The story of Wang Labs begins and ends with the singular genius of its founder, An Wang. An incredible engineer, a brilliant businessman, Wang Labs rose on the back of his ability to create the future. An American story, a man from China who came with nothing and became a billionaire, before losing it all. In this video, we're going to look at the rise, an incredibly sad fall of a computing pioneer, Wang Laboratories. But first, let me talk about the Asian Armory Patreon. Early access members get to see new videos and select their references for them before they release the public. It helps support the videos and appreciate every pledge. Thanks, and all with a show.
An Wang was born in 1920 to an upper middle class family in Shanghai. His educated father was a teacher and a practitioner in traditional Chinese medicine. Now during this period, had fallen into an age of chaos, torn between Shanghai Shex, KMT Party, and Mao Tadong's Communist Party of China. Wang's family would move repeatedly throughout the years, staying ahead of the conflict.
Wang started his schooling in the third grade, since there was no first or second grade at the time, so Wang would always be two years younger than his classmates. Despite this, he did brilliantly in math and science, though not so much in the other subjects. And not only was he brilliant, he knew it too. Wang's unusual but quiet confidence in himself and his abilities would drive him for the rest of his life. When he was just nine, his parents wondered whether to send him on to junior high school or have him repeat the sixth grade. Wang made the decision himself, taking the junior high exams and getting first place.
A few years later, he tested into the Shanghai Provincial High School, today Shanghai High School, and left his family behind at the age of thirteen to attend it. Being two years younger than his classmates, on Wang in high school was quiet and kept to himself. He shied away from team sports but liked ping pong. He was also brilliant in the maths and sciences but struggled in other subjects like Chinese and English, never mastering the latter even in adulthood.
After testing in the top ten of his class, again, Wang won a scholarship to the Chaotong University, then considered China's MIT, he was just sixteen. The school later split after the Chinese Civil War, it is now Shanghai-Jiao Tong University on the mainland and National Yang Mean Chaotong University in Taiwan. Late 1936 was the time of Japan's invasion of China, the university along with Wang's family fled to the French concession of Shanghai and was amidst the fighting. Despite incredibly challenging personal circumstances, his mother, father, and older sister would die in the fighting under unclear circumstances, Wang graduated in 1940 first in his class.
After graduation, Wang joined the Chinese Central Radio Corporation to build radios for the Chinese Army. He worked in the city of Gua Yulin within range of Japanese bombers. Occasionally, he and his teams had to hide into Gua Yulin's deep limestone caverns to avoid the bombings. People knew the mild-mannered on Wang was destined for great things. The company's president later told his wife, look at Wang, he is very quiet, but he is always thinking, we have to support him all the way up, he is very genius, he will do something one day.
In 1944, the Japanese overran Gua Yulin, Wang and his cohorts fled to the nearby Chinese mega city of Chongqing. Shortly thereafter, the Chinese government held a test to select a few towns to send to the United States for schooling. Wang naturally won a spot. Wang arrived at the United States in 1945 and entered Harvard to study applied physics. He found the work there pretty easy, eventually receiving a PhD in just 13 months. He met a charming young woman from a prominent Shanghai family Lorraine Chu. They married after a short courtship and would have three kids, Fred, Courtney and Juliet.
After receiving his PhD, Wang joined the Harvard Computation Lab working on the Mark 1, then one of the world's most powerful computers under the strong-willed Howard Aiken. There, he pondered the problems of storing and reading large amounts of stored information without the use of clumsy mechanical steps. Back then, data was stored on magnetic tapes, reading out the stored information, however, demagnified the tape, destroying the information, how to get around this.
Wang later recalls, while I was walking through Harvard Yard, I realized that it did not matter whether or not I destroyed the information while reading it. I could simply rewrite the information immediately afterward without any real sacrifice or speed. This concept was later incorporated into magnetic core memory, or core memory, the successor to the magnetic drum and the ancestor of RAM. In 1949, Wang, with his wife's encouragement, applied for a patent of this concept.
Today, there are university policies for this, but back then, Harvard only reserved patent rights relating to public health. Wang's patent application, however, angered his Harvard lab colleagues who believed that such knowledge should be for the public. Howard Aiken later said that Wang, quote, ran away with Harvard's stuff and claimed it as a zone.
