What You See Is What You Get: My Autobiography (60 page)

Bob and I sat down and looked at it in the good old-fashioned Amstrad way.

'Just what
is
this we're looking at, Bob?' I said. 'Look at the dish from a different perspective - it's a bit like a dustbin lid, and a steel dustbin doesn't cost much, does it? Why don't we find the people who bash out dustbin lids and start from there?'

We needed to get some special material that wouldn't rust, bearing in mind the dish would be exposed to the elements. We thought of plastic-covered steel, as used on the top cover of one of our cassette decks. Logically, it
had
to be as simple as that - there was nothing special about this dish, it was just a lump of steel.

Bob got on to the British Steel Corporation and asked them to quote us for blank sheets of a steel known as Stelvetite that was laminated on both sides with a rugged plastic covering. A couple of days later, he told me, 'You're not going to believe this. British Steel's raw material cost for a piece of steel large enough to punch out one of these dishes is . . . guess what?'

'No idea, Bob. Go on, tell me.'

'Seventy pence.'

We couldn't believe it.

'Seventy pence? And that tosser was asking for thirty quid? Can't be right, Bob.'

'I'm telling you, it's seventy pence. If we buy the amount of steel needed to make a million of these dishes, they've quoted me a raw material price which equates to seventy pence a pop. All we need to do now is find some metal-basher who's prepared to take the steel in, make a tool, bash them out and we'll give him a few bob for his labour and overheads. Up in the Midlands, there are great big car plants and car part suppliers who make wings and boots and bonnets - these guys have got the size of press needed and can do these dishes with their eyes closed.'

Brilliant stuff! Brilliant Amstrad stuff, sitting there brainstorming. Can you believe being quoted 70p and someone had asked PS30 for it? Now we were really at the races on this satellite thing. There was light at the end of the tunnel. We'd cracked the LNB and now the dish. We were on target to meet our costs and I was able to relax a bit - I had made a promise to one of the world's biggest media moguls and at one point it had looked like we weren't going to be able to pull it off.

Bob and one of the buyers found a Midlands company, Concentric, who were delighted to take on this work. We made a three-way arrangement between Amstrad, Concentric and British Steel whereby Concentric bought
the raw material directly from British Steel, bashed out the dishes and then supplied us with the finished product. At the same time, we slung in all the bracketry for them to make and we offered them the opportunity to pack the whole thing up in a cardboard box. In other words, the satellite dish was delivered boxed and ready to go - we didn't have to touch it. Concentric agreed to make the dish for PS1, plus another couple of quid for the bracketry and packaging, so for around PS3 we had a fully packed satellite dish ready to ship.

The schedule was very tight, so who was the best man to make these satellite receivers quickly for us? Emperor Otake. As usual, he got his team working diligently and they managed to produce the receivers on time, which was amazing considering they first had to learn how to make the highly complicated tuner. Of course, we owned the intellectual property rights, so Otake couldn't go flogging them to other people. Also, as the chip in the tuner belonged to Amstrad, the manufacturer would not supply it to anyone without our permission.

We met the PS199 retail price target, but it was very tight, so we pulled our old trick - we made another receiver which included a remote control and priced it at PS249. Of course, everyone went for the PS249 model and we were well in the money.

Credit to Rupert Murdoch, he started broadcasting in January. We got to market by February and were the only supplier at the time. Dixons advertised the hell out of the product and, sure enough, started to sell them in great volume. It was the first time the British consumer had a choice of television beyond the four terrestrial channels.

Meanwhile the BSB consortium had finally got their act together and raised some money. They were peddling a new technology using a small square dish which they called a 'squaerial' and their satellite receivers were based on the transmission system D2MAC. I had recommended to Rupert that if he needed to get to market quickly, we'd have to use the PAL system, otherwise we'd have no chance of meeting the on-air date of February 1989. At the time, D2MAC was seen to be the professional and industry-adopted standard by which satellite transmissions should be conducted. As for Murdoch and Amstrad, they were just a couple of renegades who were bucking the system by using PAL.

There was a lot of snobbery about the BSB service. They tried to project themselves as being superior, both technically and in terms of the programmes they'd broadcast. I can't recall who the major investors in BSB were, but they spent millions and millions of pounds setting up this competitor to Sky.

Sky got to market first in February 1989, with a great advertising campaign that showed a Sky dish and the competitor's BSB dish. The strapline on the advert said, 'Sky: on air - BSB: hot air.' BSB didn't start transmitting until March 1990.

As with all new technology, you get what are known as 'early adopters'. My gut instinct had told me that if consumers were offered a package of sixteen television channels for PS199, the product would fly off the shelves. However, it turned out that only a certain number of early adopters were interested. Dixons sold around 150,000 units very quickly and then sales started to slow down.

This was obviously a learning curve for Rupert Murdoch. It was clear that if his objective were to be achieved - if Sky Television were to become profitable - he would need
millions
of viewers so he could make money from advertising or subscriptions or whatever - 150,000 was absolutely useless.

As Sky Television began to take off, out came the snipers with their adverse comments about the 'ugly' dishes which were changing the face of the country's masonry. Some people vowed they would never have such a hideous thing stuck on the walls of their homes and, on reflection, it
was
a cultural change. These days there are over ten million around the country, so I guess if I am remembered for anything, it might be as the man who changed the face of the suburban landscape - when you see a dish, think of Sugar. Of course, if I had my choice, I'd prefer to be remembered more like Sir Christopher Wren, the man who built St Paul's Cathedral.

In rushing to the market, no thought had been given to a method of encrypting signals so that Sky could charge consumers on a pay-per-view basis. The satellite receivers we had made were 'free to air'. We were asked to think about incorporating technology into the receiver to enable the next phase of Sky Television to progress. They needed to be able to charge for viewing movies or sports events.

