Computer Chronicles Revisited 67 — The Boston Computer Exchange

On August 12, 1991, the Boston Computer Exchange (BCE) held an “Irish wake” for the original IBM Personal Computer. The 10-year-old PC had finally reached the point where it had no resale value, a BCE manager claimed, so it was now time to mark the machine’s “transition from a salable commodity to a donation item.”

The BCE was one of the first used computer dealers in the United States. Even jumping back five years to 1986, Computer Chronicles had already taken notice of the growing market for second hand computers. Indeed, BCE’s co-founder was among the guests on this October 1986 episode devoted to the topic.

Stewart Cheifet and Gary Killdal opened the program by looking through the classified ads in a local newspaper. Cheifet pointed to an ad for a used 1983 IBM PC XT selling for $2,495. Cheifet looked up that model in The Brown Book, a Blue Book-style guide for used computers, which suggested the machine’s value was closer to $2,380. Cheifet asked Kildall how nervous someone should be about buying a used computer. Kildall quipped he was probably more nervous about buying a new computer given the rapid advances in microprocessor speeds. You might actually be safer buying a used machine.

Ich Bin Ein San Mateo Computer Swap Meet Patron!

Wendy Woods presented her first remote segment from a computer “swap meet” held in San Mateo, California. Woods said these swap meets were notable for their eclectic mix of merchandise, new and used, from printer ribbons to complete systems. But despite their homegrown appearance, swap meets were shaped by the volatile computer market, and dropping prices shifted the balance between new and used gear.

Jim O’Donnell of Microshows, the company that produced this swap meet, told Woods that about 90 percent of the people at the event sold new equipment, with only 10 percent selling used. Three years ago, there were many more used equipment sellers. But as the prices started to drop, the used dealers started selling more lower-end but still new equipment.

Woods added that the changing fortunes of hardware manufacturers left a lot of early computers out in the cold without any software or support. For those “orphaned” computer users, computer trade fairs and swap meets were one way to find help. O’Donnell said it was an especially valuable place to find software vendors. He said this particular swap meet featured three wholesale software dealers who bought out-of-date inventory and sold it at the show.

As for individual vendors of used equipment, Woods said, swap meets presented an opportunity to sell even a small collection of gear to a large group of customers. O’Donnell said these vendors could see 4,000 to 5,000 people in one day looking to buy, as opposed to a couple of hundred people coming to their stores. He added that a swap meet was also a good place to get rid of inventory that sellers wanted to close out.

Even with the shift in sales created by dropping computer prices, Woods said, price brokers estimated that up to 40 percent of the installed base would be resold in the next two years–i.e., as more people bought computers, more used computers became available.

Was It Better to Buy a Used Computer from a Store or a Classified Ad?

J. Mark Couch and Stan Politi joined Cheifet and Kildall for the first studio round table. Couch was president of Interstate Computer Bank, a used computer store in Mountain View, California. Politi was the publisher of Computer Currents, a free magazine that listed used computer classified ads.

Kildall opened by asking if customers were generally satisfied with used computers. Couch said there were some “horror stories,” but for the most part people were happy with buying used computers. Cheifet asked what type of people looked for used computers as opposed to new machines. Couch said people buying a second computer typically looked for used computers. These users weren’t afraid of computers, they knew what they were looking for, and they knew how to check them out.

Kildall asked about the most popular computers sold in the used market. Couch said there were a lot of sales of the Apple II+ and IIe models as well as IBM PCs. Cheifet asked Politi about the used models advertised for sale in his magazine. Politi said the most popular were the IBM PCs and clones. He said it was common to see bunches of the same products–such as Compaqs or printers–come in at one time. That made it hard to figure out trends.

Chiefet asked how easy it was to sell a used computer through the classifieds. Did you have to run an ad for a couple of months or just one week? Politi said it usually only took placing an ad once. It was seldom that anybody came back to advertise more than once, as they were able to sell their item quickly.

Kildall asked if people were using methods other than newspaper classifieds or going through stores to sell used computers, such as online systems? Politi said some people used bulletin board systems or put a used machine on a consignment table at a swap meet. It depended on how much time a seller was willing to take.

Kildall asked, a bit nervously, if people were also selling used software. Politi said there was some used software sold. Cheifet quipped, “I wonder where they’re getting it?” (I assume the implication here was that people were selling “pirated” copies of software.)

