Datapoint

Datapoint Corporation
Company type	Public (after 1969 IPO)
Industry	Computer hardware, computer networking
Predecessor	Computer Terminal Corporation (CTC)
Founded	July 1, 1968; 58 years ago in San Antonio, Texas, United States
Founder	Phil Ray, Gus Roche
Fate	Decline and downsizing in the 1980s
Headquarters	San Antonio, United States
Area served	Worldwide
Key people	Phil Ray (founder), Gus Roche (founder), Victor Poor (engineer), Harry Pyle (engineer), Jonathan Schmidt (engineer), Harold O'Kelley (chairman)
Products	Computer terminals (Datapoint 3300, Datapoint 2200), ARCnet LAN technology, PL/B programming language, DOS and RMS operating systems, VISTA-PC series computers, DX200 video server

Datapoint Corporation, initially known as Computer Terminal Corporation (CTC), was established in July 1968 in San Antonio, Texas, by entrepreneurs Phil Ray and Gus Roche. The firm’s first products were computer terminals intended to replace the loud Teletype devices commonly used with time sharing systems.

Background

During the mid-1960s, engineers Phil Ray and Austin O. "Gus" Roche were employed at General Dynamics Dynatronic Division, working on a NASA computing contract related to the Apollo programme. Observing the drawbacks of large mainframe computers paired with noisy Teletype terminals, they sought to create a more compact and quieter input device utilizing a television set as a display, inspired by guidance from a University of Texas instructor.

Early history

After obtaining financial backing from local investors, Ray and Roche founded Computer Terminal Corporation in July 1968. They combined a novel Texas Instruments integrated circuit with industrial design expertise sourced from New York City to develop three prototypes of the Datapoint 3300, named in homage to the well-known Teletype Model 33. The product debuted successfully at the 1968 computer exhibition, attracting substantial orders.

With limited production capabilities and capital constraints, the company raised US$4 million through an initial public offering (IPO) in October 1969. This capital injection allowed them to temporarily outsource manufacturing to various contractors before setting up their own production facility. Datapoint procured chips from both TI and Intel, leading to significant outstanding supplier debts.

The Datapoint 3300 enjoyed robust sales for several years and was later marketed under different names such as the DEC VT06 and HP 2600A, broadening its commercial reach.

Datapoint 2200 and the Intel 8008

Following the $4 million capital raise in an August 1969 IPO—with shares initially priced at $8 and climbing to $45 by August 1970—founders Phil Ray and Gus Roche aimed to develop a more sophisticated terminal. They recruited engineers Victor Poor, Harry Pyle, and Jonathan Schmidt to design the Datapoint 2200, which some consider among the earliest personal computers.

During Thanksgiving of 1969, Poor and Pyle crafted the processor’s instruction set architecture, enabling Ray and Roche to build the programmable 2200 terminal. The original CPU employed a serial architecture constructed from standard TTL logic components and Intel shift registers for memory functions.

In December 1969, Poor joined CTC as Technical Director, overseeing Pyle’s team and supporting Schmidt’s academic pursuits. Nonetheless, CTC questioned whether their CPU design goals could be achieved using discrete TTL chips alone. Consequently, Ray and Roche explored implementing their architecture on a microprocessor chip, with Poor and Pyle estimating development expenses around $100,000.

Ray and Roche met with Intel President Robert Noyce and Texas Instruments’ President, presenting their microprocessor design on postcards while proposing that whichever company first produced a chip-based computer would waive Datapoint’s outstanding invoice—a strategic move motivated by large supplier debts. Though initially hesitant, Noyce consented.

This collaboration led Intel engineers Ted Hoff and Stan Mazor to develop the Intel 8008 microprocessor. However, Datapoint ultimately declined the 8008 due to performance shortcomings and missed delivery deadlines, opting instead to launch the 2200 using conventional SSI/MSI chip technology. Datapoint continued manufacturing processors for future models such as the Datapoint 6600.

