When MGT went under in June 1990 Alan and Bruce brought out the rights to the Coupé to form Sam Computers Ltd
Read more about MGT on Wikipedia
A major investigation by Contact has led to this, a complete break down of Miles Gordon Technology’s final year in business. Why did the company collapse? Was it Mis-management…Over production…or just Bad debt?
Johnson Fry Corporate Finance Limited arranged the public flotation of Miles Gordon Technology, in charge of the project was Simon White, a senior executive at Johnson Fry. In his own words he explains why the company failed and the markets view of the machine.
During June and July of 1989, Johnson Fry acted as sponsors for the company Miles Gordon Technology plc and raised a sum of £500,000 which capitalised the company at a total of £750,000.The investment was always seen in the high risk/possibly high reward category and was intended to fund the final development and subsequent marketing of the SAM Coupe home computer both in the UK and abroad.
The management of the company consisted of Bruce Gordon, Alan Miles and Robert Collins as Executive Directors, with Andrew Browne as Non-executive Chairman and Brain Barrows as Johnson Fry’s Non-executive Director on the board. Both Bruce Gordon and Alan Miles were well known in the computer market for their previous work, providing peripherals for the Spectrum, and together with the rest of the management team, they succeeded in the remarkable achievement of providing, what was widely recognised as an exceptionally good machine for its price.
There was no doubt in our mind that, on a technical level on, the computer represented extremely good value for money due to its custom ASIC, and it showed good use of a innovative design, not only in appearance, but in use of the latest disc drives and their ease of incorporation.
The machine contained very substantial expansion possibilities for its price. It was easy to assemble and was targeted at a popular market. In my personal opinion while one can always criticise companies that have failed, and blame their management, there is no question though, that any of the management did not put 110%in to the project and worked unfailingly for its success.
The company failed for a number of reasons, one of the most significant being the delay by the original supplier in providing the finished ASICs. When a secondary supplier was engaged, it was quite apparent that the original supplier had taken excessive time in carrying out its production design. The delay in providing machines to work with resulted in the following delay in the production of the DOS and initial software.
The upshot of these factors meant that only 200 machines were shipped out by Christmas 1989 (MGT claimed a number of just under 1,000) and thus the period of the year where the majority of sales takes place had been missed with the resultant detriment into the company’s cash flow. The deepening recession certainly affected the machines market and while the computer press gave the machine outstanding reviews, further delays in the initial software combined with the seasonal level of sales meant that the company would not have been able to survive without further cash input.
Over the next few months, a considerable effort was expended by the company’s directors and ourselves, but the institutional funding had, by this point withdrawn from any deals of even a nominally speculative nature. Talks between interested commercial partners continued right up to the date that the receivers were appointed. In short, the company simply ran out of money despite having what was acknowledged as an excellent product and against a back ground of growing sales. After a short time in receivership, the company went into liquidation. Bearing in mind their own personal liabilites, Robert Collins sought employment elsewhere, while Bruce Gordon and Alan Miles started a new company called SAM Computers Limited and, following agreement with the Official Receiver, the continuation of the SAM Coupe, its design and its peripherals.
While the market has inevitably moved on during this period, there is no doubt that the SAM Coupe is still a product unmatched in terms of overall performance per pound, its current company though, does not have the backing to maintain the extremely high level (and very costly) marketing campaign that accompanied the initial launch.
Read more about MGT’s demise at The Your Sinclair Rock ‘n’ Roll Years (Recovered) YS56
Well, it's a bit of a tragic story really, so it'd be best to get the Kleenex handy. Are you sitting comfortably? Then we'll begin.
There's no point it trying to break it to you gently - Miles Gordon Technology (the company behind the SAM) have gone into receivership. What this means basically is that they've run out of money - and nobody is willing to give them any more, Hopefully a buyer will be found for the company and the Coupe will continue to be built - if not, it effectively spells the end of the line for the machine (and just as software was starting to appear for it too!).
So what went wrong?
