Ampex Corporation

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Ampex Corporation

500 Broadway
Redwood City, California 94063-3199
(415) 367-4111
Fax: (415) 367-4669

Public Company
1944 as the Ampex Electric and Manufacturing Company
Employees: 531
Sales: $95.66 million (1995)
Stock Exchanges: American
SICs: 3695 Magnetic and Optical Recording Media; 3663 Radio and TV Communications Equipment; 3651 Household Audio and Video Equipment; 3660 Communications Equipment; 3752 Computer Storage Devices; 7819 Services Allied to Motion Pictures

Ampex Corporation is among the world leaders in the fields of magnetic recording, digital image processing, and high-performance digital storage for the visual information age. Ampex introduced video tape recording, and it has applied its resources to other areas of data storage as well. While it continues to supply the radio and television broadcasting industry with professional tape recorders, its electronic data storage systems have applications in any company that handles large volumes of digitized information. The company has been granted thousands of patents in its history and has received numerous awards for technical achievement.

Coming of Age with the Modern Era

Ampex was founded in 1944 by Alexander Mathew Poniatoff, a Russian immigrant to the United States. Poniatoff s early life was full of narrow escapes. As a Russian studying in Germany at the outbreak of World War I, he narrowly escaped home via Belgium, England, and Norway. Later, as a pilot, he ripped his flying boat in two during a takeoff attempt in rough seas. When training to fly fighter aircraft, he narrowly escaped a deadly crash while practicing spins. He retreated with the White forces through Siberia during the Bolshevik Revolution, ending up in Shanghai in 1920.

Poniatoff had a hard time finding passage out of China due to his lack of credentials and linguistic limitations. His knowledge of German, however, did help him obtain a position working for the Shanghai Power Company. Poniatoff s work there brought him into a new fieldelectrical design. No machinery was manufactured in Shanghai at the time, so Poniatoff was forced to digress from his bent for mechanical engineering, which had been apparent even as a child. The son of a prosperous lumber company owner, Poniatoff had been fascinated by the first visits of locomotives to the rural province of Kazan where he was born.

After seven years in China, Poniatoff at last managed to obtain a passport from the League of Nations, enabling him to sail to San Francisco. He had initially hoped to work the land but was disheartened by the austere conditions farmers in Pet-aluma, California, faced without the aid of modern machinery. So instead, he decided to travel the country with the aid of a $2,000 bonus he had received as a five-year service award from the Shanghai Power Company. A generous letter of reference then helped Poniatoff land a job with General Electric in Schenectady, New York.

GE assigned Poniatoff to a circuit breaker design group. With the help of a friendly librarian who was also Russian, his grasp of English engineering jargon gradually improved. Poniatoff recalled a most daunting assignment came when he was asked, due to his relative inexperience and unfamiliarity with the concept of the impossible, to design a new vacuum type of circuit breaker. Though hesitant, he completed the task and, newly confident, once again set forth for San Francisco in 1930.

He was unable to find research opportunities since the Great Depression had made people wary of investing capital. After working briefly for the Pacific Gas and Electric Company, he persuaded the Dalmo Victor company to let him volunteer for three months in developing new appliances. The gambit earned Poniatoff a short-lived position, during which he earned a patent for a temperature control on a permanent wave machine, but he had to return to his former job after Dalmo Victor was sued for infringing on an unrelated patent on electric razors. In 1942, he was called back to help Dalmo Victor develop a radar scanner for the U.S. Navy.

Dalmo Victor lacked a steady source for motors and generators for its radar scanners, and Irwin Mosley suggested Poniatoff, whom he had hired, form his own company to produce them. Poniatoff took his advice and on November 1, 1944, founded the Ampex Electric and Manufacturing Company in an abandoned loft in the Dalmo Victor building in San Carlos, California.

Poniatoff wanted to use his initials to name his company, but Aircraft Marine Products, which made electrical connectors, had just registered the name AMP. Poniatoff added ex for excellent to form the unique name. He recalled in an address to company engineers that the companys motors and generators performed so much better than the competition that they soon became exclusive suppliers for the Navy.

A Fruitful Postwar Decade

Although a contract to supply motors for furnace manufacturers kept the company busy immediately after the war, Ampex focused its long-term plans on developing a magnetic tape recorder inspired by the Telefunken Magnetophon developed in Germany during the war. (Interestingly, Dr. Heyne, president of Telefunken, had proposed the concept to General Electric, who regarded it as impractical.) Harold Lindsay was hired and given the initial task of developing recording heads for the new machine.

