MiniScribe

MiniScribe was a manufacturer of disk storage products, founded in Longmont, Colorado in 1980. Through the 1980s, MiniScribe made its name by selling cheap stepper motor-based drives, eventually moving into higher-profile voice coil motor designs before going bankrupt in 1990. MiniScribe's downfall also centered on one of the first major accounting scandals in the computer industry.

A slow but steady start

The key to MiniScribe's early success was a 10MB drive that was much cheaper than competing models from Seagate and others. Most drives of that era used a high-resolution (400 steps/rotation) stepper motor and simple gearing or a pulley to move the heads. MiniScribe found that they could save money on the motors by using a stepper with a more coarse resolution (usually 200 steps/rotation), then setting the gear ratio on the head arm's drivetrain to match. This made MiniScribe drives cheaper, but the extra turning required by the motor also hurt performance; their first drives had average seek times in excess of 100 milliseconds, when even Seagate's 10MB model could manage 85 milliseconds. Despite their slow performance, MiniScribe drives were generally solid (though they had QA problems toward the end), and had advanced for the time diagnostic features built into the drive's CPU.

Later on, MiniScribe perfected the design, and by 1987 had drives that were competitive with Seagate's market-leading ST-225 model. They also started to expand into higher-performance drives for use on the ESDI and nascent ATA and SCSI buses including the 8425S. Miniscribe also developed the 8051 and the 7080, two drives based on a brand-new embedded servo platform and using the latest digital motor control technology.

Cooking the books

In 1985, however, they lost a critical supply contract with IBM, and since sales and inventory were starting to drop (and they didn't have the money to make more drives), something needed to be done. MiniScribe hired a turnaround specialist, Q. T. Wiles, to help fix things as part an investment in the company by his venture capital firm. Wiles tried reorganizing the company, but when that didn't have the desired effect, he decided to artificially inflate the company's sales numbers instead.

The first plan he came up with involved recording drives that were stuck in transit (due to shortages in air cargo space), or didn't even exist, as shipped. Miniscribe also tried "stuffing the channel" -- shipping excess drives to customers and not recording the returns. The most famous plan they came up with, by far, was executed in late 1987, and was very simple: Buy a load of bricks, pack them into boxes, then ship them to a fake customer's warehouse and report them as actual sales to cover the shortfall. The company's reputation was tarnished quite a bit once the deception was unveiled in early 1989; shareholders revolted and sued the company, and combined with the industry-wide slump in disk drive sales in the late 1980s, MiniScribe's health never fully recovered.

The end, and a new beginning

On New Year's Day 1990, MiniScribe declared bankruptcy and announced that it was up for sale. In April, Maxtor purchased the company. Maxtor was looking for a PC-friendly companion line to its high-end XT-series drives, and the company also needed a working 1-inch-high 3.5-inch drive, something the competition (and MiniScribe) already had. Under the Maxtor umbrella, MiniScribe's design team continued the 7000-series ATA and SCSI drives, as well as designing the DiamondMax drives that saved the company in the mid-late 1990s; the changeover was somewhat rough (the 7120 60/120MB model in particular had serious reliability problems), but by 1996, Maxtor had discontinued all members of the XT, MXT and LXT series. From that point, all of their drives were based on MiniScribe designs until the merger with Quantum Corporation's "HDD" division in 2000.

As for Wiles, in 1994 he was prosecuted and convicted for securities fraud. MiniScribe's accounting firm, Coopers & Lybrand, was also sued by MiniScribe shareholders for their part in the fraud; they settled in 1992.

References

• Cooking the Books: How Pressure to Raise Sales Led MiniScribe To Falsify Numbers (http://www3.uta.edu/faculty/subramaniam/Articles/Miniscribe-Cooking%20the%20Books.htm) 1989 Wall Street Journal article about the fraud