Attachmate Corporation

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Attachmate Corporation

3617 131st Avenue Southeast
Bellevue, Washington 98006
U.S.A.
Telephone: (425) 644-4010
Toll Free: (800) 426-6283
Fax: (425) 747-9924
Web site: http://www.attachmate.com

Private Company
Incorporated: 1984
Employees: 1,275
Sales: $319 million (2001 est.)
NAIC: 511210 Software Publishers; 334119 Other Computer Peripheral Equipment Manufacturing

Attachmate Corporation is one of the largest privately held software companies in the world, operating as a developer of software for e-business and Web services technology. The company’s strengths are in allowing personal computers to communicate with and to emulate mainframe computers, historically the primary repositories of corporate data. Attachmate’s customers are Fortune 500 corporations and federal and state governments. The company operates on a global scale, serving customers in Europe, the Middle East, Africa, Latin America, Asia, and Australia. Domestically, the company maintains offices in nearly 50 cities. Attachmate is managed and owned by its founder, Frank Pitt.

Origins

In the January 27, 1997 issue of Forbes, Ann Marsh wrote: “A great barrier to new technologies is the investment people have in the old ones. That’s why the United States hasn’t embraced the metric system. It’s why the un-ergonomic Qwerty keyboard survives. And it’s how Frank Pritt made a small fortune.” Pritt, Attachmate’s founder, could not have known he would make a fortune with his start-up venture. Indeed, his first experience associated with Attachmate’s founding was anxiety-ridden shock. All signs pointed to a quick failure. Pritt was retired when he launched his start-up company. In December 1982, with the idea of starting Attachmate, Pritt composed his resignation letter from Harris Corp., mailed the letter to his boss in California, and left his sales and marketing position behind him. He then went home to have lunch.

Pritt’s intention was to create a company that made software capable of connecting mainframe computers to a fledgling but fast-growing breed of computers: the desktop. Corporations were keen on incorporating desktop, or personal computers, within their operations, but they also were reluctant to give up their trusted mainframes. Pritt sought to bridge the gap separating the old technology with the new technology by developing a product that enabled desktops to emulate the monitor of a mainframe. Known as connectivity, or terminal emulation, the process of allowing mainframe computers to “talk” to personal computers and networks promised to be a big business as the computing revolution leaped forward. By using a program that turned a personal computer’s screen into a facsimile of a mainframe’s old terminal, corporations could use both their existing equipment and invest in the future. Further, the program would allow employees to access information on the mainframe without memorizing a long string of commands and performing as many as 15 different steps. Pritt foresaw great demand for this backward-looking technology, but his heart dropped while eating lunch at home.

As he sat at his kitchen table, Pritt flipped through an issue of Computer World and saw an advertisement for IRMA. Pritt was looking at a product made by a company—Alpharetta, Georgia-based Data Communications Associates (DCA)—that was offering a product identical to the one he intended to make. IRMA was available for immediate shipment. Pritt’s product existed only in his mind.

Nevertheless, Pritt pressed ahead with his career as an entrepreneur, resolving to forget that DCA existed and that IRMA was already to market—a difficult feat of denial given that DCA’s Bothell, Washington, headquarters stood only several miles north of his base in Bellevue, Washington. Pritt used his retirement money to start Attachmate and immediately faltered. In a June 18, 1993 interview with the Puget Sound Business Journal, Pritt explained what happened next. “I had lots of technical problems getting started,” he said. By the time I got on the market every competitor I had was already there [and] the product wasn’t quite as ready as the customers were. We had a lot of customer problems and I wasn’t very successful in raising outside money. I was about to run out of money by mid-1984 and the product wasn’t working the way we thought.”

Having eschewed the voices of reason by going to market belatedly, Pritt again flew in the face of conventional wisdom. He laid off some of his workforce, fixed the product’s flaws, and did something rarely witnessed in the software industry at the time. Pritt got rid of Attachmate’s distributor and dealer marketing methods and assembled a direct sales force. Although his tactic was unconventional, Pritt was convinced that the reasoning behind this move was sound. In his June 18, 1993 interview with the Puget Sound Business Journal, he remarked: “Our product was going into a sophisticated environment that required a lot of expertise and knowledge to sell. What we found out was that distributors and dealers didn’t have good product knowledge. So we did something that was considered a no-no and set up our own direct sales force.” Pritt also made two other important moves, each designed to beat back his competitors and give Attachmate a toehold in a burgeoning market. The company focused on designing extra features only a small portion of the market needed, theorizing that eventually the rest of the market would demand the added features. The design strategy gave Pritt’s product its name, a terminal emulation package marketed under the name Extra. Pritt also turned his attention directly to DCA, offering customers the opportunity to trade in IRMA for Extra, a marketing ploy that later became commonplace in the computer industry.

Growth in the 1980s

After Pritt revamped his product and implemented his new marketing strategy, Attachmate began to record robust growth. As Pritt had hoped, mass demand for the added features included in Extra occurred, giving Attachmate a secure and sizeable position in the market it belatedly entered. Annual sales reached $5.3 million in 1986, rose to $13.6 million in 1987, and jumped to $31 million in 1987. Vigorous financial growth ensued, giving the company a $90 million sales volume by 1991, when Pritt, then in his early 60s, decided to step back from his responsibilities at the Bellevue-based company. He no longer enjoyed his work as much as he once had, and he needed someone to shepherd Attachmate’s evolution from a start-up venture into a full-fledged corporation. Pritt turned to a friend for help, hiring G. Wayne Smith as Attachmate’s president and chief executive officer. Pritt cut back his duties to those assigned to a chairman, taking responsibility for strategic planning and monthly reviews of Attachmate’s performance.

