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Sunday, August 23, 1992 - Page updated at 12:00 AM

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Once-Booming Wang Laboratories Failed To Heed The Changing Market

AP

NEW YORK - Wang Laboratories' troubles demonstrate what happens when a once-booming company disregards fundamental changes in its market.

Wang, which filed for bankruptcy court protection Tuesday, pioneered office-automation in the 1970s with its word processors, which allowed typists to correct, revise and rewrite before printing out a letter or other document.

Wang's green-tinted computer screens soon became a fixture in secretarial suites of major corporations, where they replaced typewriters and moved letter-typing to an era light years away from White Out and erasers.

These word-processing terminals were connected to Wang minicomputers. Minicomputers, the miracle computer product of that era, packed a wallop of power in a small package and cost far less than the room-sized mainframes they supplanted.

But as the mainframe lost favor to the minicomputer, the minicomputer eventually was edged out by the personal computer for many uses, particularly word processing.

Wang ignored this trend until the Lowell, Mass., company belatedly introduced its own PCs.

"They were feeling so flushed with success from the early days," said Roger Sullivan, a former Wang employee who is now vice president of BIS Strategic Decisions, a market research company. "There was a disregard to what was happening in the industry."

Seeking a new high-growth market, Wang entered the business of computerized image processing. This technology allows computers to create electronic snapshots of documents such as letters or customer accounts. These documents - turned into computer code - can be stored electronically for later retrieval, a more efficient method of maintaining records than conventional file drawers.

Again, Wang entered a market at its infancy. But unlike word processing, electronic imaging did not take off. Although Wang's early machines were innovative, they didn't find many takers. Later imaging efforts by the company proved more successful.

Wang faced another predicament. Its minicomputers are based on proprietary technology, meaning they cannot easily be connected to machines made by other computer companies or run software designed for other machines.

Computer users have been shying away from proprietary machines for a number of years because they don't want to be locked into any one manufacturer's technology. It was another trend Wang failed to heed.

A similar plight is troubling Digital Equipment Corp., Wang's much larger competitor, also based outside Boston. Digital boomed during the late 1970s and early 1980s on the strength of its proprietary VAX minicomputers.

But as customers moved to PCs and non-proprietary, or "open systems," computers, Digital's boom went bust. The company has laid off thousands of employees and last month its board pushed out its co-founder and president, Kenneth Olsen.

An Wang, the Chinese immigrant who founded Wang Labs in 1951, made other mistakes. Like other executives in the 1970s and '80s, he used millions of dollars in debt to expand. Costly interest payments contributed to the company's problems.

The troubles prompted Wang to fire his eldest son, Frederick Wang, as president in 1989, replacing him with Richard Miller, a former General Electric Co. executive.

Even then, An Wang was drawing up petitions to file for bankruptcy protection, Miller said Tuesday.

Miller, who became chairman in 1990 after An Wang died, made a bold gamble to save the company, creating an alliance last year with one-time enemy International Business Machines Corp.

Under that deal, Wang is selling IBM computers while tailoring its imaging software to these machines. IBM agreed to invest at least $25 million in Wang.

The alliance received a mixed reaction. On the one hand, analysts say, Miller took a painful but necessary step. However, the alliance may have helped accelerate defections by Wang's customers.

"They always had a hard time showing why you should buy it from Wang if you could buy the same computers from IBM," said George Colony, president of Forrester Research Inc., a computer research company.

Copyright (c) 1992 Seattle Times Company, All Rights Reserved.

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