In 1950, Harvard started moving away from fields with commercial applications, which included computers. Dr. Wang, as he would often be called, disagreed with the decision. He wanted to strike out on his own and start a company. Wang's friends tried to disweight him. It was a different time. They only recently repealed Chinese Exclusion Act had relegated the Chinese to second-class citizens only for the laundries and restaurants. But despite the racism, his challenges with English and lack of money, Wang had unshakable confidence in what he could do. Even naming the company after himself and never entertaining the notion of changing it.
Later on, when a senior official bluntly suggested changing to something more, quote, unquote, American, he angrily replied in a stuttering English, quote, if you don't like a name of company, you go work for company you like name better. He quit Harvard in April 1951, giving up a comfortable $5,400 annual salary just as his wife Lorraine was giving birth to their first son. Founded in June 30, 1951, Wang Laboratories had just $600 of savings and Dr. Wang, but one in assets that was.
Wang started by producing and selling core memories for about $4 each. Has the only employee in a dusty office, Wang did all the selling himself. He methodically called or wrote clients about what he had. And in 1952, he reached out to IBM about licensing his pending patent on core memory. The computer giant had started using the memory for their electronic calculating machines, the talks dragged on for a year.
Things were slow at the start and Wang had to supplement his income by teaching a course at night. But slowly, he gained a reputation and custom consulting jobs came in. He would tell one client, first you show me all the ways you know how to do it, after you have done that I will show you how to do it better. And of course, he followed through. Over time, Wang secured more custom design business. In 1953, he struck a deal with IBM for some consulting revenue and a future option to buy his patent. This gave the company the stability to hire employees.
Wang was not only a brilliant engineer who saw all parts of the problem, he was also a sharp, very tough businessman, unafraid to go head to head with IBM. The doctor was also totally consumed by his work. He obsessed over every little thing in his company, even reviewing all the mail his company received.
When I say Wang, am I talking about the company or the person? It doesn't matter, the two are one and one. That is how involved he was in the business. And unfortunately, Wang was not a great boss, a micromanager. He demanded a lot from people and saw the company has something he fully controlled. And critically, he envisioned eventually passing it over to his son.
In 1955, IBM paid Wang some 400,000 to $500,000 roughly about $4.4 to $5.5 million for his patent. Good money, but Wang's patent only covered a small piece of the final core memory product. IBM ended up paying Jay Wright for a stir, $13 million for a more practical and complete application of the concept. Wang kicked himself for being so close yet so far, telling a friend, why not I think of that. IBM's money finally freed Wang to move away from consulting towards products. Nevertheless, he would harbor special ill will towards the American giant for a long time afterwards.
In the early 1960s, Wang partnered with a small Boston based company called CompuGraphic. The CompuGraphic guys had an idea for a nifty machine that justified lines of text for publishing companies. Wang helped design and produce the machine which CompuGraphic sold as the Linessec. Linessec, named for a line per second, was a hit. In 1962, Wang laboratories made $427,000 in revenue. The next year, they made $643,000 and then $1.4 million a year after that. A success, but a quiet and shared one.
When competitors entered the market, Wang refused CompuGraphic's request to lower the price. CompuGraphic thus started producing the machine themselves, cutting Wang out of a million dollars of future additional revenue. Wang then told CompuGraphic that he patented the machine's original design and threatened an infringement lawsuit. The lawsuit never happened, but it shows Wang's hard-headed style. He learned then never to produce a product that he did not have full control over.
Wang's first big, fully controlled hit, came in 1964. The calculator industry was transitioning from mechanical to solid state transistor-based electronics. Wang wanted to take advantage of this trend. Wang wanted to produce a calculator far smaller than a mainframe computer, but with the same capabilities. He used natural logarithms to do this. If you recall from calculus class, you can easily multiply or divide two numbers if you have their logarithms.
But how to get the logarithms? One might think to pre-calculate the values to get a table and store that table in memory, but that would use too much memory. So Dr. Wang and a colleague developed a patent transistor logic capable of getting the natural logarithmic value of any number with just six natural logarithmic values. 10 to 0.9, 1.01, 0.9999, and 1.001. These six values can be easily stored in ROM, thus we have the logarithmic calculating instrument or low-ci.