In the wake of the transition in leadership, Attachmate’s sales continued their energetic rise. In 1992, the company generated $123 million in sales, representing nearly a ten-fold increase during a five-year period. Not along afterwards, speculation abounded regarding Attachmate’s conversion to public ownership. During the period of speculation about the company’s initial public offering (IPO) of stock, Smith left and Pritt returned as Attachmate’s president and chief executive officer. The IPO rumors swirling around the industry ended in May 1994, when speculation turned to anticipation. Pritt filed a preliminary prospectus with the Securities and Exchange Commission (SEC), confirming the company’s intention to complete an IPO. The proposed IPO was expected to raise between $87 million and $101 million, but in July 1994 the IPO was scuttled, with poor market conditions given as the reason for the withdrawal. Not long afterwards, Attachmate filed an amended IPO document with the SEC, but backed out again. Following these two aborted attempts at an IPO, Pritt stunned the connectivity software community with an announcement.

1994 Merger Creates Industry Leader

In November 1994, Pritt announced he was embracing his old nemesis. The following month, Attachmate merged with $241 million-in-sales DCA, creating the largest company devoted to connectivity software in the world. The union of the two companies created an enterprise with nearly $400 million in annual revenues, 2,200 employees, and control of 35 percent of the worldwide market for terminal emulation, a greater market share than its closest rival, IBM, which controlled 23 percent of the global market. The merged company retained the Attachmate name and used Bellevue as its headquarters. Leadership of the company was drawn from both sides of the merger. Pritt served as chairman and chief executive officer, while DCA’s chairman, chief executive officer, and president, James Lindner, took on the responsibilities of Attachmate’s president and chief operating officer. As the two senior executives worked on amalgamating the two companies, plans were announced for another attempt at completing an IPO, perhaps as early as nine months after the merger was completed.

Problems surfaced within months of Attachmate’s merger with DCA. Pritt handed the chief executive officer title to Lindner and began spending much of his time at his second home in Newport Beach, California, performing his duties as Attachmate’s chairman while living in what was essentially semi-retirement. Left largely in control of Attachmate’s entire operations, Lindner attempted to answer a question posited in the January 27, 1997 issue of Forbes: “What would Attachmate do for a living when the last mainframe died?”

Company Perspectives:

Attachmate helps you expand the reach of your enterprise information, improving the way you do business, enhancing productivity, and positively impacting your bottom line.

Lindner began searching for a new identity for Attachmate, attempting to redefine the company in anticipation of a time when the old mainframe technology at last became moribund. He recast Attachmate as “the intranet company,” releasing a Web browser whose existence was lost in one of the most contentious product wars of the 1990s. In the ferocious fight between Microsoft and Netscape, Attachmate’s software floundered. By 1997, the company’s browser failed to attract even 500 new customers a month. Another attempt by Lindner to redefine Attachmate met with equal disaster. In 1996, the company released server software for personal computer networks, but the introduction angered the last company any software developer wanted to anger. Microsoft, which had been promoting Extra to customers of its own server software, lashed out. The software giant severed all joint marketing agreements with Attachmate and began giving preferential treatment to the Bellevue company’s competitors. In June 1996, Attachmate dropped its server software product line. One month later, Pritt moved back to Bellevue and fired Lindner, taking back the titles of chief executive officer and president. “I’m going to keep my finger in the pie,” he vowed in a November 1, 1996 interview with the Puget Sound Business Journal.

Pritt Returns to Attachmate

In the post-Lindner period, Pritt grappled with getting his company back into shape. He reduced the company’s workforce by at least 400 employees and restructured internal operations. However, the company remained plagued for years by the mistakes made during the mid-1990s. Attachmate was unprepared for the explosive rise in the use of the Internet in corporate settings and found itself trailing competitors for the remainder of the 1990s. Although corporations continued to rely on mainframes to store a majority of their information by the end of the 1990s, the core of Attachmate’s business was ensconced in a dying sector, as companies increasingly turned to the Internet and server-base networks to store data. Against the backdrop of this ominous news, Attachmate became a dramatically smaller company. By the beginning of 2001, after three substantial lay-offs in little more than a year, the company employed 1,200 workers, nearly half the size of the company’s workforce six years earlier.

For the 21st century, Attachmate was attempting to orient itself toward a market capable of sustaining long-term growth. Pritt broadened the company’s reach, extending its involvement into developing software used to manage access to enterprise applications and databases. The company also developed desktop management software, development tools, and connectivity hardware. For a company that had once registered great success in assisting the evolution from old technology to new technology, its future depended on its own ability to evolve.

Principal Subsidiaries

Attachmate Unisys Group.

Principal Competitors

Computer Associates International, Inc.; International Business Machines Corporation; WRQ, Inc.

Key Dates:

1982:: Frank Pritt founds Attachmate.
1994:: Attachmate merges with DCA.
1996:: A failed diversification brings Pritt back to Attachmate’s headquarters.