Gone but not forgotten

Control Data Corp., the sprawling Fortune 500 computer company that defined the Twin Cities' technology landscape for three decades, disappeared 15 years ago in a wave of industry upheaval that ended the era of the mainframe computer.

But CDC, as it was known, is far from forgotten. Former employees and management will gather at the Minneapolis Convention Center today for a look back, as they celebrate the 50th anniversary of the company's founding.

Some may wonder why, in a rapidly changing world, former employees would be wistful about their company's past. The answer is that Control Data was a company like no other.

By the late 1970s, it had made the Twin Cities one of five U.S. computer industry centers (a distinction that is now only a memory). By encouraging entrepreneurship among employees, it spawned dozens of local spinoff companies, including the supercomputer firm Cray Research (also now gone). At its peak, CDC had 60,000 employees and about $5 billion in revenue.

But at the same time that it was successfully competing with industry giants such as IBM, CDC was pushing the limits of what a for-profit company could do in socially beneficial areas outside its core business, such as employing the poor, educating the public and generating green electrical power.

In charge of it all was CEO Bill Norris, who became a legendary figure. Norris, who died last year, understood business as well as computer technology, and was willing to try things that hadn't been done before. He hired Seymour Cray, regarded by some as a genius, to make computers go faster than ever. (Cray died in 1996.)

Norris pooled resources with other big computer companies to form a successful disk drive business. He sued IBM, alleging antitrust violations in the mainframe business, causing Big Blue to settle the case in CDC's favor by giving it major data services operations.

The CDC dream came apart in the 1980s, as technology made computers smaller and less expensive, and all producers of big mainframes saw their markets shrink dramatically. But there was more to it than that at CDC.

More than nostalgia

So today's meeting of former CDC employees will be about more than nostalgia. It also will inevitably touch on the most controversial question of all: What killed Control Data Corp.?

As always, the legend of Norris intrudes on this question. He was beloved by many of CDC's employees -- even those who saw his failings -- and held great sway over the direction of the company.

"If you wanted to leave [to start another computer company], Norris said, 'More power to you,'" recalled Ed Orenstein, who sold his company, Data Display, to CDC in 1965, then left in 1969 to start another successful company, Data 100. "Norris was not vindictive at all."

But Norris became more interested in some of his pet social projects than in CDC's business as a whole, Orenstein said.

"Norris' social conscience was remarkable, but not completely compatible with running a growth company," Orenstein said. "CDC would have been better off if he had stepped aside and let somebody else take the company where it needed to go."

Larry Perlman, the company's last CEO and the architect of its 1990s breakup, agrees that CDC's top management became distracted by early-stage pet projects such as Plato computer-based education and wind farms that generated electricity without pollution -- concepts that were 20 years ahead of their time.

"I don't think people in management stayed focused on the way technology was changing," Perlman said. "There was a belief that things would continue to be the way they were. The world changed, and the company, to some degree, didn't."

Perlman said that Plato computer-based education was a management distraction because it wasn't practical at the time. Plato relied on expensive mainframe computers and special networks, a far cry from the situation today, when online universities reach customers via inexpensive personal computers and the Internet.

"Norris saw the potential of computer-based education, but he didn't see the impracticality of achieving it with existing technology," Perlman said.

But former CEO Bob Price says the Plato and wind farm ventures were simply ahead of where society was at the time.

"Wind farms worked then, just as they do now," Price said. "But there was no green revolution then, no mass acceptance. The real change since then is the demand by consumers for green energy."

While pet projects got attention, many mainstream businesses didn't get enough, Perlman said. One was CDC's supercomputer subsidiary, ETA Systems, which had to be abruptly shut down in 1989.

"ETA in hindsight was a huge strategic mistake, a $700 million investment in supercomputers at a time when they no longer had the relevance they had a decade earlier," Perlman said.

"All those cash outlays came at a time when Control Data was struggling in other areas."

Not everyone agrees. Xiotech Corp. Vice President Robert Peglar, a former mid-level supercomputer manager at CDC, says that the ETA closing was a CDC management blunder. "There are many ETA veterans who think, as I do, nearly 20 years later, that it was a shame it was closed. It was a lost opportunity, never to be regained," Peglar said. "ETA could have been a major success ... but CDC management had other ideas."

Perhaps more unfortunate, in the eyes of some, was that Control Data didn't capitalize on two major innovations of the 1970s and 1980s, the closet-size minicomputer and the desktop personal computer.

"It's a question people chew over to this day," Perlman said. "I think the speed of the technology change really took a lot of people by surprise."

But Price, who worked closely with Norris during CDC's glory years, remembers a different scenario. What seemed like management missteps, Price said, were really a bold strategic move to get out of the computer hardware business before it became a commodity (as it is today), and to concentrate instead on data services and software (now major markets).

"It's wrong to say we missed the minicomputer and the PC, although that idea is so ingrained in the culture that I despair of trying to do anything about it," he said. "The fact is, we made a strategic decision that our best bet for long-term survival was to be in computer services, not hardware."

The strategy worked, Price says, because although Control Data is gone, its successor company, Ceridian Corp. of Bloomington, continues to be a major player in the computerized payroll field and other data services. It recently was sold to a private equity firm.

"Control Data did not disappear, the name disappeared," Price said. "It's unfortunate."

Four legacies

Aside from Ceridian's presence in the market, Price sees four legacies from Control Data in today's business world:

•CDC pushed the idea of "software unbundling," he said -- selling software separately from the sale of computers. "Microsoft owes its existence to unbundling," Price said.

•Innovative business practices, such as providing work for people who have handicaps, allowing people to work from home and helping employees deal with their personal problems.

•Fostering entrepreneurship through spinoff companies and opening technology center "incubators" that provided small businesses with services they needed.

•Collaborating with government to help society through projects such as inner-city manufacturing plants, remedial education for prison inmates and child care for women employees.

"Control Data was a very special place to work, and its legacy lives on not in artifacts so much as in technology and innovation that showed what was possible," Price said. "The hundreds of people who contributed to the company's 50th anniversary event did so because they feel the legacy of the company is important to preserve."

Steve Alexander • 612-673-4553

Steve Alexander • alex@startribune.com