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Fujitsu-ICL Systems Inc.

Fujitsu-ICL Systems Inc.

5429 LBJ Freeway
Dallas, Texas 75420
U.S.A.
(214) 716-8300
Fax: (214) 716-8586

Joint Subsidiary of ICL PLC (80 percent) and Fujitsu (20
percent)

Incorporated: 1977 as ICL Inc.
Employees: 1850
Sales: $240 million
SICs: 7372 Prepackaged Software

Fujitsu-ICL Systems Inc. is the leading supplier of supermarket scanning systems in North America. The company provides information technology to specific retail markets, mainly large specialty stores, such as the well-known Pier 1 Imports chain, home center stores, and supermarkets. Fujitsu-ICL is also the third largest supplier of automated teller machines in the U.S. market, and holds a worldwide market share of over ten percent. Other major products include hand-held computer terminals. Fujitsu-ICLs major parent, the British computer company ICL PLC, has been a leader in the open systems movement in Europe, providing standardized software which can be used on many different computer systems, and Fujitsu-ICL Systems Inc. is similarly a leading supplier of open systems in the United States, particularly to the retail market.

The current company was formed out of a 1992 merger of ICLs North American operations with those of the Fujitsu company. ICL is the largest British computer firm, and one of the largest information technology firms in Europe. A long-time rival of IBM overseas, ICL first attempted to crack the American market in the early 1970s. Its first American subsidiary, called ICL (USA) was founded in 1974, but its business was confined exclusively to the New York metropolitan area. In three years ICL (USA) installed only 20 computer systems, and in 1977 the company was scrapped. ICL regrouped its North American operations that year, putting together a larger firm out of a merger with the Singer company. ICL acquired Singers Cogar Corp. subsidiary and some of the manufacturing facilities of Singers Business Machines division. Cogar had a line of intelligent data entry systems, and manufactured point-of-sale (POS) terminals, which were computers for use by retailers.

The new American ICL subsidiary, called ICL Inc., moved its headquarters from New York City to East Brunswick, New Jersey, and concentrated its manufacturing and software development operations in Utica, New York. Unlike ICLs earlier American effort, the new company was headed largely by British executives. ICL Inc. intended to market the new products it had acquired from Singer, but it would emphasize sale of ICL mainframe computer systems imported from England. The new company planned to double its marketing force and expand beyond the New York area.

Over the next few years, ICL Inc. developed a network of over 40 dealers. It opened a Distributive Systems Division headquartered in Irving, Texas, and an Advanced Systems Division in Falls Church, Virginia. New product announcements focused on the companys small-to-medium size business systems, meant to compete with IBMs System/34 and System/8. The small-to-medium sized business systems market was crowded; it included products from IBM as well as Burroughs, NCR, Univac, Basic Four, Qantel, Wang Laboratories, Cado, and Jacquard. ICL Inc.s product line included both its System 10, which it had taken over from Cogar, and the ME29, imported from England.

Beginning in 1981, ICL Inc.s British parent had been collaborating with the Japanese firm Fujitsu to upgrade the quality of ICLs mainframe computers. Fujitsu supplied ICL with its state-of-the-art semiconductor technology, which ICL badly needed in order to keep up with its rival IBM. So by the mid 1980s, ICL Inc.s management was convinced that its small-to-midsize systems were technologically as good as IBMs, yet the American market was still very difficult to penetrate. The company made a decision not to try to compete across the board with a wide range of products, but to focus on specific market areas. The company concentrated on vertical market applications of small business computers, but it also eyed what seemed to be a broader market in multifunction workstations. Despite the apparent wisdom of this approach, a 1985 ComputerWorld article characterized the companys existence as stop-and-go.

Nevertheless, the company kept itself in business, and over the next few years found a flourishing marketing niche, as retailing became ICL Inc.s fastest growing area. In the late 1980s, the companys business in that area grew by 40 percent a year. ICL had a five percent market share by 1988, primarily selling to large home center stores. Sales in the retail niche totalled about $60 million a year in 1988. In that year, business increased significantly through a merger when parent company ICL PLC spent $90 million to purchase a company called Datachecker Systems from the National Semiconductor Corp.

Datachecker, a California company, sold laser scanners, POS terminals, and small computers and software to retailers. It sold mainly to home centers and specialist retailers, but its principal product was scanning systems for supermarkets. The company had sales of about $200 million in 1988, and it had been profitable for twelve years, though around the time of the merger with ICL it had been losing money. Intense competition with the ubiquitous IBM and another company, NCR, had caused Datachecker to lose ground. Datachecker became part of ICLs Retail Systems Division based in Stamford, Connecticut, almost doubling the size of that already growing business, and the name was changed to ICL/Datachecker.

ICL/Datachecker became the third largest company competing in the U.S. market, holding a market share of about 35 percent of supermarkets with installed point of sale systems. Even though the total number of supermarkets in the United States was declining, automation was becoming more important at the end of the 1980s, as stores installed more complicated and expensive programs. ICL/Datachecker positioned itself to sell the most advanced systems available. One new product the company marketed was a system of electronic shelf labels that displayed the product identification and price. These labels could be automatically updated by one central personal computer, and though the cost of installation was high, it would save the user money in labor. ICL/Datachecker also worked on ways to network existing supermarket software systems. And where the old Datachecker systems had run only on Datachecker hardware, ICL/Datachecker modified its product to run on IBM-compatible machines, making it a viable choice for many former IBM customers.