As Ampex desperately lacked capital, Mosley invested in the company, becoming a director and attaining 50 percent control. Bing Crosby Enterprises, the companys first customer, placed a 60 percent deposit on its orders for the new Model 200 tape recorder; eventually it bought 60 units at $4,000 each, reselling the first seven to the American Broadcasting Company. Decca Records placed the next order. A total of 112 units were sold at this price. The first prototype cost Ampex $76,000 to develop; it was manufactured throughout 1948.

Mosley did not feel the company had a future in making tape recorders and the Ayala investment group comprised of Joseph and Henry McMicking, George Long, and Kevin Mallen bought his stake in the company when it again needed capital. When the partnership was dissolved in 1958, Long became president of the company. Ampex began trading stock publicly in 1953, when annual sales were $3.5 million.

The Beginning of the Video Age

Ampex had a goal in mind that would make history: the creation of the first practical television magnetic tape recorder/reproducer, or video tape recorder. However, since its inception in 1951, the project had been continually postponed in favor of more pressing projects.

Charles P. Ginsberg lead the development team, which included Charles Anderson, Alex Maxey, Shelby Henderson, Fred Pfost, and Ray Dolby. Dolby had dropped out of college to join the project and in so doing lost his draft deferment; he was able to return after completing his military service. (This is the same Dolby identified with the noise reduction systems that bear his name.) Unforeseen technical problems arose during the machines development, such as the Venetian blind effect of horizontal line interference and the problem of manufacturing durable video heads in quantity, as well as finding suitable magnetic tape.

Upon its debut, the Ampex VRX-1000 (renamed the Mark IV) recorder was an immediate and sensational success, resulting in dozens of orders, even at $45,000 per unit. By April 1960 the company had sold 603 units. Almost immediately, the tape recorder began recording historic moments. The first broadcast of a taped video programDouglas Edwards and the News on CBScame on November 30, 1956. While on display at the Moscow Trade Fair, it captured the famous kitchen debate between Richard Nixon and Nikita Krushchev. The tape was broadcast across America within two days. The Ampex Video Cruiser introduced the video tape machine itself to the country. The 40-foot-long vehicle carried a crew of ten in addition to the 5,000 vacuum tubes.

In 1957, Ampex agreed to compare notes with RCA, which was working on its own video tape recorder. The deal assured compatibility of tapes between machines and also gave Ampex the technology to record color television signals, a concept which RCA was eager to promote. The VR-2000 recorder was the first practical broadcast quality color video tape recorder. Like the VR-1100, it utilized transistors rather than vacuum tubes.

Thomas E. Davis, sales manager for Crosby Enterprises, the exclusive distributor for Ampex, sought other uses for its recording machines and secured contracts with scientific and military clients. Anything that could be converted into electrical signals was a potential application. Raytheon bought 25 modified Model 300s (called Model 301s) to record flight information while testing its Loon missile. Earthquakes and brain waves could also be recorded. A heavy duty recorder (costing $17,250 each) was soon developed for the military and in 1955 a multipurpose recorder was introduced. Ampex also supplied recorders for the nascent automation industry. These machines recorded the steps used by a robot in a manufacturing process.

In 1957, National Cash Register recruited Ampex for help in developing a recorder for its computers. Its primary competitors, IBM and Remington Rand, used their own data tape recorders. Joint ventures with Philco and General Electric soon followed. The storage of digital data would become vital to the companys future development.

The film Oklahoma, released in 1955, marked the entry of Ampex into motion picture sound systems. In 1960, this work earned Ampex an Oscar, one of many awards for technical achievement from the film and television industries.

Company Perspectives:

Ampex has excelled at processing and storing visual information for more years than most of todays technology companies have been in existence. As the world increasingly demands that information be created, stored, and transmitted in visual form, Ampex remains at the forefront of innovation.

Ampex also began to make sophisticated sound systems for the home. The Model 612, introduced in 1955, was the worlds first stereophonic music system; at $700, it sold for more than double the price of a monaural system. The company had traditionally concerned itself with supplying the high end and professional market. However, when prerecorded music on tape became more economical, the company began supplying home tape recorders in earnest. Its United Stereo Tapes (later Ampex Stereo Tapes) subsidiary offered music recordings.

In 1959, the company was restructured into five divisions: The Ampex Data Products Co., the Ampex Military Products Co., the Ampex Professional Products Co., The Ampex Audio Co., and Orr Industries (formerly Orradio Industries, Inc.), an Alabama tape manufacturer which Ampex had recently acquired. It also established Ampex International in Switzerland, which coordinated worldwide marketing and manufacturing in England and Japan. The continuing growth of the company prompted further reorganization.

New Media for the Information Age

In the mid-1960s, Ampex developed a magnetic disc recorder for use in slow-motion replays in televised sporting events. It was considered that tape would not be sufficiently durable for this application. As with tape recording, the disc recording concept found diverse applications in many industries.

