Sinclair and the 'Sunrise' Technology: The Deconstruction of a Myth (29 page)

From this point on, it was downhill all the way for the C5. As the least of his problems, the Advertising Standards Authority surfaced in April to announce that it would uphold complaints that called into question launch promotion claims for the C5. It seems that the Authority considered the most contentious claim to be that the trike was ‘far safer than anything on two wheels’. It’s certainly true that there was absolutely no evidence to support the assertion. In the same month, production recommenced in Merthyr Tydfil, but demand for the C5 had ground to a virtual standstill so it was hardly worth the effort. Production was cut by 95 per cent and Hoover churned out a mere 100 C5s a week.

When in May the project’s production controller was made redundant, Sinclair was forced to confess that, at 6000, unsold stocks were twice previously disclosed levels. In a desperate bid to drum up business, Sir Clive announced his intention to ‘seek export markets, particularly in Holland’. A few days later, the Dutch National Transport Service ruled that the C5 was not suitable for Dutch roads in its present form. According to the NTS, the C5’s braking system needed to be improved, more reflectors were required and the ‘Hi-Vis Mast’ would have to become a standard fixture. Much the same requirements were demanded by most of the ten countries in which Sir Clive intended launching the C5, so he had no choice but to comply.

As we have seen, throughout 1985 Sinclair Research was mirroring Vehicle’s disastrous trajectory, and by June the company was looking to Robert Maxwell to bail it out. During this period, negotiations with Maxwell along with the search for alternative solutions to the Research crisis meant that the computer company claimed both Sir Clive’s time and his attention. Apart from his half-heartedly exploring the export potential for the C5 in the States and the Far East (approaching primarily leisure resort chains and hiring outfits), it seemed that any decision concerning the fate of Sinclair Vehicles would have to await the resolution of more pressing concerns. Then it was leaked that the company was up for sale and that Sir Clive was already talking with prospective clients. It seems that Sinclair had decided to rid himself of a millstone that required more attention than he had time on his hands.

It was presumably news of the sale and the frustration of being pushed to the back of Sir Clive’s concerns that prompted Hoover to draw up a writ announcing its intention to sue him personally to the tune of £1.5m By the second week in July when Hoover made its surprise move, Sir Clive’s plans to sell Sinclair Vehicles had collapsed when he turned down an offer of £2.7m for the company. In what was presumably an attempt to spur him into action, Hoover was pressing for the full £1,525,000 in respect of C5 production from November 1984 to date, and an additional £32,720 interest. In the end, the company never served its writ. Temporarily pacified by personal guarantees from Sir Clive, Hoover was seduced into accepting negotiation. The company even agreed to set ten of its workers to the modification of C5 stock for sale in Europe. However, by the second week in August Hoover decided that it had demonstrated more than enough restraint, and publicly announced that it was stopping all work on the C5:

We have run out of several key parts and do not wish to plan for any further inventories until our differences with Sir Clive are resolved. (Guardian, 13 August 1985.)

Out in the high street, Sir Clive’s declining fortunes were reflected in the fall in shelf value of his companies’ products. Stores discounted Sinclair goods in the hope of pruning stock before the seemingly inevitable liquidation turned it into throwaway sale fodder. In some of the larger stores, a C5 along with a complete set of accessories could be picked up for £139.99!

On 15 October 1985, Sir Clive finally got around to making the announcement everyone had been expecting. Sinclair Vehicles had officially been placed in the hands of the receiver on Friday, 12 October. It fell to London accountants Begpie, Pickering and Co. to untangle the £700,000 worth of debts owed to 110 suppliers. In the month before the receivers were appointed Sinclair Vehicles was renamed TPD Limited. On the date the receivership of TPD was announced, it was also stated that Sinclair Vehicle Sales Limited held the C5 stock and according to the Guardian was involved in continuing research. The message appeared to be that in seizing the receivership option, Sir Clive had secured vehicle development rather than throwing it to the wolves of the City:

The company [TPD Ltd] said yesterday that research on two new electric cars was well ahead. Sir Clive had been advised to call in the receivers ‘to ensure the future of the electric vehicle venture and its research activities’. (Guardian, 15 October 1985.)

