Equus Computer Systems, Inc. Business Information, Profile, and History

Company Perspectives:

Equus is one of America's largest computer system manufacturers. Since 1989, Equus has delivered nearly 1,000,000 custom computer systems through resellers and system integrators--to business, education and government. In addition to notebooks, desktops, and servers, Equus develops solutions to meet the custom integration needs of vertical software, PC appliance, embedded systems, and industrial PC markets. A top OEM of Microsoft and Intel, Equus manufactures systems with name brand components and ISO 9002 quality. Equus delivers national reach, with a local touch through 10 regional engineering, manufacturing and service centers.

History of Equus Computer Systems, Inc.

Equus Computer Systems, Inc., is one of the largest of the "tier two" computer system builders in the United States. Begun in 1989 by computer engineer Andy Juang, Equus provides computer resources to Value Added Resellers (VARs) and Systems Integrators (SIs) through ten regional satellite offices strategically placed throughout the country. The company provides engineering, manufacturing, and customer service at its locations in Minnesota, Kansas, Illinois, California, Michigan, Missouri, Ohio, Texas, Colorado, and Washington state. Competing with such giants as Dell and Gateway, Equus has built its reputation by providing unmatched customer service and computer systems that are custom configured to meet even the smallest of business needs.

The Late 1980s and 1990s: The White Box Revolution

In 1989, Andy Juang, a Taiwanese immigrant, had been working for Cray Research in St. Paul, Minnesota, for several years. Juang had come to the United States in 1993 to enroll at the University of Houston's computer science master's program, and had been offered a position at Cray Supercomputer after completing his degree. Juang had spent his four-year term at Cray working on two different projects in its research and development sector, and was disillusioned when both of his projects were scrapped before reaching the final production stage. This sense of futility, coupled with a desire to set his own course, led him to rethink his employment future. Considering both a second master's degree--this time in business administration--or investing the money in a small start-up company and doing some risky experiential learning along the way, Juang chose the path less traveled.

Juang decided to invest in his own build-to-order personal computer company after meeting with an acquaintance, Joseph Chou. Chou had succeeded in starting Pony Computer in Ohio, one of many such small build-to-order PC suppliers cropping up in the United States at the time. It was determined that Juang would open a similar franchise in the Minneapolis/St. Paul area, otherwise referred to as the Twin Cities. With $30,000 investment money of his own and another $30,000 from Chou, the two built a partnership and Juang founded a small retail storefront computer store.

Juang was optimistic from the start. He placed an advertisement in a regional technology magazine, hired five employees, and waited for the orders to roll in. Juang's optimism was rewarded when demand for the company's PCs nearly overwhelmed the small start-up. In its first month the company had $100,000 in orders and by year's end Juang and his Minneapolis-based Pony Computer franchise had done $3 million in sales.

With the franchise's success, a rift developed in the partnership. Chou wanted to take control of the new operation while Juang wanted to maintain his ownership. A legal battle ensued which Juang won in a court's decision. The ruling allowed Juang to buy out Chou's interest in the company.

Following the legal fight, Juang renamed his company Equus Computer Systems and continued to build and grow the company at a remarkable rate. This was an era when many recent computer science graduates were putting together computer packages for profit. Personal computers were making their way into businesses and homes at an astounding pace and the availability of hardware and software in the marketplace allowed industrious individuals to control a small piece of the market.

There were many fundamental business practices that Equus did well in order to maintain its competitive edge. One trick was to keep inventory control very tight. Though inexperienced, Juang knew that stocking technology-related inventory translated into lost revenue and there were times the company stayed ahead of the competition by ordering equipment on a daily or weekly basis. In the computer industry, products were ever changing and technology rapidly improving; older components meant lower prices.

With the PC business booming during the 1990s, Equus was poised to capture its share of the market. Its Nobilis brand of computer made use of Microsoft and Intel components and remained competitive with other build-to-order operations.

The 1990s: Redirection

The 1990s rise in demand for PCs also brought competition from computer superstores. When Equus was faced with the volume sales and liberal return policies of the superstores, the company's leadership studied the situation and redirected the company to compete by serving a niche in the market the superstore could not reach. Equus took itself out of the retail market and focused its work on Value Added Resellers (VARs)--those smaller computer suppliers who were building computer systems and networks for companies who needed computer systems configured to work in their unique corporate settings. Equus provided services to VARs at a fraction of the cost that the VARs would have had to charge to maintain the necessary laboratory equipment and personnel themselves. This process, known as "outsourcing," actually saved VARs money in repair costs.

From 1992 to 1996 Juang attempted to replicate the success he had in Equus when he started ten other similar companies in Texas, Illinois, Missouri, Colorado, California, Ohio, Michigan, Kansas, and Washington state. In a November 2001 article in Minnesota Business, Juang described the overwhelming responsibility he faced when trying to control and manage ten separate corporations in ten U.S. cities. He stated, "Physically, I couldn't take it. I was pretty much on the phone as much as eight to ten hours a day. I was almost breathless. My management style back then was 'I have to manage everything, I have to talk with everybody.'"