Ampex vigorously pursued derivatives of its innovative technologies. In 1962, Ampex introduced a recorder especially designed for closed circuit (CCTV) applications: the VR-1500. At $12,000, it was relatively affordable and could record for five hours on a single tape. In 1963, Ampex introduced EDITEC, which allowed frame-by-frame control in tape editing. In 1970, TeraBit Memory, a high capacity digital storage system utilizing videotape technology, was introduced.

Alexander Poniatoff was named chairman emeritus in 1970. He continued to maintain an interest in the foundations whose research he sponsored in health and preventive medicine. He died on October 24, 1980.

The home videotape recorder, introduced in 1975, changed the entertainment business. Besides recording programs from television, consumers could also peruse video stores for prerecorded movies; eventually a straight-to-video market for film producers evolved.

In 1983, Signal Cos. bought Ampex, which failed to produce a profit the next year. In 1985, Allied Corp. merged with Signal. The following year, when revenues were $532 million, Henley Group Inc. bought part of the company. Allied-Signal sold the rest of the company to the New York-based Lanesborough group (later renamed Sherborne Group Inc./NH Holding Inc.) in 1987 for $479 million. In 1992 Ampex was incorporated as a public company.

In the late 1980s, Ampex employed approximately 8,000. In 1989, the company cut its work force by approximately ten percent due to sales growth that was less than expected. Low cost foreign producers by this time had made Ampex the only remaining American videotape equipment manufacturer.

While digital video recording and processing equipment offered unprecedented picture quality and superior flexibility, its high price inhibited buyers. Ampex introduced a sales strategy in 1991 that allowed broadcasters to convert from analog to digital facilities in a gradual, piece-by-piece process.

Terming the U.S. television broadcasting market mature, Ampex shifted its emphasis away from the analog videotape recording to digital recording and to other applications for digital data storage. It took time for this to prove profitable. In 1995, the company sold its Recording Media division (Ampex Media Holdings Incorporated), which reduced the size of the company considerably but also helped the company retain its profitability. Ampexs keepered media technology for extending the capacity and performance of hard disk drives excited investors in 1996 and again stirred rumors of a takeover.

Further Reading

Allied Nears Ampex Sale for $479 Million, Debt Takeover, Electronic News, April 13, 1987, p. 20.

Ampex Head Says Company Is Back on Track, Broadcasting, March 4, 1991, p. 66.

Ampex is Newest Piece in Diverse Lanesborough Pie, Broadcasting, April 13, 1987, p. 38.

Ampex Lays Off 250 from Recording Media, Broadcasting, July 22, 1991, p. 44.

Ampex Lays Off Personnel, Cuts Inventory, Broadcasting, December 11, 1989, pp. 65-66.

Ampex Proposes Evolutionary Path to All-Digital Production, Broadcasting, January 28, 1991, p. 52.

The Ampex Story, Monitor, Redwood, Calif.: Ampex Corporation, 1969.

Bettinger, Jim, Videorecording, West, November 6, 1994, p. 5.

Hostetler, Michele. Ampex Rewinds the Tape to Profitability, The Business Journal, April 10, 1995.

Davey, Tom, Sale Lets Ampex Wash Some Red Ink Off Its Balance Sheet, San Francisco Business Times, May 5, 1995, p. 1.

Deagon, Brian, E-Systems, Ampex Ready Storage System for 92, Electronic News, May 28, 1990, p. 17.

The Early History of Ampex, Redwood, Calif.: Ampex Corporation, company document.

Euan, Barty, A Far East Lesson From Ampex, Electronic Business, August 1, 1988.

Foisie, Geoffrey, Ampex Terms U.S. Television Market Mature, Broadcasting, June 15, 1992, pp. 22-23.

Ginsburg, Charles P., The Birth of Video Recording, Redwood, Calif.: Ampex Corporation, company document.

Levine, Jonathan B., Little Orphan Ampex Looks for Daddy Warbucks, Business Week, April 13, 1987, pp. 39-40.

Lubar, Robert, Five Little Ampexes and How They Grew, Fortune, April 1950.

Marcial, Gene G., Whats Revving Up Disk Drives, Business Week, May 20, 1996, p. 100.

Morton, David L., The Rusty Ribbon: John Herbert Orr and the Making of the Magnetic Recording Industry, 1945-1960, Business History Review, Winter 1993.

Scully, Sean, Once-Might Ampex Cuts TV Product Line (To Offer DCT Line of High-End Digital Equipment), Broadcasting and Cable, October 4, 1993, p. 65.

Warner, R. M., Jr., Ampex and RCA, VHS and Betamax, IEEE Spectrum, February 1996, p. 57.

, Earl Masterson: A Fresh Slant on Videorecording, IEEE Spectrum, February 1996, pp. 51-57.

Fedrick C. Ingram