Cheifet asked Couch and Politi to compare their respective businesses–selling used computers through a middleman versus classified ads–from the perspective of a buyer. What were the advantages of each approach? Couch said they dealt with the buyer one-on-one and provided a warranty on each machine sold. His store had a location where people could come back for help or to purchase other products. Cheifet asked if a customer ended up paying more buying a used computer through Couch’s store. Couch said it depended.

Kildall asked what a used machine like the one on the table–an original IBM PC with a color monitor from Couch’s store–would cost. Couch said this machine sold for about $1,300. A similar new machine would run about $1,650.

Cheifet asked Politi if people did save money buying through classified ads as opposed to a store. Politi said not necessarily. He noted that from a seller’s perspective, going to a reseller like Couch meant you would get your cash very quickly. You didn’t have to take the time to sell it yourself.

Cheifet asked Couch where he got his used computers from. Couch said there were a number of sources. Some were individuals looking to sell their personal machines. They also dealt with larger companies getting rid of computers and upgrading. There were also other retailers looking to get rid of overstocked products.

Kildall noted that many customers were concerned about whether a used computer was in good shape. With that segue, he asked Couch to demonstrate a program called Interrogator by Dysan Corporation, on the previously mentioned IBM PC. Couch explained that Interrogator allowed a user to check the disk drives on the PC for possible faults without opening up the machine. Couch ran the program and checked both of the drives on the PC. (Kildall quipped he always seemed to end up with computers that had one disk drive that didn’t quite work right.)

Kildall asked what other things a customer should look for before buying a used machine. Couch said you should always try to boot the machine, as that performs a memory check and shows that it will read a DOS disk. Cheifet asked Couch to demonstrate the memory check.

Chiefet turned back to Politi and asked him about the hardest machines to sell. What were the “dogs” that people couldn’t sell? Politi said computers based on the old S-100 architecture and the “plain, vanilla CP/M machines” that nobody wanted anymore. (There was some laughter around the table at Kildall’s expense.) He added that people tended to sell not because they were looking to get out of computers, but rather to upgrade to a better system.

Cheifet asked if there was much of a market for lower-end machines like the Commodore and Atari 8-bit computers. Politi said he didn’t see many ads for those. Many people ended up giving such machines away to charity and taking a tax-deduction instead. He noted there were a lot of nonprofit groups advertising in Computer Currents looking for such donations.

The group turned its attention back to Couch, who was still running that memory test. He explained the test produced a “201” error, indicating a bad RAM chip. The program gave the location of the failed chip. Couch then pulled out another demo motherboard to show the location. Kildall asked how much it would cost to fix the problem. Couch said it only cost about $1 to buy a new RAM chip.

Orphaned Osbornes Continued to Find User Support

Wendy Woods presented her second remote segment, this time covering a meeting of a users group for owners of Osborne computers. Woods noted that Osbornes were now considered “orphaned” computers, i.e. machines that were no longer made by companies that no longer existed. So when an orphaned machine like the Osborne Executive broke down, you had to know how to fix it yourself or join a users group like the San Mateo chapter of First Osborne Group (FOG).

Woods said that FOG had 135 U.S. and 22 foreign chapters. Each month, members gathered to hear speakers, make their own copies of public domain software, exchange information, and get help. This allowed users to get help with software and hardware that could not be found anywhere else. In the San Mateo FOG, two members had businesses repairing Osbornes and they brought their tools to the meeting. Jim Switz, a member of the San Mateo FOG, told Woods that when he started attending the group, he got all of his questions answered within the first couple of meetings. Eventually, he started answering other members’ questions, so you paid back what was given to you.

Woods said that roughly 250,000 Osborne computers were sold prior to the company’s bankruptcy in 1983. Since then, the user groups had kept the machine alive. Ron Herman, an Osborne owner and FOG member, told Woods that just because the companies went out of business, it didn’t mean their products weren’t still out there doing a good job. Herman noted that he’d been using his Osborne 12 hours a day, 7 days a week, for 6 years and the machine had never given him any trouble. So he planned to keep the Osborne until it died.

An Online “Virtual Inventory” of Used Machines

Alex Randall and Brad Ruedig joined Cheifet and Kildall for the next segment. Randall was the founder of the Boston Computer Exchange. Ruedig was a vice president with C.A.S. Computers, a chain of four used computer stores in Chicago.

