share of billing with Jack Harker.

And Ken Houghton gets the credit for Winchester technology and deservedly so, I think. But, the guys who actually invented Winchester technology are Armond Miller at Data Disc and Don Johnson at IBM. These guys preceded Ken but Ken put it all together and made it work. These guys were who invented Winchester technology, in my book. I still get credit for Winchester technology, too. Isn't that amazing. I wasn't even involved in it. (laughter)

IBM had a competing program in the mid-60s, competing with disk drives. The Poughkeepsie IBM lab decided that disk drives were a lot of trouble and there were too many of them and too many formats and too many interfaces so the Poughkeepsie Development Laboratory invented the loop program. Some of you old timers might remember the loop program. And this was a storage device that had a loop of magnetic tape, with probably a circumference of 5 inches or so and an inch or half-inch wide. And these loops of tape were switch accessed pneumatically. And there were various read/write stations they could go to. And depending on the size of the box containing the various loops of tape you could have variable amounts of capacity. Performance could be improved by having multiple stations.

So Poughkeepsie Labs proposed this loop program to put all the people in San Jose out of business. That was an interesting turn of events. It took us in San Jose to get IBM to kill the loop program and they finally did. Bob Evans who is now with Hambrecht & Quist, I think was the ringleader of the loop program, a good guy. Some of you might know Bob. He was given credit for IBM System 360, which was announced in 1964. It was the first big computer system that was compatible from its smallest model to its largest model. And that architecture stuck around ever since. Bob deserves the credit because he was the 360 system manager, but Gene Amdahl is given credit publicly as being the inventor of the System 360, because he has a big name and formed his own company.

The truth is neither of them invented the System 360. It was really Fred Brooks, who was the architect of the 360 and the last time I heard Fred was head of the computer science department at the University of North Carolina. In fact, if it wasn't for Fred Brooks, a lot of us would have trouble right now because I was unable to sell defective disk tracks on disk drives to anybody in the IBM Company in the early days. I had a discussion with Fred Brooks and we were talking about costs and I acquainted him with the fact that perfect disks were costing us an awful lot of money and that all we needed to do was to implement a defective track procedure and we could save ourselves beaucoup money. And he said let's do it. And we did it and we saved a lot of money and defective tracks have become a way of life and permitted us to bring the cost of storage down even further.

And IBM had a big optical storage program, too. Tom Gardner talked about optical. The optical program in the early days was called the photo digital system and it was a system of recording dots and no dots on standard halide film with an electron beam and then developing the film, fixing it and putting these strips of film—eight to twenty—in a little box all automatically done by machines. And then storing the box someplace. The boxes moved around the system pneumatically. It was a trillion bit file and we were building two of them one for the atomic energy commission and one for I Lawrence Radiation Labs in Livermore (Calif.)

The photo digital project was a huge project. It was not my project. In fact, I was on record as saying it would never work. Jack Keeler who still is or just was president of IBM actually ran the photo digital program. Before the two products were completely developed Jack called me one day. I was running the disk drive programs in San Jose. He said he had been given the opportunity to move to Armonk—if that's an opportunity-—to become assistant manager—a big promotion for him—but he felt so dedicated to the engineers on the photo digital program that he wasn't going to do it unless I would take over the photo digital program and let somebody else run the disk drives.

I was really flattered, particularly since I had already told everybody on that program their program wouldn't work, but I went ahead and said okay I would do it. Jack said he would never forget it and he never did forget it. He sued me twice. (laughter). We had to close the program. We delivered the two products as planned and Frank Kerry told me if we could make the thing profitable on a production basis then we could keep the thing (program) going. So we put a real press on selling some more. We sold seven more and that wasn't anywhere near enough so we had to fold the program. In the meantime, though, we had made commitments on seven more systems, so we had to build seven more photo digital systems. That was history of the photo digital program at the IBM Company.

I'm glad I'm the historian and not the predictor, because I don't know what's going to happen. The cost of computing has come down so far that we've opened markets that no one ever dreamed of before and I see more of that happening, further driving down the cost of disk drives, as unit volumes go up. I think that obviously data storage requirements are going to continue to grow and I think at tremendous rates. I think as we start storing video on disk drives in a real time fashion, that the storage requirements are going to really jump. The big thing that's going to cause us some problems is the bandwidth capability for transferring data around the world. I think that's a real tough problem to solve. I think that the data storage requirements will advance at least as fast as the technology advances.

Tom, I'm with you. I don't know whether 30%, 40% or 50%, but it seems like every couple of years we double the recording density. Product life cycles are getting shorter and shorter. I've convinced that some day, the day we announce the product we will announce its end of life the same day (laughter) and ask our customer for their final order.

But I think that technology will continue to double every couple of years. I don't see any big changes in technology. I think that magneto resistive reading will be the wave of the future. It will be the way we get to an order of magnitude more storage density than we have right now. I think that alternate substrates, alternate to aluminum will become standard. As you might know Seagate has a relationship with Corning and we are working on Ceramic disks and that's the way we are going. There may alternate substrates that perform like Ceramic. It won't be very many years before all the disk drives will be alternate substrates and magneto-resistive reading. I am sure.

I'm pretty excited about it. Everybody worries. Phil talks about prices declining and nobody making any money. We're making money. As soon as you learn that you have to sell it for more than you make it you can make some money in this business. And I think it is really exciting that the market is growing like it is and prices are coming down. That makes it tougher for the marginal people to stay in business. I kinda like that because I don't consider ourselves as being marginal.

Like I said I didn't prepare a speech, but that's all I was going to cover. I think.

I was talking to Tom Gardner and Norm Hayes out front a little while ago and we were talking about some old timers in the business, three in the industry you never hear of. Classical engineers and really great guys and one of them was Ray Herrera, some of you might remember Ray, fantastic guy. I promoted Ray to senior engineer, which was the top spot at IBM in San Jose. You know what he said to me when I told him about it. He said, "hey fantastic, I'm the first Mexican senior engineer IBM has. I never thought about it, but he really was. Rusty Nagakura, remember Rusty, great little fella. He could hit a golf ball 350 yards. Rusty died a long long time ago. And the last guy, a great philosopher, who could absolutely solve any problem in the world was Yan Hou Tong (spelling). Brilliant guy, who moved to work with Xerox in Dallas, many years ago. And since that time I lost track of him. I know he retired. I wanted to mention these three people because no one ever does and they were really classy people.

So I hope you all live 50 more years along with me and I'll let you all go have your cocktails. Thanks very much.

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