It's interesting that the founders of FedEx discovered and filled a
> market niche for overnight delivery of things that can't be faxed.
Someone earlier commented on Western Union's early fax rates, in connection with my comment that for many things the cost was not a factor, that cost is always a factor. In a technical sense he is right, but in the context of the W.U. fax rates as posted they were not prohibitive for many legal documents, plans, etc.
Your comment about FedEx is very relevant. The "founders" of FedEx is well known...Fred Smith, who first proposed his plan for FedEx in s college paper. His professor gave him a low grade, saying is was an interesting concept but of no practical value because there would never be sufficient demand, at the rates that would have to be charged, to give it commercizl viabiliy.
When I was with Southwestern Bell in the early days of wide area calling arrangements, I recall a small town near Austin that had been pleading for Extended Area service with Austin. The local managers finally got Area Headquarters to do a full enginnering study with proposed rates. The local managers thought that the proposed rates were so high as to be prohibitive, but when they presented them to the town council, the councilmen and -women were not aghast and one of the councilwomen said she'd do a personal survey of each subscriber. She reported back before long that SWBT would lose two aubscribers at the proposed rates but five other non-subscribers would take the service at the proposed rates.
Our views of what would be a prohibitive cost often do not reflect the actual views and needs of customers, as this example and Fred Smith's clearly demonstrate.
Admittedly there's much we don't know about the WU fax service, but it does appear there was inadequate public demand to make it viable.
Remember, it wasn't only the rates, but the limited origin and destination options, the need for pickup and delivery to a single central site, and let's not forget alternative methods to get materials to a distant place. I don't know how expensive an individual fax machine was, but I can't help but suspect if WU offered the service to many more cities nationwide it would've been more succesful. Also, handling a larger document, while admittedly expensive, would've been attractive for sending plans instead of cutting them up.
Remember, WU's original telegram service was successful since they used railroad stations as small town agents, and had branch offices in larger cities.
In 1960 old industrial cities were still quite busy, and places like Philadelphia, Boston, Baltimore, Pittsburgh, Detroit, St. Louis should've been part of the fax network. Newer sunbelt cities like Houston and Atlanta at a minimum should've been included too.
We don't know what was specifically proposed in the paper. Again, FedEx was not a new idea, but a revival of a long existing service provided by carriers. We also don't know what other issues were involved in providing the service.
As to the price, remember that FedEx's price in constant dollars was far below what WU charged but the service was far more convenient and comprehensive.
Just out of curiosity, what were the rates, miles covered, savings in tolls, and year? What were the specific reasons that local managers thought the proposed rates were too high? Were marketing people (as opposed to technical people) consulted?
I don't agree with that.
Every business has to weigh its costs against its revenues. A proposed cost must be weighed against other costs saved or new revenues received. A new way of doing business is compared against existing methods to see what benefits are gained for what costs. Some things may be desirable but just too expensive. It took _decades_ between the time Touch Tone service was first introduce and the time almost all businesses found it cost-justified to have it; and part of the reason was that the cost of it went down.
Likewise for consumers. As a college student with friends in many different places, my long distance charges were high. I looked into WATS and FX lines available at that time but they were simply too expensive--I didn't make that many calls to justify their high costs, although not worrying about the "meter running" would've been wonderful. Even the home metro area package offered back then was too expensive. That is, back then. Today, my home national "WATS" line is dirt cheap and even though I don't make as many toll calls, certainly justified.
In terms of telecom services, let's not forget how businesses used them 40 years ago as compared to today with much cheaper rates. Back then companies were _very_ sensitive about telecom prices. Only authorized employees could make outside calls. Toll calls were strictly limited and carefully logged. Payphones were available and mandated for personal calls. Companies ordered only features that they needed and no more; for example, key systems that didn't have optional line lamps. When advanced-feature PBXs and key systems came out many companies stuck with cheaper basic systems. As previously mentioned, things like photocopier use was strictly regulated.
