How Things Fell Apart For Germanys Nixdorf Computer

TITLE: How Things Fell Apart for Germany’s Nixdorf Computer CHANNEL: Asianometry DATE: 2026-05-24 ---TRANSCRIPT--- It is one of Europe’s greatest  technology startup stories. A young student in 1950s West Germany   motorcycling across the country 

• offering companies a computer. That young student built an empire from scratch.   One of Europe’s biggest, most  famous computer companies. Then it all came tumbling down.   In today’s video, one of Europe’s most  well-known computer companies: Nixdorf Computer.

Beginnings

Heinz Nixdorf was born in 1925 in Paderborn,   a city in the West German state  of North Rhine-Westphalia. Born to a traveling salesman and a homemaker,   he was the eldest of five children.  The 1930s were hard times for Germany.   Nixdorf’s father lost his salesman job,  but found work at the railway company. But then soon after, the elder Nixdorf was drafted  into the German Army. Heinz had to step up,   recalling not being able to go to secondary  school because he had to support the family. In 1943 at the age of 18, he too was called  to the Luftwaffe school and - like many in his   situation - enrolled in the Nazi Party. However,  with the Luftwaffe low on planes and fuel,   the school was disbanded and Heinz  moved to the Panzer division. After the war’s end, he evaded  capture and returned to his hometown.   Nixdorf’s father had died on  the Eastern Front. So now,   at just twenty years old, Heinz had to work  the farm to support his mother and siblings. He would not be able to enter university until  1947, enrolling at the University of Frankfurt.   Later in 1951, he as a student trainee  met the physicist Dr. Walter Sprick,   who then worked at the German  subsidiary of Remington Rand. Rand had hired Sprick to help build West Germany’s  first electronic calculator. Nixdorf joined with   Sprick, who taught him how to build punch-card  and vacuum tube-based calculation machines. But then Rand abruptly pulled out of the  project due to rising domestic competition   as well as to focus resources on developing  their UNIVAC computer for the US market.

LFI

Like many others during the time, Nixdorf  came to believe that things were changing. Back in those days, the dominant device for  calculating and keeping track of data was the   tabulator - an electromechanical tool hardwired  to count and sort data stored on punched cards. The tabulator dominated the  first half of the 20th century.   However, the rise of stored program computers  made it possible to run many different   programs - capable of doing more than just  adding - at speeds that tabulators cannot match. Computers were simply better, and Remington Rand  pulling out of Germany changed nothing about that. Nixdorf suggested that he and Sprick together  start their own company. But the latter opted   to work for IBM, where he did pioneering work on  automated text readers. So Nixdorf abandoned his   university studies and chased the entrepreneurial  dream with all the energy and enthusiasm of youth. He motorcycled across West Germany, offering  various companies a computer for $8,000.   Eventually, he met the man in charge of punch card  machines at one of the country’s largest power   stations: Rheinishe-Westfalsche Electrical  Power Station or RWE in the city of Essen. It was a time of optimism and growth in Germany.  RWE somehow was convinced to give the young   student a room and 30,000 Deutschmarks to build  a vacuum tube-based calculating machine for them.   Sprick agreed to help Nixdorf, even  personally guaranteeing the 30,000 mark sum. Thus in July 1952, Nixdorf  founded the Laboratory for Impulse   Technology (“Labor fur Impulstechnik”)  or LFI, and hired his first worker.   Together, they successfully delivered their  first electronic calculating machine to RWE. Nixdorf was a decent enough engineer,   but his sweet spot was more on the  product and business side. The man saw   how computers can revolutionize the way small  businesses operated and rode that wave hard.

Calculators and Components

In addition to their business  supplying calculating machines,   LFI expanded into component supply. One of Europe’s major computer  companies in the 1950s was the   French enterprise Compagnie Des Machines Bull,  or Groupe Bull. They have long been France’s   national compute champion - battling IBM’s French  subsidiary in the punched card tabulator industry. In the 1950s, Bull seized on the growing computer  revolution to launch a series of stored program   vacuum tube-based computers called the Gamma.   These offered a compelling upgrade path for  Bull’s existing users of punchcard tabulators. To enter the West German market, Bull  signed an exclusive distribution deal   with a mid-sized German company called Exacta.  Exacta in turn struck a supplier relationship   with Nixdorf to buy certain vacuum tube-based  electron components for these Bull machines. For Nixdorf, it was a stroke of good luck.   Exacta ordered electron tube and multiplier  components from LFI for Bull’s machines.   LFI also contributed a transistorized multiplier  unit to Exacta’s 1958 Multitronic 6000,   a very successful electromechanical  accounting machine that sold over 2,000 units. Exacta’s commercial director, Hans Bringer,  also had deep connections to Germany’s banking   community. Such connections would help open up  what would later be a critical space for Nixdorf. By 1957, Nixdorf employed 24 people and produced  nearly a million Deutschmarks in revenue - a very   successful and thriving business. In 1959,  Nixdorf relocated LFI from Essen back to his   hometown of Paderborn. The company would come  to employ 10% of the town’s entire population.