Kildall asked Randall to explain how his company’s service differed from the retail or classified approaches to selling used computers discussed during the prior segment. Randall said the Boston Computer Exchange (BCE) was an online service available all over the world. People could log onto BCE’s database and do a search. He then provided a demo using a computer in the studio to search BCE for a used IBM PC-AT. The software asked for the highest price the user was willing to pay. Randall entered “$5,000.” This search produced seven results. Randall pulled up the first search result, a July 31, 1986, listing for a 10-month-old IBM PC-AT with 512 KB of RAM, 20 MB hard disk, color monitor, and printer, selling for $3,400.

Kildall asked how lower-priced PC clones were affecting the used computer market. Randall said the used market always stayed just a little bit under whatever the current IBM prices were. A new clone typically sold for the same price as a used IBM PC model, which was about 20 to 30 percent below list price.

Kildall asked Ruedig what a customer should look for–or avoid–when buying a used computer. Ruedig said first and foremost, it was important to make sure that a used system still included all of the original hardware and software manuals. It was difficult to purchase this documentation outside of buying the computer. You also wanted to check the cables were complete and had no burns on them–especially printer cables, which can cost between $30 and $50 to replace. You also wanted to copy files from one disk drive to another, which tested their reading and writing abilities.

Turning back to Randall, Cheifet asked about the size of BCE’s database. Randall said they kept about 1,000 machines on hand at all times in a “virtual inventory.” Cheifet asked about the cost of the service. Randall said the buyers paid nothing. The sellers paid a 10 percent commission. So there was no cost to buy or list equipment.

Cheifet asked if there were any practical concerns with buying from a national database–e.g., a buyer in San Francisco couldn’t physically inspect or test a machine sold from Boston. Randall said BCE acted as a neutral intermediary who made sure both the buyer and seller were happy.

Somewhat repeating the previous segment, Cheifet asked Ruedig to run a diagnostic disk program included with a Leading Edge PC clone in the studio. (Leading Edge was the presenting sponsor of Chronicles this season.) Ruedig ran a keyboard diagnostic that tested all of the keys on the keyboard. He then ran another test for the monochrome monitor, which demonstrated the 80-column display and tested various graphics modes.

Cheifet asked if there was a “generic” diagnostic diskette available. Ruedig said no, diagnostic disks were typically made for specific computers. Sometimes only service facilities in computer stores had access to these disks. But companies like Leading Edge provided their own diagnostic diskettes with the computer. Ruedig added that if you bought a used computer with a hard disk drive, it was best to let a service organization take a look at it beforehand.

Cheifet asked Randall whether buying a used computer was more risky than buying a new computer. Randall said it was actually less risky. New equipment tended to fail because the chips hadn’t burned in yet. With older equipment, the chips had a chance to burn in, so you knew that the electronics were safer. There was still a potential issue with mechanical equipment, such as disk drives and printer heads, but overall he thought used machines were very sound. Kildall followed up, asking whether peripherals like printers were subject to more wear and tear. Randall said they were due to their mechanical nature and thus required more testing.

Was There a Viable Used Market Without IBM Support?

For the final segment, George Morrow showed up to throw cold water on the whole subject of buying used computers. He said that for a good used computer market to exist, you had to have lots of customers, and we didn’t have that yet. It wasn’t like the market for used cars. You don’t have manufacturers that support their used computers. He’d believe in the used computer market when a company like IBM started accepting trade-ins. On the other hand, he noted there was a durable market for used mainframes and large tape drives.

Kildall repeated his earlier question about the effect of lower-price PC clones on the used market. Morrow said the clones had to be hurting the used market. He said the clone makers typically priced their machines 20 to 30 percent under IBM and offered more features. So if a used computer was the same price as an IBM, so what? You could buy a better clone for the same price.

Apple’s Bottom Line Improved Despite IIgs Shipping Delays

Stewart Cheifet presented this week’s “Random Access,” which was recorded in October 1986.

Randall Tried to Bring 1960s Ideals to the 1980s/1990s Used Computer Market

Perhaps the most noteworthy guest from this episode was Alex Randall–formally Alexander Randall, 5th–who founded the Boston Computer Exchange (BCE) with his wife, Cameron Hall. Randall, a Quaker who had been active in the movement against the Vietnam War while a student at Princeton University, told Jane Meredith Adams of the Boston Globe in October 1985 that he wanted to “make 1960s ideals work in a 1980s world” and that “[t]he answer was computers.”

