Blue Chip Electronics
Blue Chip Electronics was an American computer company founded by John Rossi in 1982. Rossi, a former employee of Commodore Business Machines, founded the company to develop peripherals for Commodore's home computers. The company switched gears in 1986, when Rossi employed Hyundai Electronics as an original equipment manufacturer (OEM) for Blue Chip's own line of computers, which were low-cost IBM PC clones.

1982: Foundation and Commodore peripherals

John Rossi founded Blue Chip Electronics in 1982 from his home in Scottsdale, Arizona. Rossi formerly worked at Commodore Business Machines as a sales manager of the company's European market. Rossi expressed dissatisfaction with Commodore's management during the mid-1980s, when the company underwent three changes of chief executive officer (CEO), which removed its founder Jack Tramiel from office. In 1986, Rossi referred to Commodore as a "well-known revolving door". Among the company's first offerings in 1983 was a line of RS-232 serial and HP-IB parallel high-resolution dot-matrix printers for computers such as the Commodore 64 and the IBM PC. Later that year they introduced a daisy wheel printer, the BCD-4015, that supported both cut-sheet and tractor-feed stationery, 5 to 15 inches wide. In 1984 they released a lower-resolution dot-matrix printer, the M120/10, compatible only with the C64, in direct competition with Commodore's own branded dot-matrix printers.

By early 1986, the company had moved from Scottsdale to Tempe. In late 1985, Blue Chip released the BCD/5.25, a direct-drive 5.25-inch floppy disk drive, again directly competing against Commodore with their 1541 floppy drives for the C64. The BCD/5.25 was faster than the 1541 and had a smaller footprint. When paired with the Commodore 128, the BCD/5.25 could be used in that computer's C64 compatibility mode while retaining its increase in speed, whereas Commodore's 1571 drive could not take advantage of its own "burst" mode within the C128's C64 mode, instead emulating the earlier 1541 with its  slower thoughtput.

By mid-1986, Blue Chip had moved again, Tempe to Chandler, It was now valued at US$60 million. In the same year they planned to release the BCD/128, a competitor to the 1571, complete with its own burst mode, and the BCD/3.5, which would allow 3.5-inch floppy disks to be used with the C64. The BCD/3.5 was to be compatible with the 128 but without burst mode. Only the BCD/128 was ever released.

1986: Partnership with Hyundai
In July 1986, the company announced a clone of IBM's PC XT, called the Blue Chip Personal Computer, to be released in October of the same year. Although some mail order companies were offering lower-priced systems, Blue Chip's clone was expected to be the lowest-priced system sold through retail channels. Blue Chip hired an unnamed company in Japan to design the computer and Hyundai Electronics in Korea to manufacture it. Under their contract, Blue Chip was the exclusive seller of computers manufactured by Hyundai. This partnership came into being when Blue Chip were looking for a manufacturer of their Commodore printers. When Rossi chose Hyundai as a candidate, Hyundai hinted at their plans to develop their own IBM PC clone. Rossi convinced Hyundai to sell their computers under the Blue Chip name.

The Blue Chip PC featured an Intel 8088 microprocessor running at 4.77 MHz, 512 KB of RAM (supporting up to 640 KB), six expansion slots, one 5.25-inch floppy drive, a high-resolution Hercules-compatible monochrome graphics card, and serial and parallel ports built into the motherboard. The base configuration originally retailed for US$699  —the cheapest PC clone sold through department stores at the time, according to the Los Angeles Times. A green- or amber-phosphor monochrome monitor was sold separately for US$89. The Blue Chip PC was intended to be bundled with MS-DOS 3.2 as part of its base configuration. However, on launch, this was sold separately, along with GW-BASIC, for US$100.

Blue Chip contracted the manufacturing of 120,000 units of the computer to Hyundai in July and had several department stores on board to sell all units, including Target and Caldor. In the next month, the company chose these two stores as test markets for the computer. Rossi expected interest from the educational sector to exceed that from retail customers. However, 80 percent of purchases during this test run came from small- and medium-sized businesses who sought a computer at around US$700 that they could buy from stores. Blue Chip then nearly doubled the number of units for Hyundai to manufacture, with Rossi expecting to sell up to 200,000 units by the next year.

