How were the founders going to ensure that technology flowed from Elxsi to Tata Elxsi, Singapore? They could wait until the computer was all designed and done, but they didn’t wait till then. They started sending people to Singapore and the USA from India so that they absorbed the technology while they were actually designing the computer.
So, Elxsi needed to find somebody to manage the technology transfer from Silicon Valley to Singapore and to manage further development in Singapore. They found that person in Pat McGoldrick who joined in 1981. Pat had a master’s degree in computer science from Stanford and worked for eleven years at Lawrence Livermore National Laboratory (LLNL) as the chief computer architect for the supervisory control and diagnostics system for the mirror fusion test facility. Later, Pat was on my board at Tata Elxsi India.
Pat and his team also stepped up marketing and they had early success. While the first sale of the Elxsi 6400 computer was to Singer Link for simulation, the second sale anywhere in the world was to Aeronautical Research Labs (ARL) in Melbourne, Australia. The purpose was to study fatigue on Australia’s defence aircraft to keep them in service longer.
Techway in Sydney, Australia, became a Tata Elxsi distributor, followed by many others. In Korea, Tata Elxsi appointed Daewoo Engineering and sold machines to the Korean Science and Technology Institute (KAIST) as well as to other companies that were in the field of engineering or simulation.
In China, Tata Elxsi sold machines to several universities, including Beijing University, Tsinghua University, Xi’an Jiao Tong and others. Each of these machines usually required an export licence from the US Department of Commerce. However, Tata Elxsi, Singapore had an advantage as the US government formula that calculated the machine’s power allowed the Elxsi 6400 to come under the export cut-off.
Exports to China were growing. Tata Elxsi’s Singapore engineers, primarily Singaporean and predominantly female engineers, travelled all over China for both pre-sale and support. China looked quite promising until the 1989 Tiananmen Square protests. After the demonstrations, Tata Elxsi could not get export licences for sales to China, and the business there died.
Tata Elxsi sold well into engineering, scientific and defence markets in India. Installations included one at Tata Motors and the largest system provided was for seismic exploration at ONGC, Mumbai.
Tata Elxsi, Singapore, hired engineers from India, many from Tata Motors, to start software development. Some engineers also went to Elxsi in California to participate in core development. As the Elxsi 6400 development was behind schedule, software development continued on a prime computer, running simulation software in San Jose and Singapore.
When Elxsi 6400 was introduced in 1984, the processor was four times faster than DEC’s VAX 780. The system could accommodate up to sixteen processors without modification to the user application or environment. In the very first year, Elxsi generated $20M in revenues. The first customer was VLSI Technologies (a pioneer in automating VLSI designs), which used the system to check design rules.
Design rule checking needed memory capacity as much as computing power. If one could keep the entire design in memory, one could do the verification significantly faster if one didn’t have to move files back and forth from the disc. A single-processor Elxsi system could do a Design Rule Check (DRC) in eight hours compared to eight days on a VAX-780.
Tata Elxsi, Singapore, had a leased flat roof factory where the Elxsi 6400 was being system-integrated for sales in the local geography. This was the first time an American computer company was simultaneously releasing new equipment from their facilities in the US and Singapore. Their clients at that time also included aerospace companies like Martin Marietta, which was a customer of applications under the Strategic Defense Initiative (SDI), more popularly known as Star Wars during the Reagan era. No other computer, except Elxsi, could keep track of as many objects in play in real time.
Elxsi expected sales to double the following year. What one did not foresee was one of the most significant downturns in the Valley, especially in the semiconductor, seismic and aerospace businesses. Though Elxsi managed revenues of $25M in 1985, it ramped up its expenses, expecting significantly more in revenues. Elxsi was founded on the idea that they would employ the fastest chip technology, Emitter Coupled Logic (ECL), on a high-speed bus that would accommodate multiple CPUs with ECL technology running a parallel processing operating system.
However, their premise was overruled by the fact that RISC architecture computer systems were under development which was faster than this one and Elxsi could not compete in this space.
Meanwhile, in the United States, the venture capital business saw a severe decline in the mid-to-late 1980s followed by the Black Monday crash in the US stock markets on 19 October 1987. Tatas did not have the resources outside India to tide over the crisis as foreign exchange was tightly controlled in India.
Bill Hambrecht of Hambrecht & Quist was an investor and board member of Elxsi. He is credited as one of the first significant investment bankers to recognize the value of technology and biotech companies, and he helped take Intel, Apple Computers, and Genentech, among others, public in the 1980s. Hambrecht facilitated the merger of Elxsi with Trilogy in 1985. Trilogy belonged to Gene Amdahl’s company and Gene was the principal architect of the famous IBM 360 machine.
It was an interesting combination, as Trilogy had raised $300M for wafer-scale integration of “mainframe” computers and had $100M left over. Trilogy had no product, and Elxsi had a product but was running short of money. So in 1985, Trilogy bought the US entity of Elxsi. Elxsi may have lasted just six years, but its name stands till today in Tata Elxsi. Elxsi’s merger now paved the way for Tata Elxsi to focus on the Indian market.
The 1980s were the days of the licensing regime in India and Tatas had obtained a manufacturing licence for the Elxsi 64-bit minicomputers, and approval for a phased manufacturing programme for these systems here. At that point, apart from Tata Elxsi, only two other companies in India had a licence to manufacture super minicomputers. One was the government public-sector company ECIL, Electronics Corporation of India Limited. They had a collaborative agreement for manufacturing technology with the Control Data Corporation, CDC, based in Hyderabad. The other company with a similar licence was Processor Systems International, PSI, with Groupe Bull of France, which was based in Bangalore.
After deciding to use the manufacturing licence and having access to technology from a US/Singapore-based company, it was a no-brainer for Tata Elxsi to start its operations in Bangalore to manufacture Elxsi super minicomputers. However, as luck would have it, by this time, Elxsi in the US had been sold to Trilogy Systems, as mentioned earlier.
Since the few engineers employed and hired at Tata Elxsi were trained on the Elxsi products, its operating system, hardware technology, diagnostics, and decoding all the bugs in the operating system, Tata Elxsi was in a position to maintain some of the Elxsi mainframes globally. In the meantime, Tata Elxsi India imported all the capital goods and manufacturing equipment, including many CPUs, memory and I/O controller boards, along with the entire inventory at Tata Elxsi in the US and Singapore. This was a massive investment for the Indian company, which had yet to generate sales and revenue.
Thus, the company in India was saddled with capital goods and manufacturing kits for the Elxsi super minicomputers.
Tata Elxsi did build a few Elxsi systems in India and had a base of about six or seven customers, which they continued to support. However, this could not be continued because the technology could not be upgraded and sustained.
Excerpted with permission from Designed to Win: The Tata Elxsi Story, S Devarajan, Penguin India.
