Control Data Corporation
Norris, who were dissatisfied with management at Sperry Rand, they believed that technical experts who understood where the field was headed should be the directors of high-technology companies. Cautious of potential backlash from Sperry Rand, former ERA workers Willis K. Drake and Arnold Ryden used a little known Minnesota law that permitted stock sales only to Minnesota residents without any filing to the Securities and Exchange Commission, essentially keeping the company secret from Univac until it was already in business. Norris left Univac as CDC was just founded, and five weeks later they announced that he would be the president. Sperry Rand was upset, as expected, and viewed this as poaching their talent and employees. They filed lawsuits against the new firm alleging intellectual property theft, but these ultimately didn't go anywhere, as is often the case with lawsuits of parent companies against spinoffs. In November of 1957, CDC bought Cedar Engineering, a machine-shop, and itself a spinoff of Honeywell, that made motors, servos, and actuators for aircraft, and their new acquisition brought with them all its existing revenues, receivables, 165 employees, and design and manufacturing space.
Cray headed the engineering and design of Control Data, and Norris provided strong executive leadership. The first year of life for Control Data was touch and go, with so little money that Norris slashed paychecks including his own to reserve operating funds. In about 1958, after receiving only a few of the large government contracts they had been expecting to survive on, Seymour Cray suggested that they try to build a computer. The first machine that they brought to the market was the all-transistor CDC 1604. The CDC 6600 and its successor the CDC 7600 are widely hailed as the first supercomputers and sold for premium prices (100 copies of the 6600 at about $7 million each). Thanks in part to these supercomputers, CDC was surpassing annual revenues over $1 billion by 1969, but much more than just these two models contributed to that number. The manufacturing of tape drives and memory units at Cedar Engineering was one of the main sources that financed the development and testing of each generation of high-end computers.
In 1960, Control Data opened its new industrial park in the southern suburb of Bloomington, allowing them to hire 1000 new employees, and a year later when their stock prices went up to $101 a share, they opened another suburban facility in Bloomington-Edina where they filled Original Equipment Manufacture agreements (essentially producing component parts that a company like Honeywell would rebrand and package as a part of a larger system) for products such as magnetic tape drives, high-speed paper tape readers, magnetic tape transports, line printers, servomotor tachometers, card readers, data terminals, card punches, disk drives, magnetic tape certifiers, optical page readers, and electronic scales (these are products just from 1960-66). These peripheral products became a major corporate division not only because it was easy and profitable to make mass quantities of products that CDC already needed (and sold at prices that drastically undercut IBM while remaining compatible with IBM technologies and plug compatible products from other competitors), but also because of the rise of minicomputers.
The CDC 160 and 160A were early instances of low-priced minicomputers (selling for $60,000, compared with DEC's PDP-8 which sold for a shockingly low $18,000). In the 1960s the computer industry was still mainly focused on large mainframe computers, so minicomputers built around low-price solid-state electronics and bottom-end technical specifications, were seen as niche, though they eventually wound up in such diverse jobs as office and laboratory work, theatrical lighting, agriculture, and medicine. Minicomputers created a huge demand for mini- peripheral products, which CDC produced at their new factory in Omaha. They also designed the Storage Module Drive (SMD) as a simpler alternative to the IBM Winchester disk drive (SMD was so good and worked for the minicomputer industry so well that it brought in $600 million in corporate revenue). The success of peripheral products manufacturing even changed the computer production method, which had before been more of a craft, each machine basically hand built from a kit, rather than mass produced, which led to orders backing up. By 1960, CDC had set up its first Service Center, by 1963 had created the Data Centers Division, and had two dozen data or service centers around the country, and more overseas.
"Initially, computer services evolved organically from computer sales. Every new sale of a large computer triggered a small raft of hiring with a sales representative being assigned to that site for follow-up business. For each of these million-dollar machines, there was an extensive corporate training and post-sales support."
CDC's leading customers including Lockheed and Oak Ridge, formed an active user group (similar to IBM's Share user group) that created an entirely new operating system called the Co-op Monitor, a unified set of interfaces that you could attach new things to as needed. In 1968, they created Cybernet, a network of seven CDC 6600s in Palo Alto, Los Angeles, Houston, Minneapolis, Washington, New York, and Boston, connected by the company's communication lines, and supported by other midline CDC 3300s. ARPANET, the forerunner to the Internet, had 18 identifiable network centers in 1971, compared with Cybernet's 20. Services as a division grew even more after the acquisition of IBM's Service Bureau through the pretrial settlement of a lawsuit filed by Norris against IBM for monopolistic practices.
In 1967, amid racial riots in Detroit and Newark, Control Data announced that it would be opening a new factory in Minneapolis' northside, which had suffered from white flight and was economically depressed, for which Senator Walter Mondale put in $1 million from the Department of Labor to fund job training. The opening of the northside factory marked a change in the way that Bill Norris ran Control Data, shifting away from the "hard-headed economics" of caring only about the bottom line and towards trying to solve "society's unmet needs" through their Rural Venture, City Venture, and Fair Break initiatives. However, the vast majority of their employees remained in the suburban plants in Bloomington, Edina, St. Louis Park, Arden Hills, and Roseville. Employment peaked between 1981-84 at more than 25,000 fulltime workers, but they hit hard times in the 1990's, seeing major upheaval which some have blamed on Norris's extensive social activism and focus on the innovative PLATO education system. By this point Control Data was a large and diverse corporation, with each branch needing specialized management that may have proved to be just too much to handle. The different divisions of the company spun-off, were sold, or were absorbed by other companies.