It was not long before Juang realized that managing the business of ten independent franchises would prove too difficult for even the most skilled business owner, and in 1997 he brought the companies under the Equus corporate structure and worked on establishing a management team equal to the task of centralizing control while maintaining a quality local presence at each of the satellites. The company continued to offer full engineering, manufacturing, and customer service at each of it ten operations sites.

Looking Forward: 2000 and Beyond

In another attempt to stay one step ahead of the competition and find a new direction for the company, Equus turned its attention to Systems Integrators (SIs) in the late 1990s. Working with SIs seemed a logical extension of the company's business. SIs like VARs were better served by using Equus's labor force and expertise than by hiring their own. The company anticipated this and moved in to establish relationships with a wide network of Systems Integrators.

In another attempt to continue to grow in an ever changing and highly competitive industry, Equus adapted when the market for desktop PCs began to decline in the late 1990s. Equus began producing computer notebooks and servers and was able to keep its production from falling off significantly. Though still not at the 1998 revenue high of $185 million, the company maintained considerable sales levels. In over six years, Equus managed to exceed 6,000 percent growth, and was able to achieve that ratio without incurring any long-term debt.

In March 1998, Equus hired Mary Jo Farell as its corporate marketing manager. Farell was just one of several experienced managers Equus brought in to revamp the corporate structure and create a workable and strong management team.

In February 1999, Equus created a sister company, Exelus, to meet another industry need. Forecasting the increased market for repair and warranty services, Juang and the leadership team including Kevin Porter, vice-president for business development, established Exelus to provide services to businesses wanting to save time and money by utilizing one "point of contact" when it came to their company's information technology. Exelus was created to expedite project management services, aid with installation, repair work and support, and accelerate hardware and software package configuration for the company's network. Porter was named president at Exelus in 1999.

With an Equus presence distributed over a good portion of the country, the East Coast and southeastern United States were the only areas where Equus did not have satellite offices. Despite the absence of representation in these regions, Equus together with Exelus made it clear that it "provided on-site service to every zip code in the continental United States through an extensive network of more than 4,000 technology professionals."

Its prominence in the Midwest was clear by May 2000 when Equus Computer Systems topped Minneapolis-St. Paul City Business's chart of minority-owned businesses. The ranking by revenue was an indicator of how far Juang and Equus had come from the founder's initial investment of $30,000. Andy Juang, a recent immigrant and just over 40 years old, had built a company worthy of first honors among other multimillion-dollar corporations in the Twin Cities.

In 2000 Equus took notice of the increased demand for microcomputers in all sorts of differing industries. Computers were included in many industrial components from children's toys and games, to appliances, medical devices, audio/video displays, and manufacturing parts.

Embedded technology and the increasing demand for its maintenance and repair appeared good prospects for yet another area of the competitive computer market. Thus it created a Custom Solutions Division in 2000 to address original equipment manufacturer (OEM) business needs in this area.

A large measure of Equus's success and growth in its industry was its adaptability. The company had been compelled by industry competition and changes to look for new directions at every turn and bump in the market. The company's ability to adapt to such pressures directly contributed to its stability and growth in an industry that had been hard hit by softening markets in the late 1990s and early part of 2000. Equus appeared focused on its mission with one eye kept on market trends in order to keep afloat and stay one step ahead of the competition.

Principal Subsidiaries: Equus Computer Systems of Minnesota, Inc.; Equus Computer Systems of Kansas, Inc; Equus Computer Systems of Illinois, Inc; Equus Computer Systems of CA, Inc.; Equus Computer Systems of Michigan, Inc.; Equus Computer Systems of Missouri, Inc.; Equus Computer Systems of Ohio, Inc.; Equus Computer Systems of Texas, Inc; Equus Computer Systems of Washington, Inc.; Equus Computer Systems of Colorado, Inc.

Principal Divisions: Custom Solutions Division.

Principal Competitors: Gateway, Inc.; Dell Computer Corporation; International Business Machines Corporation; Hewlett-Packard Company.

Chronology

• Key Dates:
• 1989: Andy Juang partners with Joseph Chou to start a Pony Computer franchise in Minneapolis; revenues exceed $3 million.
• 1991: Juang goes to court for control of the company, wining legal battle and renaming the enterprise Equus Computer Systems.
• 1992: Experiencing competition from computer superstores, Equus changes direction from direct consumer retail sales to providing sales and service to other businesses.
• 1994-96:[fs11]Equus opens satellite locations throughout the United States.
• 1997: Equus reorganizes its management structure.
• 1998: Sales revenue hits new high mark at $185 million.
• 1999: Equus founds sister company Exelus.
• 2000: Experiencing decline in sales of PCs, Equus expands its services to include sales and service to Systems Integrators and companies manufacturing components using embedded computer technology.