In the meantime, a new market was emerging in 1981 – citizens’ band radio (CB). This was effectively a glorified walkie-talkie which up until then was illegal in Britain because there was no allocated frequency for it. In the USA, CB radio had become very popular for people to install in their cars and trucks to communicate with each other while driving. Enthusiasts gave themselves ‘handles’, colourful names like Rubber Duck.
In Britain, the industry lobbied the government to make CB radio legal and after a lot of pressure, the government agreed. However, they allocated a frequency that was different to the USA’s which meant that instead of importing the products already being made (in the Far East) for America, the electronic circuit had to be completely redesigned. Customers were contacting me, asking whether we were going to be active in this market, and it was clear to me that as soon as there was a product available, they would buy it in volume. The first one to market was going to win.
Many Japanese suppliers were reluctant to invest in what they perceived to be the small UK market, especially bearing in mind they would have to redevelop their existing USA version. I finally found one fellow who would be prepared to make them. He told me that his company had a great relationship with Sanyo, who had embarked upon the fast-track development of a new chip for the British CB market. The first company to have a PCB ready for this chip would be the first company to be in the British market.
Things were moving very fast. In March 1981 I agreed to make a one-day trip to Japan, as crazy as that may sound. At the time, there was a British Airways Boeing 707 which landed in Moscow for refuelling, then went on to Tokyo. I jumped on a plane, landed at around 3 p.m. Japanese time and was met at the airport by Mr Shigano, the boss of the company. We immediately went to the Okura Hotel to discuss the supply of CB radios to Amstrad.
I could see this company was quite small, but to check them out thoroughly would have meant a delay we couldn’t afford. The bottom line was that he promised a delivery date which would mean we’d be first to market. I wanted to get an LC to him quickly, so he could see we were serious.
The meeting went on till about 9 p.m. and after negotiating on price and exclusivity, Mr Shigano agreed to supply me. He then dropped a bombshell. In order to meet the delivery dates, he needed to have my front panel design drawing by the following morning! He warned me that if the drawing were to be delayed for a week, then so would the shipment.
My Brooke House education kicked in. I phoned room service and asked for a pencil and ruler to be brought up. Then, on Okura Hotel notepaper, I drew up the front panel design of our new CB radio based on the dimensions Mr Shigano had given me. I had to take into account where all the knobs would poke out and where the LED display would be and design the plastic front panel accordingly. I came up with two different designs: a basic model with fewer features and another up-market model which had more knobs and lights on the front panel. I intended to buy the basic model in small quantities, simply to obtain what was known as a lead-in price.
Consumers are quite funny people. They are attracted by a lead-in price, such as £39.99, but when they arrive at the point of sale and see the up-market model for £49.99, human nature makes them enquire about the better model. The salesman in the store then explains that this is the deluxe version and, nine times out of ten, the customer buys it. This technique would prove successful in the years to come.
It was 11 p.m. and I had just about drawn the outline of the front panel. I was stuck because I had no implement to draw the circles for the knobs. The Okura Hotel sewing kit came in very handy here – the shirt buttons in the kit were proportionally the right size for my drawing (it was drawn to half scale) and so I drew around one to create the four knobs on the front panel. Shigano was very surprised at our breakfast meeting the next morning when I presented him with the drawings and told him I had produced them myself. Can you imagine explaining that?
‘How did you arrive at that design?’
‘Er, with shirt buttons, mate!’
I had taken the wind out of Shigano’s sails and I told him that now he had no excuse and could immediately start tooling the front panel. Being Japanese, he could not lose face. I then set off back to London. In the one-hour layover in Moscow I bought a set of Russian dolls as a present for Ann and the kids. This, I understood, was a typical Russian novelty. Credit to Shigano, he stuck to his word. We airfreighted in the first shipments of CB radios at great expense and hit the market in November 1981, before anyone else. This enabled us to open up some new customers, such as Rumbelows, with whom we’d not previously dealt. These were giant chain stores with hundreds of shops all over the country.
Through Ken Sladen, I’d managed to sell tower systems to Currys, but CB wasn’t his department. He told me the buyer who dealt with this was Ian Radley. On this occasion, Currys’ rude and arrogant attitude was dispensed with. As soon as I entered their headquarters and spoke to the receptionist, I was told to go up to the ninth floor to see Radley. He was hot to trot to buy CB radio and wanted to be the first in the market.
He tried it on, saying he would not buy from us unless Currys had exclusivity. Then he started bullshitting about having other suppliers who had products coming, but I knew from Shigano that we had consumed the first quantities of the Sanyo chips and that we were the only company with cargo on the way.
I told Radley that there was no chance I was giving him exclusivity and, to Dickie’s surprise, I closed my notepad, as if to say the meeting was over, and made as if I was going to stand up and leave. The guy got my body language, backed down and booked a massive order for quite a few thousand units. In fact, I had underestimated the size of the market, so unbeknown to Currys, their order was so large that they got exclusivity by virtue of the fact that I had nothing else to ship! I didn’t let Radley know that.
I asked Shigano to see if he could ramp up production. He did accommodate my wishes, though not immediately; we had to wait a few more weeks for production to increase. There was tremendous demand in the early days of CB radio. My other customers, including Rumbelows, were starting to question me, justifiably I guess, as to why I couldn’t supply them with Amstrad CB radios when they’d seen them in Currys’ stores.
I explained to them that Currys had bought my first lot and paid extra for airfreight. I was stuck between the devil and the deep blue sea – either I would have to pay an extra £3–4 per unit to airfreight them in or wait an extra five weeks for them to arrive via the sea route. Many of the customers agreed to pay an extra £5 per unit for airfreight and, looking back over the whole CB exercise, we must have airfreighted in 90 per cent of what we sold.
Like all fads, CB radio died very swiftly. We supplied the market with tens of thousands of units and the first wave of nutters scrambled to buy their CB radios. This gave the false impression that there was a gold rush on. It was another lesson learned: when dealing with big retailers like Currys, their large orders fill the pipeline and can cause confusion and create a false market as far as volume is concerned.
Come the downturn in CB radio by the summer of 1982, Currys demonstrated just how mercenary retailers are. They simply pulled the plug on taking more goods, despite the fact that they had given me firm purchase orders! The options open to me were to sue them for breach of contract or swallow it on the basis that you don’t want to alienate a customer for life. This shoddy treatment by Currys taught me that an order from a big chain retailer is not worth the paper it’s printed on. You can only consider that you’ve had an order when you’ve delivered and been paid.
Currys was a good barometer. Clearly they had seen their sales drop dramatically and the buyer’s alarm call to me indicated that we should give up CB radio quickly. I instructed Dickie Mould to start dumping them in the marketplace at just above our cost price, which was the right decision. Some of the other customers didn’t have sophisticated enough radar to see that the market was dying, so when we slashed the price of our CB radio, they thought their boat had come in, only to find they were well and truly lumbered.
We all played around with the CB radio sets, installing them in our cars and giving ourselves handles. I also arranged a base station at home for my two boys to play with – they would speak to people driving by. It was fun, but a classic example of a passing fad. The speed to market and realistic acceptance of when the market was dead was a classic case of get in, make a killing, get out, move on. I know I might sound a bit of a bigshot talking about pulling off this coup, but at the time I had no idea it would be a passing craze. It taught me a big lesson.
