For the past several decades, the computer market has been an up and down ride for investors. This look back offers some great insight into this volatile marketplace.
While the computer market is large, the market for its related equipment is even larger. Herein lies the advantage enjoyed by such industry leaders as IBM, Burroughs, and National Cash Register which manufacture a wide range of peripheral equipment used with computers. Such equipment, which needs less costly research, is one of the most profitable segments of the business.
An exciting brand of accessory equipment is the thin-film memory field which appears to represent a climax for stored-program computers. A stored-program computer is an electronic computer with an internal storage system processing an entire program rather than individual bits of information.
Early computers used punched cards or paper tape to feed information into the system. Then, a new storage technique was found using magnetic tape, which made possible an input rate 50 to 75 times that of cards. The use of tape has considerably improved the ability to store information within the computer memory unit.
Particularly interesting among the recent memory innovations is Telex, Inc.'s Mass Memory Module, a disk-file-type random access data-storage machine, which is in initial stages of production. The data-storage device employs revolving disks as the storage medium. Information is recorded on their oxide surfaces by readwrite magnetic recording heads, which do not touch the disks but "fly" on a thin boundary film of air created by the disks' rotation.
This technique has made possible faster access than had previously been achieved. As a result, it provides substantially larger storage capacities as well as faster access, at a lower cost per unit of information stored.
The advance news of this data-storage device had caused quite a stir in the computer industry and was evidently behind the rapid movement of the stock from the 16 level in June 1960 to the 40 level in August 1960.
Then, in early December 1960, Sperry Rand announced its new Univac 1107 which was said to represent the first commercial use of thin magnetic film as a memory unit. The system, it said, opened the possibility of computer speeds measured in billionths rather than millionths of a second. Remington Rand Univac disclosed its work on the thin film memories at the prompting of the New York Stock Exchange, after Sperry Rand shares had risen sharply on heavy volume.
Close on Sperry's heels, Minneapolis-Honeywell announced the development of a thin-film memory device for its computers. Thin-film memories use a deposit of metal dots on thin glass film to store data. "We have definitely achieved nanosecond (billionth of a second) speeds with these films," said the company statement. However, it played down the significance of commercial thin-film applications.
Another fast-growing factor in the peripheral data processing equipment field is Anelex Corporation whose Printers and Print Stations, according to Edward P. Thorsell, Jr., of Putman & Co., investors, "comprise the leading independent line of Electronic Data Processing system output equipment.
"In an industry which is expected to grow rapidly over the next decade," said Mr. Thorsell. "Anelex is a specialist with strong possibilities for exceeding the records of its industry.
"Of particular importance," continued the Putman analyst, "is the rapid expansion of the data processing market Anelex serves as more industries turn to EDP, a wider variety of problems with ancillary equipment is bound to arise."
Mr. Thorsell, however, made sure to stress that the stock is highly speculative because of its smaller over-all position and limited product lines.
Early investors in the industry have retired as very wealthy individuals. Others lost their shirts. Learning from the past is an important part of understanding the best investment opportunities available in the modern market.