During his debut in January 1965, the low-ci looked like a typewriter fused to a box, but it was small and powerful, capable of finding advanced logarithms using less than 300 logic transistors. The low-ci became Wang's first big hit, selling about 10 to 20 a month at $6,500 to science labs. But it was also difficult to use with its intimidating keyboard requiring knowledge of logarithms. So Wang geared down to produce the Wang 300 calculator. Introduced in 1966, the 300 was an immediate hit, easy to use and costing just $1,695. It not only sold well to scientists and researchers, but also to stock brokers and insurance companies.
On Wall Street, the Wang 300 became a legend for revealing a calculating error in a bond trading table that had been in use for three decades. He cared that it had a Chinese name. People joked Wang stood for wild-ass number grinders. Wang set up a direct sales team to promote the product. Revenue is nearly tripled from 2.5 million in 1965 to 6.9 million in 1967. And that year, Wang laboratories went public in a highly publicized IPO. Wang's personal stock holdings were then worth $50 million.
Wang helped make Wang rich, but he wanted the next big thing. In 1968, the advent of the computer language basic convinced Wang that that would be a computer. He acquired a data processing company called Phil Hankins Inc. for help. They began working on two new computers, the Wang 700 and Wang 3300 basic. But then he will have Packard announced their new HP 9100 calculator. The 9100 was really a computer, but they decided to call the calculator because only IBM made computers. The 9100 had a CRT display, magnetic card storage, and made calculating as easy as pushing a button.
Realizing the series challenge the 9100 presented to the 300, Wang rushed out the 700 in mid-1969 as a response. Just like with the 9100, Wang called the 700 a calculator rather than a computer. A year after production, the 700 became Wang's most important product, pushing revenues to $25 million.
The Wang knew that the calculator market was getting difficult. By 1971, the Wang 300 wasn't declined, costing just $600 each. 1971 was also the year Intel introduced their first micro-processor. Analysts now predicted a future in where you could put an entire calculator onto a single chip. Dr. Wang believed that such a thing would push calculator prices from $600 to just $100. He was wrong here. Prices would eventually go even lower than that.
Aware of the coming storm, in 1971, Wang made the incredibly ballsy decision to pull out of the calculator market, starting with the lower end markets. It seemed crazy back then. Calculators made up 75% of the company's total revenue, but Wang had nothing but confidence in himself. He knew that the computer was the future, and he had a two-pronged strategy for getting there.
The strategy would have Wang develop two computer products for different parts of the market. First was your more traditional general-purpose computer that was the aforementioned Wang 3300 basic. The Wang 3300 reached the market in 1970, but the calculated computer as it was called wasn't successful. It took 40 minutes to program, and you loaded programs into it using paper.
The second product would be a word processor to replace IBM's magnetic tape-selectric electric tight-rider in the general corporate environment. IBM had 80% of the word processing market, but they didn't particularly give it a lot of attention. The space made for a great first move. The first iteration of the product was the Wang 1200 word processor, or just model 1200. It announced in November 1971, before it was widely available.
The 1200 was really a modified Wang 700 calculator connected to an IBM's electric tight-rider. The tight-rider's job was to render the type of words, but unfortunately, its connection failed due to improper components causing reliability problems. The eventually fixed it, but sales nevertheless slumped to below expectations.
Three products brought Wang back from the brink of death and beyond. In May 1973, Wang came out with a successor to its 3300 basic calculator slash computer, the 2200. The 2200 still used basic computer language for easy programmability, but stored program information on Intel's ROM chips. This gave the computer instant wake capability. Price between $6,000 to $8,000, quite affordable at the time. The 2200 became a capable small business computer and sold extremely well for a decade and a half.
The second product would be its biggest. The 1200 fell short, but it taught the company some important lessons. In September 1975, Dr. Wang called two of his veteran product guys, Harold Copplao and David Moros, and asked them to try again. Copplao and Moros thought hard about what such a product should look like. They redesigned the system from the ground up to be powerful, upgradable, and radically easy to use. Developed a network of powerful machines. Each machine had its own 8080 Intel microprocessor.
