"Poor Man's IBM"

"If a guy owns 80% of the railroad tracks in a country and you want to run a train, you make your wheels fit his track." So says an executive of a firm that has prospered by learning that simple lesson well: Minneapolis' Control Data Corp., a maker of computers. The track owner of the computer busi ness is mighty IBM, which routinely scoops up 70% of the world's computer orders. By making all its equipment so that it meshes with IBM's systems--and trying to make it better and cheaper--once-tiny Control Data has risen to third place in computers (after Sperry Rand) and is jokingly known on Wall Street as "the poor man's IBM."

Targeting Missiles. That is the only joke on the Street about Control Data, whose fast growth and aggressive stance have made it a favorite glamour stock. Last month the firm made a 3-for-2 stock split, the second in its seven-year history, and announced that new orders for June, the latest month calculated, reached a record $61 million. Needing space for its lusty growth, which boosted sales to $100 million last year, Control Data last week settled into a new three-building headquarters in suburban Minneapolis, which replaces the converted paper warehouse in which it has operated since its founding. "Our people were running scared when they started this company," says shy, slight President William C. Norris, 54. "Now they're scared millionaires."

Not that there is anything to be scared of. Control Data's success is due to the shrewd marketing strategy and careful planning program worked out by the eleven Sperry Rand engineers--led by Norris--who founded the firm in 1957 after tiring of life in a big corporation. Realizing that they could not compete directly with the giants, they concentrated on scientific computers, where IBM was weakest, instead of on business data-processing equipment, where it was strongest. They made all their machines compatible with IBM systems at a time when most other computer firms were setting up their own systems; since then, many firms have followed the example of Norris & Co. Because of its specialization, careful planning and tight control of inventories, the company sells some equipment for 10% to 20% less than IBM, claims that its computers are 98% efficient v. 90% for most computers. No customer has been more impressed than the U.S. Government, whose business accounts for 75% of Control Data's output; it has installed Control Data computers on submarines to target in Polaris missiles.

More Plans than Money. Control Data's latest computer is its complicated 6600, which can execute 3,000,000 orders per second, is being installed in the AEC's Livermore, Calif., lab. Cost: $7,000,000. But the firm is gradually moving beyond purely scientific computers. Its most popular model is its high-speed 3600, a machine that averages $3,000,000 in price, is designed for data processing as well as for scientific problems. The 3600 will be used, for example, by West Germany to forecast weather, by Sears Roebuck to coordinate orders from 1,400 offices, and by Francis I. du Pont & Co. to receive and channel stock orders to specialists.

Control Data has acquired twelve small companies or divisions as their products or systems were needed, has also expanded to Canada and Australia, and to Europe, where the market for computers is growing twice as fast as in the U.S. But despite its spectacular growth, the firm tries to maintain the stimulating atmosphere that its founders sought. Ideas bubble up from below with such frequency, says Norris, that "there are usually more plans than we can afford to finance." In an industry overshadowed by one huge competitor, Control Data claims to be the only firm other than IBM to be making money on its computers.

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