Vendor lineage

Tandy and RadioShack

Outsold Apple three to one with a worse computer, because it had seven thousand shops.

In 1975 Don French, a RadioShack buyer on the West Coast, bought an MITS Altair to run inventory and became fascinated enough to start designing his own. He spent a year persuading John Roach, then vice president of manufacturing, that a chain of electronics shops should sell a computer. In November 1976 they hired a 24-year-old from National Semiconductor named Steve Leininger - a Homebrew Computer Club member, like Jobs and Wozniak - to design it.

The prototype was demonstrated to Charles Tandy in February 1977, running a tax-accounting program. Tandy himself was a Texan who had built the business out of his father's Fort Worth leather company; the electronics chain was an acquisition that outgrew everything else.

Roach committed to building 3,000 units, a number chosen because it matched the number of RadioShack stores - if they never sold one, each shop could use it for accounting. Leininger argued for at least 50,000 and was laughed at. The TRS-80 was announced on 3 August 1977 and sold roughly 50,000 in its first month.

It was, on the merits, the weakest of what Byte magazine christened the 1977 Trinity. The Apple II had colour graphics and expansion slots; the Commodore PET had an integrated design; the TRS-80 had a Zilog Z80 chosen because it cost $25, a cassette recorder from the shop shelf for storage, and quality complaints that were entirely justified. It also cost roughly half what an Apple II did.

And it won, for years. By 1979 it had the largest software library in the microcomputer market. In 1980 Tandy shipped three times as many computers as Apple. RadioShack was the largest retailer of personal computers in the world through 1982, with a claimed 7,000 stores in 40 countries.

The reason is the whole lesson: everyone else sold computers by mail order or through a handful of specialist dealers, and Tandy sold them off a shelf that customers were already walking past. RadioShack did not adopt superstore retailing until 1991, by which time the advantage had inverted - IBM compatibles and the Macintosh were sold everywhere, and being in your own shops was no longer being everywhere. Tandy left computer manufacturing in May 1993.

It is worth sitting with, because the pattern recurs constantly and is usually described the wrong way round. Tandy did not beat Apple on technology; it beat Apple on reach, and then lost when reach became commoditised. Anyone who has worked in distribution recognises both halves of that.

Founding stories

1919

Hinckley-Tandy Leather

Fort Worth, Texas · Founders: Norton Hinckley, Dave L. Tandy

A leather supply business, whose most profitable idea turned out to be craft kits sold to scouts and campers. That is the pattern the whole company runs on: find people who already make things, and sell them the parts.

The timeline

A bankrupt chain for $300,000
RadioShack was nine stores and a mail-order business in Boston, close to failing. The turnaround was brutal and fast: stock lines cut from around forty thousand to twenty-five hundred, a deposit required on credit sales and then credit abolished entirely. It was profitable inside two years.
Sources give 1962 and 1963 for the purchase; both appear in reputable accounts.
Charles Tandy dies
Unexpectedly, the year after the TRS-80 launched and before anyone knew whether the computer business would work.
Nineteen per cent to under nine
Market share in personal computers roughly halved in a few years, and the reason given at the time was not price or performance. It was that the machines only ran software written for them.

Flagship products and solutions

The TRS-80 lineThe Model I and its successors, sold through the shops rather than through dealers, and for several years the most widely sold personal computers in the world.
Everything else in the shopComponents, cables, batteries, kits and the parts nobody else stocked - the business that made the chain worth having and outlasted the computers by two decades.
Thirty-four factoriesTandy made its own products: wire through to microchips, in plants it owned. The retailer was a manufacturer, which is what made the margins work and what eventually cost it the computer market.

Key innovations

Selling parts to people who make thingsLeather kits for scouts, then components for radio hobbyists, then computers for people who wanted to program them. The customer was always somebody building something, and the shop was always the place they went for the piece they were missing.
Own the whole chainPrivate label wherever possible, manufactured in-house wherever possible, sold only through your own shops. It is a coherent doctrine, it rescued a failing retailer, and it produced margins nobody else in consumer electronics could match.
And then the doctrine invertedThe same policy applied to computers meant software written for a TRS-80 ran on a TRS-80. While Apple and the IBM-compatible world accumulated third-party applications from anybody who cared to write one, this platform accumulated what its owner commissioned. Nineteen per cent of the market became under nine, and the cause was the strategy that had saved the company twenty years earlier. Vertical integration is a position on how much of the world you want working for you, and the answer changes when the world is writing software.

Main markets

Hobbyists, small businesses, schools and households - the customers who wanted a computer without knowing a dealer, in a country where the nearest RadioShack was a short drive from almost anybody. That reach is the entire commercial story.

Its competitors in computing were Apple, Commodore and eventually the IBM-compatible manufacturers; its competitors in retail were nobody in particular, until the electronics superstores arrived and then the internet did.

Analyst standing

The computing position ended in 1993 and the retail one deteriorated over the two decades that followed. What is worth assessing is the model rather than the outcome.
Two lessons sit in the same company and they contradict each other only if you ignore the dates. Vertical integration and exclusive distribution rescued a bankrupt retailer in 1963 and destroyed a market-leading computer business by 1984, and the difference is what the product was. Selling somebody a resistor, it does not matter who made it. Selling somebody a computer, what matters is what other people have written for it - and a company that manufactures everything itself has no way to want that.

IEEE Spectrum: the TRS-80 Model 1 ↗

From the company

This company no longer trades under this name.

Sources