The next big change in ICLs U.S. operations came in 1992. In 1990 Fujitsu, which had already been involved in joint ventures with ICL, decided to buy 80 percent of the British company. Fujitsu had a hands-off attitude toward its new subsidiary, and ICL management maintained its independence to a large degree. But in 1992 the two companies consolidated some of their operations. Fujitsu took control of 80 percent of ICLs marketing operation in Australia, New Zealand, and the South Pacific, and in exchange, ICL gained 80 percent control of the new company that emerged when the North American operations of ICL and Fujitsu were combined. The new company, Fujitsu-ICL Systems Inc., put together ICLs retail systems operations with two divisions of Fujitsu called Fujitsu Systems of America and Fujitsu Customer Service of America. The combined companies had mostly retail-related computer sales. Fujitsu-ICLs annual retail sales almost doubled after the merger, to $350 million, though the company remained in the number three spot in the U.S. retail systems market, still behind IBM and NCR.

The combination was a logical one. Fujitsu Systems of America was a competitor of ICL, but it had carved out its own special niche in the retail market, focussing on specialty stores, especially apparel shops. Its customers included chains such as the County Seat clothing stores, the chain of Barneys department stores in New York, and the large paint store Sherwin-Williams. Its leading product, the Atrium 9000, was designed for specialty stores, mass merchandisers, and department stores, and it doubled as both point of sale register and personal computer. Fujitsu Systems other big product was automated teller machines. The automated teller machine market was dominated by NCR Corp. and InterBold, which was a joint venture of IBM and Diebold, but Fujitsu had major customers such as the CombiNet banks in Boston. Some of Fujitsus machines had special features, such as a machine for drive-through banks that adjusted itself to the height of each passing car and machines for the blind with voice guidance and braille indicators.

In 1993 Fujitsu-ICL entered an agreement with Applied Communications Inc. to explore further technological developments of self-service banking machines. The company gained further inroads in the financial service market by supplying machines to Meridian Bancorp in Pennsylvania, one of the countrys largest owners of automated tellers, and winning a contract in 1994 to provide automated banking services at many of Americas major airports. With sales of about 1,500 terminals, Fujitsu-ICL lagged far behind its two main competitors in automated teller sales worldwide, as InterBold shipped over 18,000 terminals in 1993 and NCR shipped over 26,000. But when only the U.S. market was considered, Fujitsu-ICL did much better; 1,200 of its automated teller machines were for the domestic market, compared to about 4,000 for InterBold and 5,000 for NCR. And there were signs that Fujitsu-ICL was gaining ground. In June of 1994 the company signed an exclusive deal with the Star Banc Corp. to supply approximately 100 teller machines a year for three years. The contract was noteworthy not only because it was worth approximately $6 million to Fujitsu-ICL, but also because Cincinnati-based Star Banc was in the heart of rival territoryboth NCR and InterBold were Ohio-based companies. The newly-formed Fujitsu-ICL aimed to increase its presence in the retail market, and the Star Banc deal was perhaps an indicator of the companys success.

Further Reading

Barthel, Matt, California Federal Buys Fujitsu ATMs for Disabled, American Banker, May 28, 1991, p. 3.

Bartolik, Peter, European Firms Take Varied Aim at U.S. Market, ComputerWorld, July 1, 1985, p. 1.

Fallón, James, National Agrees to Sell Datachecker to ICL for $90M, Electronic News, December 19, 1988, p. 10.

Fujitsu, ICL Set Three Units, Electronic News, February 24, 1992, p. 1.

Fujitsu-ICLs ATMs in Airline Clubs, American Banker, May 9, 1994, p. 13A.

Hooper, Laurence, Fujitsu, ICL to Consolidate Some Businesses, Wall Street Journal, February 21, 1992, p. 7A.

ICL, Fujitsu Join Forces to Pool Efforts, Technology around Globe, Supermarket Business, March 1992, p. 17.

ICL, Inc., Brings ME29 CPU to U.S. Market, Electronic News, June 16, 1980, p. 18.

ICL (U.S.) Offers Upgraded System 10, Electronic News, January 21, 1980, p. 30.

Independence as a State of Mind, Economist, April 10, 1993, p. 67.

McLean, Joe, ICL Regroups U.S. Staff in New Marketing Effort, Electronic News, January 10, 1977, p. 32.

Meridian Bancorp Picks Fujitsu as Principal Source of ATMs, American Banker, February 18, 1993, p. 3.

Moran, Robert, OS/2 Suits Barneys for Point-of-Sale Net, ComputerWorld, August 21, 1989, p. 41.

Murphy, Liz, Fujitsu Sells Its Way into the Race, Sales & Marketing Management, May 14, 1984, pp. 41-44.

Savage, J. A., National Semi Sells Datachecker Division, Computer-World, December 19, 1988, p. 71.

Schneidman, Diane, Technology Drives Todays Financial Marketing Plans, Marketing News, April 24, 1987, p. 14.

Simmons, Tim, Big Front-End Changes Coming as Aging Systems Are Replaced, Supermarket News, May 22, 1989, p. 14.

Tucker, Tracy, Star Banc and Fujitsu in Exclusive ATM Deal, American Banker, June 17, 1994, p. 17.

U.S. ATM Market Grows Better, Not Much Bigger, Bank Technology News, May 1994, p. 8.

Weighing a Self-Service Future, Bank Systems & Technology, November 1993, p. 56.

A. Woodward

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