According to Adams, Randall and Hall started BCE sometime in 1981 or 1982, although Massachusetts records indicate they did not formally incorporate the business until January 1985. Randall served as president with Hall as vice president of finance. One of Randall’s cousins oversaw operations. In 1984, Randall said over $1 million in used computers were traded on BCE.

Essentially, BCE was kind of an early version of eBay, although the process still involved quite a bit of human intervention, as Peter McWilliams of Universal Press Syndicate explained in a May 1990 column:

If you’re a seller, you call BCE and give your listing, giving such information as your model, its age, and what legitimate software comes with it. The company then posts a listing in its databank as well as on CompuServe and a few other information services. (On CompuServe, type “GO BCE.”) A listing goes for $25. BCE can appraise your computer, too.

If you want to buy a used computer, you call BCE and the company arranges for you to pay for it through an escrow service. The seller then sends you your computer. You have 48 hours to try it out and make sure it is what the seller says it is. If it’s not, you can send it back and get your money back from escrow, or you barter with the seller and get an adjustment price.

At the end of 48 hours, if everything is fine, the seller gets the money out of escrow, minus a 10 percent commission to BCE and $25 to the escrow company.

BCE started working with CompuServe in November 1986, shortly after Randall appeared on Chronicles. The company also later published a written “index”–known as the BoCoEx–that tracked prices for popular used computers, much like a listing of stock quotes. Wendy Woods’ Newsbytes actually published BCE’s weekly table of used computer prices from 1989 to 1993. And in 1991, Randall launched an unsuccessful effort to sell “seats” on the exchange, which offered third-party brokers access to BCE’s database for $20,000 plus a 2 percent commission on all sales.

It was also during the early 1990s that Randall expanded his ambitions internationally towards the collapsing Soviet Union. In August 1990, he co-founded the East West Education Development Foundation with Patrick McGovern, the chairman of computer publishing giant IDG. The foundation provided used computers and related equipment to people in the Soviet Union and other countries in eastern Europe. Randall told Newsbytes in September 1990 that in the absence of hard currency, he sold several used computers to Moscow’s Academy of Sciences in exchange for a “hard disk with a layer of diamond on it.” Randall subsequently tried peddling these supposedly “indestructible” diamond hard disks at the fall 1990 COMDEX show in Las Vegas to no avail. The foundation later shifted its focus to corporate donations of discontinued and abandoned computer systems.

In September 1993, Randall added talk radio personality to his list of jobs, co-hosting a two-hour weekly syndicated program called “The Computer Exchange” on Boston’s WSSH. By this point Randall’s role at BCE had diminished. In 1990, BCE signed an affiliate agreement with ValCom, a Nebraska-based chain of 275 computer stores, which accepted used computer trade-ins based on the BoCoEx index. In 1991, ValCom merged with Inacom Computer Centers to form InaCom Corporation, which in turn acquired an 80 percent stake in BCE. Randall, who continued to own the remaining 20 percent with Hall, officially left the company in July 1994.

At the time, Randall said he planned to devote himself full-time to the work of the East West foundation. But by the summer of 1995, he’d left his position there as well and moved to the U.S. Virgin Islands. Randall told a Princeton alumni newsletter in 1998, “I got tired of law suits, I got tired of three-piece suits, and I got tired of snow suits.” So he decided to semi-retire and focus on spending more time with his wife and three young children. Sadly, six months after the family moved to the Virgin Islands, Cameron Hall was diagnosed with incurable lymphoma. In recent years, Randall has worked primarily as a teacher, serving as an adjunct professor at the University of the Virgin Islands.

The Boston Computer Exchange’s business essentially disappeared into InaCom, which at one point was the third-largest computer distributor in the United States, according to FundingUniverse. BCE continued to exist, at least on paper, until the early 2000s. By that point, InaCom was in the midst of lengthy bankruptcy proceedings in Delaware. The bankruptcy court formally dissolved BCE in March 2004. As for the East West foundation, it stopped filing corporate reports with Massachusetts authorities in 1999.

Notes from the Random Access File