The instruction set architecture developed by CTC directly influenced Intel’s x86 processors along with AMD compatibles, significantly impacting modern computing. The 2200 also featured an optional Shugart 8" floppy disk drive—the first commercial computer to offer this storage medium.

The success of the 2200 led CTC to rebrand itself as Datapoint Corp. Victor Poor played a key role in creating ARCNET, the first commercial LAN card that enabled distributed processing among connected terminals across global business environments. Although ARCNET was eventually eclipsed by IBM’s Token Ring and other technologies, Datapoint provided Token Ring LAN support for Tandy’s TRS-80 systems.

Jonathan Schmidt developed supporting communications software for these networks. Following John Phil Ray’s passing, his widow Brenda Ray Coffee was deposed during litigation involving TI and Intel over claims related to microprocessor invention rights.

Boom phase: 1973-1980

Although the 2200 model achieved commercial success, the company encountered difficulties in managing its finances and production processes. After evaluating various alternatives, founders Ray and Roche obtained funding from TRW; however, TRW's president retracted from a comprehensive agreement due to conflicts with key client IBM, ultimately agreeing only to overseas manufacturing rights. Alongside institutional share offerings, these efforts generated $7 million for developing new product lines.

A financial audit uncovered underlying problems, prompting the departure of chairman Gerald Mazur and the appointment of Harold O'Kelley, an engineering-experienced former vice president at Harris Corporation. O'Kelley renegotiated the TRW arrangement, limiting TRW's role to marketing outside North America without manufacturing privileges. Subsequently, he secured $8 million through a Wall Street-supported public stock offering with the objective of expanding sales from $18 million to $100 million within five years. Under O'Kelley's guidance, annual revenue increased by 40% between 1973 and 1981, exceeding $100 million by 1977 and reaching $450 million by 1981.

This expansion was fueled by innovations from Ray, Roche, Poor, and Pyle, such as Datashare—a terminal communication system operating independently of mainframe computers—and a 1976 product that directed calls via the most economical telephone lines, facilitating liberalization in the US telecommunications market following AT&T's breakup. Datapoint also introduced software for telephone directories, word processing applications, and electronic mail services.

In March 1977, Datapoint acquired Data Disc, a pioneering hard disk manufacturer, for $2 million.

Significant inventions included ARCnet (1977), one of the earliest token-passing local area network protocols, and the PL/B programming language (initially called "Databus"), which ran on the Datashare multi-user interpreter. Subsequent advancements encompassed the Mapped Intelligent Disc System (MIDS), designed to connect terminals to mass storage devices, as well as proprietary operating systems DOS and RMS (Resource Management System), launched alongside the 8800 processor in 1980 to enable networked resource sharing and scalable application development. Eventually, Datapoint transitioned its hardware platforms to Intel 386 processors.

ARCnet was temporarily succeeded by ARCnetplus, which offered 20 Mbit/s speeds and LiteLink infrared connectivity; however, it captured limited market share compared to emerging 100 Mbit/s Ethernet technology despite benefits such as simpler cabling and easier configuration.

Datapoint also held a patent for MINX (Multimedia Information Network eXchange), an early picture-in-picture videoconferencing system used in video visitation and arraignment settings. The company reportedly generated more revenue through patent litigation than from product sales. MINX operated on IBM-compatible PCs or Datapoint's VISTA-PC series—Intel 80186-based MS-DOS computers running PRO-VISTA office automation integrated with MINX within an RMS environment.

In pursuit of expanding into the Unix market, Datapoint collaborated with Charles River Data Systems in 1984 and reinvigorated this effort in 1988 through a three-year contract with Norwegian firm Norsk Computer Industri (NCI) to provide multiprocessor systems based on Motorola 68020/68030 CPUs. NCI products were marketed under the SX100/200/300 Unix server line utilizing ARCnet LANs. Early in 1988, Datapoint also introduced the DX200 video server. However, after Olivetti gained control of Scanvest Ring—a major shareholder in NCI—Datapoint terminated its agreement with NCI in mid-1989 and launched new DX models featuring the 68030 CPU and VMEbus architecture.

