Xebec Corporation

~ the obituary ~

Hard disks in the early eighties did not know how to talk to computers by themselves. Something had to sit between the drive and the bus and do the translating. In the early and middle eighties the company selling most of those parts was Xebec, of Sunnyvale and later of Gardnerville, Nevada. It had started in 1969, traded as Microcomputer Systems Corporation from 1974, and took the name of its own best-selling subsidiary when it went public in February 1983.

The year that happened was the best and the worst year the company ever had. IBM was building the PC XT, its first personal computer to ship with a hard disk, and signed a contract with Xebec for the 1210 controller said to be worth two hundred million dollars. Xebec reported fifty seven million dollars of revenue in 1983, a quarter of it or more from that one customer. Hewlett-Packard and Texas Instruments were on the books too, and headcount hit 1,200 in 1984.

Then IBM shopped elsewhere for the PC AT. It kept buying XT controllers, because the XT kept selling, but the next machine was somebody else's. In 1987 IBM discontinued the XT entirely and launched the PS/2 with disk controllers built on IBM's own silicon, which pulled the business out from under Xebec in a single product announcement. Xebec supplied parts for two more years, sold its tape patents to a company it had spun off itself, and filed Chapter 7. It dissolved on 31 July 1989.

Jim Toreson took the mail-order subsidiary out of the wreck and ran it as First Class Systems, selling clones of the PS/2 that had just killed his old company. It lasted a year.

~ the case file ~

~ the two hundred million dollar customer ~

Investors could see the risk in the IBM deal while it was still good news. If IBM ever bought controllers from someone else, or built its own, the revenue would go with it, and that is exactly the sequence that ran from 1984 to 1987.

Xebec's answer was to build something IBM would have to keep buying. In late 1984 it introduced the Owl series, the first hard drive made in the United States with the controller chips soldered directly onto the drive's own circuit board, which is how drives have worked ever since. Getting there meant tens of millions of dollars of automation and robots in Nevada and in the Lehigh Valley in Pennsylvania.

The company was also one of the few American drive makers buying all of its chips from American suppliers while its competitors sourced from East Asia. That reads as principle now. In 1985 it was a cost structure, and the wrong one.

~ the last reorganizations ~

By 1985 the losses had started and the consolidations began, two underperforming subsidiaries folded together and the Pennsylvania plant shut. The spin-offs kept coming anyway: First Class Peripherals in October 1984 to sell drive subsystems by mail order, Epelo and OMNI-Shore in 1987. Epelo bought the tape drive patents off its own parent in early 1988, which says plainly enough what the spin-offs were for.

The first machine I used had its disk controller inside the chipset on the motherboard, where nobody could see it or think about it, and that is the only arrangement I ever knew. The idea that a hard disk needed a separate expensive card from a third party, bought and configured on purpose, belongs to a decade I only met later as old hardware in somebody's cupboard. The Owl drives were an early move in the direction of that part vanishing into the machine.

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