I suggested the smartcard system to Rupert. Initially he was unhappy with it because of its cost, and got some of his own technical people to investigate alternatives. They got a bit confused thinking about the way the CTV cable system worked in the USA and went off on a tangent, investigating technology that simply wouldn't work on satellite. Eventually, Rupert called me and said, 'Don't start crowing down the phone telling me, "I told you so," but it seems we need to go with this smartcard technology.'

He told me that one of his subsidiary companies had an investment in the company NDS in Israel, who specialised in making smartcards for banking
and security purposes. We were quite happy to incorporate the hardware for the smartcard technology in a new receiver, but there was an added complication - there needed to be signal encryption, the thing that scrambled the signal so that viewers couldn't watch the programme if they hadn't paid their subscription.

Rupert Murdoch's technical people chose the French company Thomson, who owned the scrambling system VideoCrypt. Thomson insisted that if he signed up to a licence for VideoCrypt technology, then they themselves must make the satellite receivers exclusively.

I told Rupert that this was totally unfair on Amstrad - after all,
I
was the one who'd had the balls to make a load of units on spec to help him launch Sky. Now he was trying to soft-land me into a situation where Thomson would be the only ones allowed to make the units for him. This was typical of the bloody French, who always want to keep things for themselves.

To be fair, Rupert took my point. He told Thomson that they weren't getting any deals unless they granted Amstrad a licence to make units with VideoCrypt technology. He argued that there was no way any broadcaster would ever place all their eggs in one basket, relying upon hardware supplied by one company.

Thomson reluctantly agreed to give us a licence, but insisted we send our staff to Paris to negotiate the agreement. I sent our corporate lawyer David Hyams over and asked Marion to get involved because I knew what these French bastards were like. Just like their VCR protectionism in Poitiers, we had to make sure there were no banana skins we could slip up on.

Sure enough, Marion called me from Thomson's offices and said, in her very dramatic French way, Alan, I'm telling you, they will never give you a licence. They are messing around and neither David Hyams nor I can convince them. They are being typical Thomson. They hate you. They don't want you to have a licence.' It was true. David Hyams confirmed that these people were being totally unreasonable and were throwing demands on the table that no one in their right mind would accept.

I got on the phone to Rupert and explained what was going on. I can only imagine that Rupert must have gone in to bat for me and beaten them up some way or another, because the following day they did sign an agreement with us. All their bullshit had gone away. Well, at least I
thought
it had gone away.

Part and parcel of being a Thomson licensee was to ensure that the product we shipped complied with their specifications. Or maybe they were being tricky and this condition only applied to us! The licence agreement that
David and Marion accepted gave Thomson the right to check the quality of our product and only once we had Thomson's technical approval would we be able to buy the main chip from the manufacturer, SGS (owned by Thomson).

Rupert wanted me to stop production of the simple satellite receiver, so that
all
production would incorporate the VideoCrypt system and smartcard. Sky's requirement was for a combined receiver-decoder.

One of the other exciting aspects of entering this satellite business was that there were far more than the sixteen English-speaking channels on this service. In fact, there were over fifty channels, many of them being German. Germany was worse than England in that they had only two official terrestrial channels. German companies had decided they would start broadcasting stuff via satellite and our German subsidiary was being pestered for Amstrad receivers. The German market didn't need a decoder - it was capable of taking the standard product we were shipping. We had to make some minor modifications, but we started to enjoy massive business in the German satellite market. Initially, there were problems in that our product didn't comply with German FTZ regulations (similar to the FCC issues we experienced with PCs in America). Demand was tremendously high, so although it was illegal for us to ship stuff to Germany until we had FTZ certificates, we did sneak some of the existing stuff under the radar. This led to one of our German competitors, Hirschmann, complaining to the authorities in order to protect the marketplace, but, with usual Amstrad efficiency, we produced an FTZ version quickly and overcame that obstacle.

Meanwhile, Stanley had honoured his obligation and taken into stock about 350,000 of these receivers. As I've mentioned, he'd sold the first 150,000 or so, but the balance was sticking. Dixons was well and truly lumbered with the old stock.

What I'm about to tell you now doesn't bother my conscience at all, because Stanley Kalms and Dixons were a real hard-nosed bunch of people, which of course they were perfectly entitled to be. During the demise of Amstrad's computer business, when I organised a fire sale to reduce our inventory, Dixons commercially raped us and exploited our predicament. There was no sentiment, no camaraderie, no loyalty due to the fact that we'd put them in the serious IBM-compatible computer business in the first place. They'd never sold a bloody PC in their lives before we came along and yet now, when you walked around their stores, they were decked out with IBM, Apple, Dell and all the others. The fact was,
I
had put Dixons in that business and it now represented over 40 per cent of their total business. There were no
thanks whatsoever. As a realistic person, I didn't really expect any, but I just want to create a clear picture here, to justify what I was about to do in my next move.

One of Dixons' senior managers, Danny Churchill, called me up and said, in the typically arrogant Dixons manner, that they had stocks of the Amstrad satellite receiver that weren't shifting and what was I prepared to do about it?

I told him, in a very straightforward way, that he could forget about bullying me like he did all his other suppliers. He could forget about asking me to take them back because, in short, Dixons weren't buying anything else off us. They weren't buying computers, they weren't buying audio - all they were buying was satellite.

'In fact, Danny Boy,' I said, 'all you
ever
buy off me is what's shit-hot and what the market wants. The minute we get ourselves into trouble or our products stop selling, you drop us like a hot brick. You don't do
me
any favours and frankly I'm not going to do
you
any favours.'