The earliest computers were too expensive except for a handful of highly specialized users, most of whom had Defense Dept money to help out. It took several technological improvements through the 1950s to lower the cost of hardware enough to broaden interest beyond a mere handful. Certainly bsuinesses and engineers wanted them for what they could do, but they were just too expensive to justify. IBM's biggest growth in the 1950s was not electronic computers, but old fashioned punched card tabulating machines which did the job much more cheaply. When IBM's computers could've been literally been counted on hands and toes, IBM sold _thousands_ of punched card electronic calculating system as a poor man's computer (the 604, also the CPC).
The reason it was successful was that there was no competition to telegrams if you needed a message delivered quickly. Until about 1960 a long distance phone call was more expensive than a telegram, and a lot of people still didn't have phones so you couldn't call them even if you wanted to. When long distance rates dropped below telegram rates and residential phones became cheap enough that everyone had them, WU was doomed.
Nobody before FedEx offered guaranteed overnight delivery to distant places. The model of flying everything to Memphis and sorting it in the middle of the night was rather different from anything Railway Express or the PO offered. Apparently it was sort of inspired by the way the French post office works.
ObTelecom: By the way, Fred Smith said the reason that ZapMail, their fax network, failed was that it depended on a large satellite that was never launched due to the Challenger explosion. The plan was to put tiny satellite dishes at customer sites and bypass the telco.
But part of this was due to a mind set at IBM that punched card data processing was adequate for every business need.
"...if it should ever turn out that the basic logics of a machine designed for the numerical solution of differential equations coincide with the logics of a machine intended to make bills for a department store, I would regard this as the most amazing coincidence that I have ever encountered." Howard Aiken, 1956
IBM was practically dragged into the computer business when, early in the Korean war, the management asked the government what the company could do to aid the war effort and the response came back, primarily from the aerospace companies, that they needed electronic computers. IBM was only a little worried when Univac proposed doing all the data storage on magnetic tapes. But IBM did undertake a study of a tape processing machine, and found that there was a market for it. IBM also learned quickly when presented with the problem of inventory control, realizing that this was an application which punched card didn't handle well and that something closer to random access was needed. They developed magnetic disk storage.
That "mindset" was not cast in stone. As you pointed out, IBM was experimenting with computers in the late 1940s.
But in a sense that statement was correct--at least in the late 1940s and early 1950s. Business data processing was normally very little arithemetic and lots of moving data around. Computers of that era were focused on high speed binary arithmetic to solve complex problems, and they weren't very good on moving data around. Indeed, IBM's 650 initially didn't even support alpha, that was added as an afterthought. Business computing required _reliable_ tape storage and that took much time to perfect.
A very true statement, not achieved until System/360 (celebrating its
45th annivesary). Indeed, in the early PC days sci/eng users had to buy a separate math co-processor chip. (When did that become standard, with the 486?)
As you say, IBM did have various computers under development. IBM's
1948 SSEC, while perhaps a "spite" machine and not fully electronic, introduced many computer innovations and yielded valuable patents and experience.
IBM did panic when Univac came out. But the Univac I had many limitations despite their superior engineering (coupled with ERA's engineering). Once IBM got into the game things took off.
My original point in this discussion was that the vast majority of businesses simply could not afford a computer in the 1950s no matter how much they wanted one, and had to make do with punched card machines. This was also true in the 1960s, until IBM came out with its System/3 and other vendors developed mini computers.
Just because there's a very useful tool out there does not mean a business will jump at the chance to use if it's not cost justified. I suspect that was the case with WU's public fax service.
Western Union recognized in the 1950s that the individual telegram was doomed per above and working hard to develop alternative services. One area was private networks for industry and the government. Another was new services such as the fax we're discussing.
WU also tried its hand a private line voice services in the 1960s. As best as I can tell, that didn't have many customers. I have no idea of the pricing (I'd love to know WU's charges relative to AT&T's charges at the same time for the same service.). Also, I suspect the availability of service was limited to major cities, so if you wanted a voice line to Cedar Rapids, Iowa, you were out of luck.
Also, I suspect the service was limited to a few telephone sets. That is, a businessman might have a WU phone on his desk. If he happened to be away from his desk, he'd have to be located throughout the plant and brought back to his office to take a call (or make a call for that matter). That's inconvenient.
A Bell private line would terminate on the company switchboard and be routable. (Certain FX lines used special heavy cords for higher voltages and would only connect to certain extensions).
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