Ixo: The Revolution Has Been Postponed

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Last April, with elaborate fanfare, IXO Inc., a start-up company in Culver City, Calif., introduced a small silver-and-blue computer terminal that its creators hoped would revolutionize the way people interact with data stored in big mainframe computers (see INC., September 1982, page 49). Pocket-size and programmed to communicate in standard English, rather than computerese, it was designed to appeal to anyone wishing to enter or retrieve data from a remote computer, even if the person had no special computer training.

In an extraordinary one-day marketing blitz, IXO shelled out about $375,000 to buy three consecutive pages of advertising in The Wall Street Journal and to provide free terminals to 1,000 chief executive officers of major U.S. companies. By appealing directly to the CEOs, IXO sought to compress the selling cycle with prime prospects who might buy hundreds or even thousands of the IXO Tele-computing Systems to provide employees with a means of entering orders from the field or sending and receiving electronic mail. Small-order customers simply weren't as interesting.

Although IXO sent the little terminals to the selected executives by Federal Express, the large-quantity orders failed to materialize overnight. And by the end of 1982, sales were running far shy of the company's goals. "Things certainly aren't happening as rapidly as we all hoped," confirms Jeffrey Bachmann, an ex -- Mattel Inc. finance man who last January replaced Jeff Rochlis as president and CEO. Bachmann says that IXO greatly underestimated the time it takes for most large corporations to conduct pilot programs with the terminal and to identify potential in-house applications. For IXO, he admits, "it's been an extremely expensive market research program."

While IXO, which was financed with about $10 million of venture capital, hasn't abandoned its efforts to book the big orders, the company recently reformulated its marketing thrust. It is now going after smaller business customers and even individual users of home computers with the unit, which now sells for about $400, down from last year's $500. Bob and Holly Doyle, the successful electronic game inventors who developed the IXO telecomputer out of their Cambridge, Mass., home, have prepared software that allows the telecomputer to serve as a remote terminal for IBM and Apple personal computers in additon to being able to tie into national databases, such as Dow Jones News/Retrieval Service, CompuServe, and The Source, over telephone lines.

Originally, the company hadn't foreseen anything resembling a significant consumer market for the telecomputer until much later. But the dramatic boom in microcomputer sales during 1982, says Bob Doyle, suggested that the hobbyist and home markets were already worth pursuing. In computer magazines and at regional computer shows, therefore, IXO and its distributors have begun promoting the unit as a portable companion to personal computers.

For IXO, convincing prospective customers of the advantages of using the telecomputer to enter and retrieve data in standard English has been a lot harder than expected. "Things move very slowly," says Bob Doyle. "We're finding that the turnaround time for a decision in many big companies we've been talking with is 18 to 24 months." Consequently, sales for its first year were just a fraction of what IXO had forecast, at about $1 million. But nobody seems too discouraged by the slow start. Doyle says, "We still did more business than Apple Computer saw in its first year." And a confident Bachmann asserts: "We haven't run out of time, money, or talent."