It was powerful enough to work independently, but can also share text or send documents to a central storage unit. And they ditched the IBM Selectric, relying on a competitor's product seemed like poor strategy. Instead they used a CRT screen to display words on the screen. The doctor himself ironed out the final kinks in the hardware connections. And finally they simplified. Previous word process required secretaries to learn various codes to do editing or formatting tasks.
The new system showed built-in prompts and had a menu system for navigation. Introduced in 1976, the Wang word processing system, or WPS, was an immediate hit and brought the company back from the brink. The accounting firm Tush Ross signed a $142,000 deal before the product was even finished. At its introduction at a New York trade show, huge lines formed to see the new device. Wang had to bring in new squadrons of salespeople to relieve tired ones. The immediate hit that we always wish we come across in our careers.
And then in 1977, Wang's third big product, the VES Mini Computer. The Mini Computer is smaller and cheaper than IBM's big mainframe computers. They do not require a big team of technicians, but are still powerful enough to run commercial applications like spreadsheets. Competing against digital equipment corporations, Vax line of computers, the VES held its own. It was almost as powerful as a mainframe, essentially being modeled after an IBM 360, but the doctor avoided calling it that.
Three incredible products brought out in quick succession. They would generate billions for Wang. By the late 1970s, Wang was the world's largest supplier of CRT-based word processing systems. But despite that, it was still largely unknown, and those who knew them, mostly knew them, has a calculator maker.
So in 1978, the company famously launched a massive three-month TV ad blitz positioning them as a leading computer maker. It culminated in a 30-second Super Bowl ad. It cost $150,000 or $5,000 a second. Despite only being the 30-second largest computer maker, Wang was the only such company advertising on TV other than IBM. Their attention grabbing David versus Goliath Spot in particular directly attacked IBM and caught a lot of people's attention. Tens of millions of people saw it and it put Wang on the map. Awareness went from 3% to 14%.
The campaign worked so beautifully that Wang's executives were afraid to say how well it worked so to discourage copycats. Wang revenues doubled again two years later from 1978 to 1980, and then again once more two years after that. Sales reached $1 billion in 1982 and then $2 billion in 1984. 80% of the US's biggest firm spot Wang Equipment. In 1983, nearly half of the company's revenues came from Fortune 500 companies.
Dr. Wang turned 60 in 1980 and he started to slow down. In 1982, he started to spend less time around the office. The year after that, he formally retired. He remained chairman with John A. Cunningham, a 16-year Wang sales employee, taking the head spot. The doctor and Cunningham were very close, Lorraine called him their American son. Cunningham was well respected and built a powerful fast growing sales force. That any successor would have to fill big shoes.
Dr. Wang was not only CEO but also chief of product development. He was intimately involved day in and day out on crafting Wang's most successful products, spending an estimated 65% of his time there. He was not only incredibly technical but also an extraordinary manager of the company's sprawling R&D operations. Imagine taking on such a job. Now imagine also being on Wang's son.
In some ways, Fred Wang took after his father. He was a bit shy, good at math and sciences but not so much the other stuff. Unlike his father, however, he grew up immersed in wealth and privilege. Both of his parents were strong-willed traditional Asian-style parents. His mother wanted him to go to Harvard and constantly harped on him to do so. Fred eventually got into Brown, a perfectly fine school, which his mother could not accept. She harped on him to get a Harvard PhD.
Fred switched his major six to eight times. After graduating, he was not sure what to do. He defaulted to work full time at the family business as a low-level programmer. He did that for two years before switching to a marketing position. Then he was pulled out of that to shadow his dad around the company has a glorified gofer.
In 1978, on Wang sat down with the then 28-year-old Fred. He explained his plan to have son's Fred and later Courtney eventually take over Wang Labs. In 1980, the doctor put his son in charge of the critical R&D department. But Fred, despite being a smart and decent guy, was not his father. Finding him into the delicate, high-performance triumvirate alongside on Wang and Cunningham turned out to be a disaster.
As with many companies, Wang Labs turning point began with the products. In October 1983, Wang Labs announced 14 new products with the hope of taking on IBM. The most important of which was the Wang Professional Image Computer, armed with image processing technology to manage images in real time. Other products included the Wang Office, a software product that allowed different machines to communicate.