There seems little point in speculating about how the original Sinclair Vehicle debt to Hoover of £1.5m failed to make the transition to TPD’s accounting. Hoover refuses to comment on the affair, and Sinclair simply confirms rather coyly that the ‘issue has been resolved’. Although Hoover is presumably satisfied by whatever settlement finally resolved its problems with Sinclair, one doubts whether the same can be said of the vehicle’s production-line workers.

When TPD finally crawled into voluntary liquidation on 4 November 1985, there was an opportunity to assess the cost of Sir Clive’s ten-month support of a loss leader. At the shareholders’ meeting at which he announced his decision to liquidate, it was revealed that in addition to Sinclair’s original investment of £8.6m (of the £12m earned from his sale of Research shares), he had also pumped in a further £5.9m of his own capital. This second age of Sir Clive’s investment was passed to the company in the form of a loan secured by debenture. In other words, although the original investment was gone for good, the £5.9m would be recovered.

According to the results of the shareholders’ meeting, there were 4500 unsold C5s in TPD’s hands as the company was liquidated, and the company’s total deficit appeared to be around £6.4m So what has Sir Clive’s £8.6m loss bought him in the way of experience? Well, although he could hardly be described as eating humble pie, the arrival of the liquidator invariably inspires gestures of penance, which in Sinclair’s case amounted to the recognition of undeniable errors of judgement. He certainly conceded that there is no room for a partially developed electric vehicle like the C5, and today insists that future developments will tackle the fundamental problems of battery innovation. By rushing ahead half-cocked in an effort to exploit a loophole in EEC regulations, Sinclair has set himself the additional hurdle of repairing his tattered credibility before he can even begin to consider marketing related products. According to the Financial Times, Sir Clive has also come round to the position where he might admit that it would have been more prudent to launch his open-topped trike in the spring rather than the winter!

Under more favourable circumstances, the C5 debacle would have been of little consequence. A rich man’s folly. However, alongside the failures of both the QL and the flat screen and coupled with the crisis at Research, the conspicuous collapse of Sinclair Vehicles did much to confirm institutional suspicions that Sir Clive was a bad risk. What could be worse at a time when Sinclair needed investment more urgently than at any other period in his commercial life?

One might have hoped that with the failure of both the flat-screen television and the C5, Sir Clive would have finally driven his long-term obsessions from his system. Not a chance! When we interviewed him the day after the TPD liquidation announcement, Sinclair was bullish in his determination to press on with vehicle development. Presumably building on research now in the hands of Sinclair Vehicles (Sales), Sir Clive intends a return to the pursuit of his original vision. In some shape or form, finance permitting we can expect the arrival of an enclosed two-seater C5 marketed as the C1O, and a deluxe, four-seater ‘teardrop-on-rollers’, otherwise known as the C15.

One can only pray that Sir Clive will shelve his plans to develop a personal, vertical-take-off aircraft!

[10] SWEET SURRENDER

Having followed the C5 saga from initiation to liquidation, we can now turn our attention back to events on the computer front at the end of 1985. In fact, our theme should start with Nigel Searle’s definitive statements about the proposed 1985 share placement, made in Computing in May 1984, after good profits (aided by QL mail-order monies) of £14m pre-tax on a turnover of £77m

I hope I’m not speaking out of turn, but I don’t believe there is any change in our originally announced intentions ... Apart from Clive and the people who bought shares from him, I don’t know of anybody in a position to decide to go public before then. And anyway, don’t you have to have five years of results before you can? We were founded in 1979.

This ‘cautious denial’ contrasted with persistent rumours that the company was short of capital after the television investments and was looking for an autumn launch. Searle’s firm grasp of the requirements for share placement may have been correct, except he got the year wrong - Sinclair Instruments (as Research then was) launched the wrist calculator in 1977. More cogently, the company was certainly in a strong enough position, with 38 per cent of the UK computer market, to survive both the seasonal summer slump in computer sales and the QL tooling and production costs. And, of course, the flat-screen television might, now that its production levels were building up, help the cash flow. Without the QL problems, and the high-profile publicity surrounding them, a share placement could have gone ahead in 1984, on the basis of the previous year’s good figures, and might have then valued the company as high as £300m, depending on the value placed on the various MetaLab projects. Still, there was no reason to suppose an adjournment would affect the position too much.

