A prosperous-looking man cozied up to the attractive young lady sitting at the bar and said, I have $1m cash in this briefcase. If I give it all to you, would you spend the night with me? She thought about it for a moment and replied Sure, if you’ve really got the money. In that event, said the fellow, would you sleep with me for five bucks? Of course not, the woman snapped back indignantly. Just what do you think I am? We’ve already established that, came the rejoinder. What we’re haggling about now is the price.On September 5, IBM proclaimed the beginning of a new generation of computers. While it couldn’t quite make up its corporate mind whether to call its line of machines the System/390 or the ES/9000 – it settled for both – it did know one thing: no big customer would have to worry about paying list price. The very next day, in Philadelphia, Judge Thomas O’Neill decided a case that had been before his court since 1985. Allen-Myland Inc, a computer refurbishing company, had hauled IBM before the Federal bench alleging antitrust violations, tortious interference and giving two for flinching.

Preposterous

At issue were IBM’s charges for parts used in hardware upgrades and the manufacturer’s pricing of mainframe microcode. The court ruled that IBM was in the right about nearly everything. Nevertheless, opined Judge O’Neill, the preposterous fees IBM asked for microcode licences – required when big mainframes were cleaved asunder by Allen-Myland’s nerds – broke a deal IBM had once made (and, undoubtedly, many times regretted) with the more trust-busting Uncle Sam of yore. By pricing microcode high just to block mainframe splitting, Big Blue lost the right to assert the full damages it claimed against Allen. Even though Allen-Myland was not a party to the 1956 consent decree and could not use the agreement offensively, Judge O’Neill said it was entitled to defend itself by citing the decree. In short, the 1956 decree still prevents IBM from blocking alterations or attachments to its systems. Judge O’Neill’s decision was based not on what IBM did – it asserted a valid copyright, said the court – but on how much money it wanted from an alleged abuser of its rights. Meanwhile, unbeknownst to IBM, Allen-Myland and Judge O’Neill, we suppose, a licensed whorehouse in Nevada was going belly up. This is not your ordinary bagnio. The Mustang Ranch is legal and famous. In 1976, Argentine boxer Oscar Ringo Bonavena died there. A security guard named Brymer served 15 months for fatally shooting Bonavena in the guts. This was the same Bonavena who, in 1970, had stood up to Muhammed Ali for 15 rounds and went on to maintain one wife in Argentina and another who worked at the bordello. Mustang’s owners tried to sell equity in the brothel, which claimed revenue in 1988 of $5.3m, but underwriters twice failed at solicitation. And so did, more recently, the pareunia parlour. On September 18, Mustang, already under Chapter 11 bankruptcy protection, was put into liquidation by a Federal court. A trustee, Ms Jeri Coppa, was appointed. She hopes to satisfy the creditor that forced the action: the aptly named Internal Revenue Service.-

By Hesh Wiener

One IRS beef, incidentally, was with the way Mustang handled its payroll. While Mustang said its therapists were independent contractors, the IRS held that they were regular employees. Therefore, Mustang should have withheld income tax and social security. The government’s position resembles its view of freelance programmers who work on clients’ premises. One difference is that Mustang’s fillies didn’t get regular wages. They split their take, exclusive of bonuses, with the house. This compensation plan is akin to that of a commissioned sales rep.Press accounts of the Mustang situation didn’t provide a lot of detail about its fee structure. But they suggest that management and/or technical staff adjusted pricing to the customer’s apparent circumstances and, presumably, interests. Locals who visited regularly, indicated one story, received favourable rates.More details about

the business may soon be available from the same people that sell IBM computers. Not that such respectable types would frequent an establishment like Mustang Ranch. But for four days beginning October 17, Computer Dealers & Lessors Association will hold its annual meeting in Reno. Mustang is 10 miles east of that burg. CDLAers and IBMers that attend might overhear idle chatter at a milkshake parlour or charity bake sale that concerns the amusements of folks with other inclinations. It is almost inevitable that this occurs if conference attendees mix with citizens. Discussions of compatibility, price-performance, midlife kickers and so forth are bound to spark conversations that resemble nothing so much as the comic dialogues of George Burns and the late Gracie Allen. If the parties persist, however, all may gain valuable insight. This would be of use not only to lessors and dealers, not only to IBM, but also to ordinary people, such as computer users, who are seeking improved ways of coping with conditions. IBM’s marketing strategy may in some ways resemble that of Mustang Ranch. Third parties should study the survival techniques used by Mustang’s less-famous competitors. Computer buyers, at least those with a sense of humour, can possibly find aspects of themselves among suburban Reno’s clientele. Successful marketing often depends more on the customer’s fantasies than the less pretty reality offered by the goods or services at hand. In more than one kind of business, what has actually been purchased is only apparent after the deal is done. Repeat buyers cannot be dismissed as suckers who never learn from their experience. Hope and its mutant twin, delusion, spring eternal from the human breast. Besides, the dream is often more fun than the reality. One might speculate that the failure of Mustang Ranch did not stem from its adherence to a fantasy-based business strategy. What seems to have happened is that the erstwhile managers of the bawdy house – Joe and Sally Conforte – apparently thought the sort of creativity that played well to johns would have equal success among government agents. In retrospect, such a notion must seem silly even to Mr and Mrs C. At the very least, a chance meeting in Reno with any savvy computer dealer or IBM executive would have elucidating potential. Can anyone imagine selling a machine as costly and concrete as a computer not on what work it can do today but on what it might do for an unspecified additional cost at some vague future date?

Grudgingly

To succeed, and, more importantly, to be repeated, every deal must leave the participants with the feeling that it was a fair exchange. That sense of justice – or its lack – may well last longer than the sentiments and motivations at the moment a bargain is actually struck. If an interaction occurs just once, the players may have to live with their regrets. IBM must accept, however grudgingly, the 1956 consent decree. Nor can the widows of Mr Bonavena do anything about their loss and society’s treatment of a killer. But a company that buys a computer and later concludes it’s been screwed will grow distrustful of the seller. Even when a vendor can’t deliver the dream, it still has to deliver the goods. (C) 1990 Technology News of America Co Inc