The market loved it and the stock soared reaching $36.50 immediately after the announcement. The stock price peaked in 1984 at $42.50. The doctor's stake was then worth north of $1.6 billion, making him the richest man in New England and a fifth richest man in America. But that would be the very top of Wang's fortunes.
The problem was that all of the October 1983 products came very late, and in some cases, years late. Fred wanted to show that he could develop products like his father and rushed out the announcements, but the delays instead badly hurt his credibility in and outside the company. And it was the wrong time for Wang to be putting out vaporware. Competition was heating up. Two years earlier, IBM released the IBM PC and it took the world by storm. Wang's PCs equipped with word processing and spreadsheet software immediately began eroding Wang's two specialized word processors and 2,200 computers.
Wang revenues kept growing, but it was all maintenance revenues for existing customers, rather than new customers buying new things. On Wang resisted the PC, he thought it would be another calculator, a future dead end commodity. Fred eventually pushed the company to build their own anyway, but without compatibility with the IBM PC's massive software ecosystem, it was dead on arrival.
The company never really recovered from its botched 1983 announcement. Cunningham, then president, came to believe that Fred could not manage the R&D division. Fred tried his best, but he lacked a doctor's touch and handling and moderating these powerful egos. In October 1984, a year after the disastrous product announcement, Dr. Wang moved Fred to run manufacturing, replacing the excellent John Cropper. Cunningham argued with this, but Wang overruled him.
The R&D department continued to turn out duds. Dead piled up as the company recklessly expanded. Wang would turn down potential mergers with Exxon's computer subsidiary and the ITT conglomerate. These mergers could have short up the company's debt position, but were rejected, because it potentially would have taken control away from the Wang family. For a very long time, Dr. Wang had seen the future, but now the doctor was passed his prime, and his loyalty to his family was taking the company down the wrong path.
In April 1985, Wang labs announced the stunning 66% quarterly profit decline. In July 1985, the respected Cunningham resigned, selling all of his stock. A magical nine-year joyride came to a smashing halt. It was the beginning of the end. Dr. Wang briefly took over for Cunningham again, but in 1987 he made Fred the company president. The company experienced unsteady profits over the next two years, laying off a thousand people.
Wang labs board of directors asked to bring in a professional manager to work with Fred. They asked five times throughout 1987. But on Wang refused every time, famously telling them, he is my son and he can do it. Losses grew throughout 1988, poisoning the company's relations with its banks. Finally in July 1989, Wang posted a $424 million annual loss, suspending dividends, and laying off more people. The stock crashed from $43 to just $5 a share.
The board became increasingly concerned about their own liability amidst all this shareholder value destruction. Also in 1989, Dr. Wang who smoked nearly his entire adult life was diagnosed with the Sophical Cancer, a very dangerous cancer. It had an 80-90% mortality rate. Finally, in August 1989, a few weeks after undergoing surgery for the cancer, on Wang had to fire his own son.
Richard Miller, a turnaround expert with no computer industry experience, was appointed president. Miller oversaw a massive $200 million asset sale in an attempt to cut down the debt, and he also laid off 2,000 more employees. And yet the company still showed a $715.9 million loss in 1990, a stunning loss considering the company had $2.5 billion in revenues that year.
Looking back on it, pinning Wang Labs' troubles entirely on Fred would be a huge mistake. Wang's failure traces back to on-Wong missing the PC revolution. The power of office software and the company's failure to find the next hit product. There were unlikely to survive this generational transition from the very beginning, few companies did, but the turmoil overhanging the company's secession certainly did not help.
In January 1990, the cancer came back with a vengeance despite the surgery and chemotherapy. Wang lost his ability to speak. He finally gave up on running the company and allowed Miller to do what had to be done. Whenever a present father in their youth, Wang spent the last months of his life with his children. His daughter remembers him writing, I love you, in big underlying letters with exclamation points after them. On a cold morning, 541 AM March 24, 1990, UnWong died alone in his room at the Massachusetts General Hospital. He was 70.
In their last conversation, Dr. Wang asked Miller to try and save Wang Labs. Whatever you do, he said, try and preserve name. I want it remembered as company founded by immigrant. Despite the acid sales and an alliance with IBM, Wang Laboratories passed into bankruptcy two years after its founder's death in 1992. It would be acquired in 1999 by the Dutch company Gettronics and renamed to Gettronics North America.