Tandon Corporation

~ the last words ~

Sirjang Lal Tandon grew up in a small town in northern India, took an engineering master's and an MBA, and went to work at Memorex in 1968. What he worked on there was the read and write head, the tiny piece of shaped metal that actually touches the magnetic field, and he came out of it knowing that part of the business better than almost anybody. Everyone who knew him called him Jugi.

He started his own company in 1975, incorporated the following year in Chatsworth, California as Tandon Magnetics. The product was heads, sold to the companies building floppy drives, and the manufacturing went to India because head assembly was slow handwork and Indian wages were a fraction of Californian ones. That decision was unusual in 1976 and completely standard twenty years later.

Then Tandon started building the whole drive. The TM100 came out in 1979 with 40 tracks where Shugart's SA-400 had 35, which sounds like a rounding error and was in fact the difference between winning contracts and not. Tandy put TM100 drives in the TRS-80 Model III in 1980. IBM put them in the Personal Computer in 1981 and bought from nobody else until 1985.

Being the sole supplier to the most important computer of the decade is as good as the drive business ever got for anyone. Tandon was the number one disk drive maker in the world by late 1982, Forbes named Jugi its Up and Comer of the Year, and his stock was worth $150 million, which put him on the Forbes 400 list at 41. The company went on for another eleven years after that and never came close to those numbers again.

~ the record ~

~ the heads came from india ~

The head plant is the part of this story that got copied. Tandon moved labor-intensive magnetic assembly out of California in the 1970s for straightforward cost reasons, and within a decade that logic had emptied the American drive industry of everything except design and final test. Singapore took the work first and Thailand took most of the rest, and by the early 1990s a drive designed in California was a drive built somewhere else.

Tandon also made drives other people specified. It built 77-track units to the Micropolis quad density format, model numbers TM100-3M and TM100-4M, so that customers buying into that format had a second source. By the mid-1980s about a dozen companies could build a 5.25 inch floppy drive competently, and the only thing left to compete on was price.

~ number one in 1982 ~

The peak was short and the descent had a clear mechanism. IBM stopped buying exclusively from Tandon in 1985, and the clone makers who took over as the volume buyers shopped on price and nothing else. Tandon bought Atasi in April 1987 for $5 million in stock, trying to get further into hard disks, which was the market everyone was moving toward.

It did not work, and in December 1987 Tandon announced that Western Digital would buy most of the PC drive line. The deal closed in early 1988 for around $80 million. A company that had been the largest drive maker in the world five years earlier had just sold the business it was named for.

~ the company after the drives ~

What Jugi Tandon did next was build PCs. The company still had factories and $80 million of cash, so it became a clone vendor. By 1989 about 90 percent of its PC sales were in Europe, where the Tandon name carried weight in the retail channel and where IBM and Compaq were charging more than they could defend.

Clone margins in the late 1980s were thin to begin with and got thinner every year. The stock had been $34.25 at its 1983 peak and traded at 50 cents by the end of the decade. The company reincorporated in Delaware in 1988 and renamed itself TSL Holdings in December 1992, which in this business is what a company does when the name on the door has stopped helping.

TSL Holdings filed Chapter 11 in March 1993 with about $104 million in trade receivables outstanding to creditors who included Microsoft and Seagate. On 1 August 1993 the creditor committees pushed through the sale of Tandon and its subsidiaries, which ended it as a PC vendor and ended it generally.

~ what the label said ~

Every hard drive I ever bought in Turkey had a sticker on the top with a country on it, and the country was never the one in the company's address. Thailand mostly, sometimes Malaysia. I read those labels for years without ever thinking about where the practice started, which was a head plant in India opened by a man from Memorex in 1976, because the work was fiddly and the wages were low.

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