He himself would later admit in his book Hypergrowth that “new product development moved slowly” until the second half of 1982. A smaller, cheaper Osborne 1, the Vixen, never reached the market while he was running the company. His $2,495 Executive computer—with a seven- rather than five-inch screen—did make it out the door. “Wayne” didn’t. Introduced early enough, Wayne could have given the Kays fits. This $1,995 model was to offer a nine-inch screen and include a built-in printer and a pile of free programs for word processing, communications with other computers, and other tasks. But technical problems bedeviled Osborne. When Osborne finally caught on that IBM had established a new industry standard, he sought to make his Executive compatible, but he was aware of his own company’s “dismal record in engineering development.”
Osborne entrusted the task to a San Diego firm. By May 1983, however, Osborne realized that the firm’s IBM-compatible prototypes were “expensive, late, and included wholly unacceptable features such as circles that would be displayed as ovals when an Executive user switched from CP/M to IBM compatibility.”
Adam Osborne was clearly losing his sales war with Andy Kay. He had talked to reporters about the Executive in early 1983, and in July newspapers said this had discouraged some dealers from ordering too many Osborne 1s. The story was that Osborne’s cash reserves had fallen as orders for the older machines dropped from 10,000 a month to almost nothing. Apparently he’d forgotten one of the precepts of any business with changing products: you're always competing against yourself. If you make too many old models or brag too soon about the new ones, then you may imperil your cash flow and see surplus product inventory pile up. Your customers will keep their wallets shut as they await your coming attraction. It was a most plausible explanation for Osborne Computer’s cash-flow problems but perhaps not the main one. In Hypergrowth Osborne revealed that his sales levels for his Osborne 1 had been dwindling even without all the puffery about the forthcoming Executive model; he confessed that he had lied to the press to throw it “off the scent of the real story.” His bankers were threatening to call in loans; he was laying off workers, yet he still hoped to woo private investors.
As the end neared, Osborne dealers were fighting Kaypro ones with price reductions. An Osborne 1, discounted, sold for as low as $1,000 by late August 1983. Stores also were dropping the Executive’s price, and with good reason: why so expensive a machine without IBM compatibility right off the bat?
The first prototypes of the new IBM-compatible Executive weren’t being built until September 1983, or as Osborne later observed, “precisely at the time the company was filing for bankruptcy.”
The bankruptcy papers showed next to no income and $45 million owed creditors. Newsweek ran a photograph of Osborne leaving his office without a portable computer in sight. Instead, a briefcase was shielding his face, and the caption read: “Founder Osborne exits: IBM was too big.”
That was somewhat wrong. The IBM-compatibility issue notwithstanding, Kaypro had been Osborne’s main competition.
“I’ve always had a great deal of respect for Kaypro,” he would later confess to Popular Computing. “You’ve got to make those statements [knocking the Kaypro]. It makes good copy, damn it.”
It didn’t make for the best-informed computer buyers, however. Bowled over by Osborne’s marketing campaign and well-publicized disparagement of the competition, some consumers had ignored the information that mattered in the end: the numbers. The screen measurements, disk-drive capacity, almost everything, said the Kaypro was a better computer for common applications. Osborne had faced a moral dilemma. Should he badmouth the competition and help his company survive? Or should he tell the truth—that Brand X was better than his own product? Not surprisingly, Osborne, like any other computer manufacturer, had made the former choice.
In fighting Osborne, Kay had dropped his suggested retail price $200 in May 1983 to $1,595, an indication that small business computers were becoming no more impervious to price wars than the home ones were. He also offered a souped-up version of his II and beefed up his software. His Kaypro IV—the jump from II to IV reflected the substitution of two 400K floppy disk drives for the II’s 200K ones—sold for $1,995.