Well, obviously details are fairly sketchy at the moment, but it is believed things started to get really bad around March this year, when MGT realised it had produced far more Coupes than it could possibly hope to sell (at this quiet end of the year at least).
Most probably they had so many machines on their hands (up to 6,000 apparently!) because they'd been aiming to have large stocks to sell in the busy pre-Christmas season. Since they'd failed to get the machine ready on time they found that vast numbers were just sitting there, doing nothing. Obviously this put them in a bit of a spot - they'd spent all that money making these things that they couldn't sell, they were owed a good deal of money themselves and on top of that had to finance the sending-out of ROM chip upgrades to their 8,000 or so existing users! This is what's known as a bit of a cash flow crisis - they were spending too much, and not enough was coming in to pay it all back.
In a last-ditch attempt to raise more money MGT got back in contact with Johnson Fry (the company they'd initially brought in to help float the company on the stock market) to try and raise more capital. When that showed no real hope of success they had little choice but to call in the receivers.
So has the writing always been on the wall or what?
Certainly the SAM project has been plagued by problems throughout its history. For a start, manufacturing costs forced the price well above the £100 or so initially intended, meaning that (with disk drive fitted) the manufacturers' recommended price for each machine was getting dangerously close to bargain basement ST territory.
Of course, the machine going late and missing the Christmas sales period (when the vast majority of computers are sold) didn't help matters at all - the SAM is said to have captured 5% of the UK home computer market, but of course 5% after Christmas provides nothing like the cash injection that 5% before would have done. Then there were the problems with the disk drive Disk Operating System, the new ROM that was required, the Spectrum compatibility problems and so on. For their part, programmers too were finding some serious problems with the computer, particularly with the ASIC chip, which made it impossible to implement MIDI on the machine!
In short, the company and its product have been plagued by problems from the word go, so it's especially sad that it's now (when all the hard work has been done, and the majority of probs sorted) that things should fall apart for them. For a company as small as MGT, the whole SAM project was an incredible risk, and one it seems they only just failed to pull off.
So what does the future hold?
Well, Alan Miles is on record as saying that "We have failed as a company, but we've got a good product and we're making sure that doesn't fail too. We're making every effort to find a buyer quickly in order to protect our customers. There are half a dozen companies interested. If a buyer is found soon the whole business will be transparent to existing customers as the customer support will continue."
Which all sounds well and good, though quite who these companies might be is, at the time of going to press, fairly unclear. Certainly Atari, Amstrad and Acorn have denied any involvement. The smart move would seem to be for a new owner to move production out of the UK - the Far East has been suggested - so that each unit could be manufactured more cheaply and the profit margin increased. Should that be the case, someone could be making a nice little profit out of the machine by Christmas, but of course this remains to be seen.
What about software support? Will it continue?
Like we said, one of the sad things about the death of MGT is that it's happened at a time when software support was just starting to come through. While we can't speak for most software houses, Enigma Variations (whose SAM Coupe version of Defenders Of The Earth features in Future Shocks this month) have announced that they will continue to support the machine. Managing Director Richard Naylor says "We would like to continue writing games for the machine but a lot depends on the reaction from the owners. If you want to see more games available we need to hear from you so that we can judge the interest that is out there."
If you want to contact Enigma Variations, either to express your support for the Coupe or to buy a copy of the SAM Defenders (£11.99 cassette/£14.99 disk inc p&p;) write to [address and phone number deleted - NickH]
So what should I do as a SAM owner?
Sit tight for the moment would seem to be the best advice. Should the Coupe fail to get placed with another manufacturer, a possible support package has been discussed by MGT and INDUG (the SAM user group), though we don't know what form it would take. Alan Miles has even suggested the possibility that the upgraded ROM might be filed in the public domain, so every user could get their hands on it if they wanted. Coupe owners can contact Bob Brenchley at INDUG on [phone number deleted - NickH].
For our part, YS will continue to run SAM news and hopefully the first SAM games reviews next issue. We will of course keep you informed as to what the future will be for the machine (if any). And that's about all we can say for the moment. (Keep your fingers crossed.)