All must have seemed well to Sir Clive as he busied himself with the C5 and various MetaLab projects. A measure of his feeling that the sunrise industry of consumer computers would serve to fund further projects is to be found in his desire to go public at all, given that he is on record as saying that it was a bad thing to be a public company in Britain. However, the share placement finally planned for March 1985 turned out to be a false dawn.

The writing was on the wall in 1984. Dragon Data, the maker of a machine that had made a significant showing in home-computer sales, went into liquidation, and Amstrad moved into the computing arena with an impeccable machine, packaged innovatively complete with monitor (choice of monochrome or colour) and with an in-built cassette deck. With this unitary approach, established outlets, good quality control and a degree of professionalism markedly absent from the Sinclair stable, it rapidly became a bestseller. This marked a significant shift in the market, as the Amstrad integrated approach was applied to computing. The swift follow-up of a disc drive, using the ageing but functional CP/M operating system (which precisely because of its venerability offered large amounts of software), exemplifies the contrast between the Sinclair style of innovation at any cost - dubious keyboards and slow Microdrives - and a good implementation of well-understood technology at intensely competitive prices. Jumping ahead a little, the Amstrad PCW8256, marketed as a wordprocessor, but in fact a full CP/M machine complete with monitor and printer, elicited this comment from the reviewer:

It is often said that whereas Sinclair is driven by technology, Amstrad is driven by the market. Nowhere is this better illustrated than this machine compared to the QL. The new technology of the QL is totally outshone by the price/performance value of a good old Z80 with production costs taken to the bone. (Personal Computer World, October 1985.)

Amstrad won at least 10 per cent of the market in 1984. This didn’t affect Spectrum sales much, but in the run-up to Christmas the retailers over-ordered, to avoid the shortages of the previous year. Although Sinclair claimed to have shipped 300,000 Spectrums in the last quarter of the year, a lot of them were still sitting on the shelves in the New Year. The seasonality of computer sales has always been a problem for cash flow, with the pre-Christmas sales in Britain of some 100,000 computers (of all makes) a week declining drastically in January, and falling to a low of 7000 a week in midsummer. No orders came in to Sinclair post-Christmas, as the overstocks were slowly cleared in the sluggish spring trade.

A price war started in the high street, and Sinclair cut the Spectrum+ price to £129.95, having creamed off what could be made from pretending it was anything different from the standard 48K Spectrum, which was now dropped. This did not endear Sinclair Research to those retailers still holding stocks at the old price. No Spectrum orders came in during January or February to help the cash flow, and the QL was hardly in the running, pre- and post-Christmas. The old problem, quality control, had not gone away, either. Far too many of the machines sold in the Christmas season would come back from the retailers as faulty.

To help the QL software situation, and promote the use of the Spectrum microdrives, the cartridge price was dropped to £1.95, from the £4.95 it had been since the ZX Microdrive launch. This at last reduced the cartridges to a price competitive with that of floppy discs, and the offer of discounts for quantity purchase and free duplication to software houses made it a viable proposition for software to be distributed in Microdrive format. The expense of cartridge purchase and the difficulties of duplication had prevented Spectrum software being sold on anything other than cassette tapes, but since the ‘business’-oriented QL didn’t have a cassette facility this was an overdue step for Sinclair to take if it was serious about the QL. It was also a statement of faith that the design problems had been sorted out, and mass-duplicated cartridges now had a good chance of working with any production QL, which had not been the case in earlier days.

If, finally, the QL looked like a workable machine, it was not before time. On Sinclair’s figures only 60,000 QLs were sold in the twelve months after the first production models went out to customers, and many in the industry thought this likely to be a gross overestimate. The QL was ‘relaunched’ in January with a showing of thirty-three software packages and seventeen peripherals ‘available or projected’. Heavy advertising was planned in the press, but some embarrassment was caused when OEL, the developers of the communications equipment Sinclair had chosen, and promoted heavily, went into receivership.