On launch in October, the Blue Chip PC was stocked in over 500 department stores across the continental United States, including Target, Caldor, Sears, Venture, Federated Group, and Fedco, as well as select Walmart and Toys "R" Us stores. Blue Chip supported this launch with a radio advertising campaign devised by WFC Advertising of Phoenix, Arizona. Meanwhile, Hyundai Electronics' sister automotive company were becoming established in the United States with their low-cost cars during the mid-1980s, and Rossi expressed interest in tying future versions of the computer with the Hyundai name.

From September to November, 27,000 units of the Blue Chip PC were sold. Hyundai projected a total of 50,000 units sold by the end of 1986 but expressed doubt that this would turn much of a profit, while remaining optimistic about sales of future versions of Hyundai's computer designs at higher prices. Blue Chip themselves were concerned about their lack of a repair service network and skilled sales force. They sought to rectify the latter by educating retail salespeople through seminars, training videos, and a floppy disk that demonstrated the computer's strengths. The company also hired Bryan Kerr, previously the director of marketing for the Tramiel-led Atari Corporation, as vice-president of marketing and sales in late November.

By November 1986, Blue Chip had 20 employees working from their Chandler office. It was in this month that they introduced the Blue Chip PC AT, an AT-compatible with an Intel 80286 running at a user-switchable 8- or 10-MHz clock speed, 1 MB of RAM (expandable to 16 MB), a single 1.2 MB 5.25-inch floppy drive, an optional 40- or 80-MB hard disk drive, integrated EGA graphics, a 12-inch monochrome monitor, and a keyboard. Its base configuration retailed for US$1895.

1987–90: Breakup with Hyundai and acquisition
In May 1987, Blue Chip collaborated with Hyundai again to develop the Blue Chip PC Popular, also based on the PC XT but with a lower initial retail price of US$549. Blue Chip included with the PC Popular a keyboard, mouse, and other value-adds but still sold the monitor separately. A month later they announced the PC Turbo, featuring similar specifications to their original PC including six expansion slots but now with an 8088 processor with a clock speed switchable between 4.77 MHz and 8 MHz and a 30 MB hard drive. Blue Chip abruptly terminated their relationship with Hyundai within the next month, after the former alleged that Hyundai let an order of 9,000 original PC Turbos and 21,400 PC Populars lapse and that Hyundai were selling their computers to other dealers. Blue Chip followed up with a lawsuit, seeking US$4.5 million in damages, and turned to TriGem Computer, another Korean electronics company, for their manufacturing. In November that year, Blue Chip and TriGem released the MasterPC, increasing the clock speed of the Blue Chip AT to 10–12 MHz switchable and with eight expansion slots.

The company established a subsidiary for international business, Blue Chip International, in 1988. During this time, the company was struggling. Rossi blamed this on their dealings with thematically inappropriate retailers such as Service Merchandise and camera stores, and sought to rectify it by adding configurations to their line-ups of computers available only to specialist retailers. The company released the Blue Chip 286 and Blue Chip 386, each of which featured a 1.2-MB 5.25 floppy drive and a 40 MB hard drive. The 386 was their most expensive product to date, at US$3199 in its base configuration, while base configuration for the 286 was US$1299. The 386 featured an Intel 80386 processor and 1 MB of base memory, expandable to 16 MB, while the latter featured an 80286 and 512 KB of RAM (expandable up to 1 MB). They also released a compact laser printer, for US$2499.

In late 1989, Capewood Limited, a holding company based in Hong Kong, acquired Blue Chip Electronics and its International subsidiary for an undisclosed sum. Rossi stated that Capewood intended to continue to market Blue Chip's products while expanding their product lines into the 1990s. Capewood apparently struggled with the Blue Chip name in 1990, with allegations of the company delivering faulty machines and generating bad debt among its dealers. At least one dealer, Crown Computers, took legal action against Blue Chip that year. The Blue Chip trademark was declared abandoned in 1995.

See also
 Indus GT
 MSD Super Disk
 Leading Edge Model D

Citations

References

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

American companies established in 1982
American companies disestablished in 1995
Commodore 64 peripheral manufacturers
Computer companies established in 1982
Computer companies disestablished in 1995
Defunct computer companies of the United States
Defunct computer hardware companies
Defunct manufacturing companies based in Arizona