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Software Firm Rides High on Aggressive Marketing Strategy

December 10, 1985|JAMES BATES | Times Staff Writer

The figures that Quadratron Chairman Karl Klessig ticks off are impressive.

About $10 million in revenue this year for the Sherman Oaks-based computer software company, $30 million next year and maybe as much as $100 million in 1987. Much of that, he says, is as good as money in the bank, because it will come from contracts already signed with major computer makers in the office automation business.

No one can doubt Quadratron's tenacity at getting those pacts. In the 2 1/2 years that it has been providing software for makers of office automation computer systems, Quadratron has signed 59 contracts with computer makers, far more than any of its competitors.

"When we start discussions with a hardware manufacturer," Klessig boasted, "we conclude it with a contract."

But some customers, competitors and market researchers are not impressed. They say the company is getting many of those contracts by promising software packages too long before they are developed. The result, they complain, is software that is delivered late and often doesn't completely work.

"They have rushed ahead so fast in development that there are bugs in the software. Some people think that Quadratron is great. Others think it's terrible," said Michael Millikin, associate editor of Seybold Report on Office Systems, a Boston-based newsletter.

William Kiely, president of R Systems, a Dallas-based competitor, said: "Quadratron is the best marketing company I have ever run across in my eight years in the computer business. Their marketing approach is to go in, get the contract and worry about getting the product done as time permits."

Defends Policy

Klessig said customers know the products are sold in advance, and they don't mind.

"It is true that we get the contracts before the products are finished," he said. "The reason people are willing to make major commitments is because of the superiority of the product and the design of it."

Quadratron has built its business primarily by marketing a software package used in Unix-based office automation systems--computer networks that link terminals, printers and other machines for office workers.

Unix is a software operating system developed by AT&T that runs the basic functions of the computer. Quadratron's software gives the system such functions as word processing, graphics, calendars and electronic spread sheets, used for financial calculations. Quadratron was one of the first companies to offer a word processing system for Unix-based systems.

Klessig, 43, who previously owned a so-called value-added reseller that sold computers with software tailored for customers, founded the company in 1983 with Stefan Zimberoff, 42, who had developed software for Fortune Systems, a San Carlos-based computer maker. They brought in accountant Les Kristoff, 38, as a third partner, raising $750,000 to start the company.

Unix historically has been a favorite system for educators, but its acceptance in the office automation market has been slow. Demand has picked up, however, largely because government agencies and regional telephone companies like Unix--and Quadratron has profited as a result.

Klessig estimates that after-tax profits this year for the privately held company will be 30% of revenue, or about $3 million.

Company executives are confident that they will become a force in the software industry. Said Klessig: "It's no longer a goal. We know we are going to become one of the largest and most significant software companies in the world."

Indeed, people who call the company, when they are put on hold, are treated to music identical to one of the themes that software giant Lotus Development uses in its advertising. Klessig says it's only a coincidence.

In July, the company moved to the 18th floor of the new American Savings building on Ventura Boulevard in Sherman Oaks, which boasts one of the best views of the San Fernando Valley, a far cry from the one-room office in Encino where it began.

About 45 of its 70 employees worldwide work in the new office, which is decorated throughout in Quadratron's burgundy and pearl-gray colors. Visitors are greeted in the lobby by a neon sign bearing the company's name that looks like it came from the set of "Miami Vice."

Missed Deadlines

But the impressive new offices and the confidence that Quadratron exudes have not been enough to satisfy some of its customers.

Executives with Plexus Computers in San Jose, a Quadratron customer since February, 1984, are furious with the company over its failure to meet deadlines. Cynthia Pilkington, Plexus' product marketing manager, says Quadratron has missed "at least three" deadlines to deliver software in the past nine months, including one just last week. The deadlines, however, were verbal, not contractual, agreements.

"They haven't made any friends here," she said, adding that she recently signed a software agreement with rival R Systems but hasn't terminated the relationship of Plexus with Quadratron.

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