Decline: 1980-1984

By the onset of the 1980s, Datapoint had secured a position among the Fortune 500 companies but encountered significant operational difficulties as demand exceeded production capabilities, resulting in shipment delays and dissatisfied clients. In an effort to drive sales, the company accepted dubious orders, many of which were placed to reserve future stock rather than for immediate fulfillment. When these anticipated orders did not come through, the surplus inventory and excess capacity led to a severe financial downturn. The economic recession of the early 1980s also caused some customers to default on payments, compelling Datapoint to reverse sales or record substantial bad debts. This sequence of events culminated in a loss of approximately $800 million in market capitalization within a few months during early 1982. The U.S. Securities and Exchange Commission (SEC) stepped in to put an end to these practices.

In March 1982, plans for a new corporate headquarters were abandoned. The manufacturing plant in Waco, Texas, was shut down that same year, with production consolidated at the Fort Worth facility, which itself ceased operations in 1985 amid continued decline. The San Antonio plant ("9725") remained as the only U.S. manufacturing site, operating at reduced capacity; parts of its production space were repurposed into office areas as the company rapidly downsized.

Edelman takeover

In December 1984, Asher B. Edelman, known as a corporate raider, revealed ownership of an 8% stake in Datapoint and proposed a $23 per share acquisition offer totaling $416.3 million. Although the board declined this bid, it invited other potential takeover offers. Edelman subsequently withdrew his proposal and sought shareholder backing to replace the board with his nominees and facilitate a sale—a tactic he had employed in previous acquisitions. In retaliation, Datapoint amended its bylaws to obstruct Edelman’s solicitation efforts; however, he successfully challenged this amendment in court.

By February 1985, Datapoint projected a $15.9 million loss for the fourth quarter of 1984. Following a protracted three-month confrontation, the board consented on March 16 to restructure leadership: CEO O'Kelley resigned, Edelman assumed the chairmanship, ceased his legal disputes, and initiated strategic changes aimed at restoring financial stability.

Divestiture

After Edelman’s acquisition, Datapoint separated its service division into Intelogic Trace, Inc., which initially concentrated on servicing Datapoint products before broadening its scope to include other manufacturers’ equipment. Intelogic Trace later filed for Chapter 11 bankruptcy protection; its assets were sold in 1995 to a company based in Pennsylvania.

Datapoint subsequently became embroiled in control disputes that attracted SEC scrutiny. In December 1999, it divested all patented video communications technologies, inventory, and associated assets to reseller VUGATE, which continued marketing these products with some former Datapoint personnel still involved as of 2021.

On May 3, 2000, Datapoint filed for Chapter 11 bankruptcy and underwent dissolution:

Datapoint UK Limited – On June 19, 2000, Datapoint transferred its name and operations to its European subsidiary for $49.3 million. This entity shifted focus toward call center equipment and exited much of the computer sector. Acquired by Alchemy Partners, it expanded by acquiring Touchbases’ Avaya assets in 2007 to enhance its enterprise communications portfolio. Headquartered in Brentford, England, it serves customers at approximately 5,000 locations across 41 countries.
Dynacore Holdings Corporation – The remaining U.S.-based operations were renamed Dynacore Holdings Corporation on June 19, 2000, pursuing litigation related to two local area network patents. With minimal capital and no active products, revenues declined sharply by 2001. In February 2003, Dynacore completed a reverse takeover of The CattleSale Company, with Asher Edelman joining CattleSale’s board of directors.
Datapoint U.S.A., Inc. – In April 2003, this company assumed responsibility for all RMS Operating System–based products from Datapoint Group (UK). Located in San Antonio, Texas, it continues global RMS development and support. Although there is a San Antonio office and street named after Datapoint, they are not connected to this remaining U.S.-based entity.

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