Nixdorf’s Daring Move

The Exacta relationship helped  lift LFI. Thanks to them,   Nixdorf did not have to initially spend  time and money building a sales network. But being so dependent on a single  customer is dangerous. In the late 1950s,   another company called Wanderer started buying  Exacta’s shares. By 1961, Wanderer succeeded in   taking over the company - changing the management  and taking component business away from LFI. At the same time, Bull in the early 1960s   suffered a major downturn due to new competitive  products from IBM like the IBM 1401. Thusly,   Bull greatly cut their own orders with  LFI - a very painful double whammy. Were it not for the success of the Multitronic  6000 multiplier, LFI would have collapsed.   Nixdorf considered selling to  a competitor called Kienzle,   before agreeing to supply components for a new  business computer that Kienzle was planning. Things then turned around when  he managed to lure a talented   computer designer named Otto Müller to Paderborn. Müller began his career at the famed German  radio and television company Telefunken,   working as part of a small team  in a small town called Backnang. In the 1950s, he and his team produced a rather   powerful digital general purpose  mainframe computer called the TR-4   as part of a technical feasibility project  relating to the electronic-switching industry. Telefunken did not initially  intend to sell this computer.   Even after West German universities saw the TR-4  and started buying it for scientific computing,   Telefunken never considered  themselves a computer company. So when the Backnang team next designed a  medium-sized computer for commercial data   processing called the TR-10, management sort of  pooh-poohed it. A Telefunken internal analysis   claimed that the TR-10’s sales can never  pay back the investments needed to be made   into hardware and software, so they dropped  it after only a few prototypes were made. Disappointed, Müller left to join IBM in research.  But Heinz Nixdorf had seen the TR-10 at the 1964   Hanover Fair and recruited the designer and his  wife to build a version of the TR-10 for Nixdorf. To do this, Nixdorf diverted components  originally meant for Kienzle project - a   daring move to hold down a competitor’s  product while they worked on their own.

Mittlere Datentechnik

At the 1965 Hanover Fair, LFI presented their  breakthrough computer: the Wanderer Logatronic. The Logatronic was a desktop computer  for the small and medium sized business. It essentially created a new category of   electronics devices called  “Mittlere Datentechnik”. This German phrase might be  translated as “mid-range computing”. And that phrase might lead  you to imagine something like   DEC’s game-changing minicomputers. Smaller  versions of IBM’s big and chonk mainframes. But in the context of West  German computer history,   the concept stands for a bit more than  that. Some scholars prefer to translate   the phrase as “medium data technology” -  as it sort of better signifies its roots. Since the early 1900s, small and medium sized  German businesses used mechanical machines   to do their bookkeeping or accounting flows.  Notably, they had these special “bookkeeping   machines” with features of both typewriters  and calculators called Buchhaltungsmaschine. Clerks spend all day entering invoices, payroll  items, receipts, and other ledger entries.   Then at the end of the day, they use the  bookkeeping machines to print out the ledgers   and associated reports for management to review. Let’s say a clerk wants to  update a transaction ledger.   With these older machines, they had to first take  a paper journal entry ledger card from the box,   check to ensure that it’s the right one, and then  insert it into the mechanical bookkeeping machine. The accountant then presses a button  which causes the machine to move the card   down to a blank space where the next entry  should be. After typing in the journal entry,   the accountant hits a button  to manually eject the card (I like to imagine that  sounding like the M1 Garand).   Finally, the clerk returns the  card back to the proper box.   This process was manual and error-prone. But in  those days, no device existed to computerize it. Like an IBM mainframe was unsuitable.  Such computers filled 20-40 square meters,   entire rooms. You cannot own it, only  rent time on it. And you had to hire an   army of expensive programmers to write  code for it. Frankly, it’s overkill.

Logatronic

The Logatronic was the first  electronic computer suited   to address these “medium data”  office devices and workflows. The device was defined by the use of this nifty   “magnetic ledger card” (Magnetkontokarten)  which combined a regular paper ledger card   with a machine-readable magnetic strip.  It greatly automated the old process. As former salesman Michael Pein  recalled in an oral history,   when you inserted a magnetic ledger card into  the Logatronic, the machine read data out of   the card’s magnetic strip, and automatically  brought up the right blank space for manual entry. The clerk next types in the latest transaction  as normal. The machine then updates the balances   for this new transaction twice over:  First, visibly on the card itself; And then second on the card’s magnetic strip.   This unique combination of machine-readable  and human-readable data helped reduce clerk   errors while also making the computer’s  output inspectable and verifiable.   It is an incremental - and rather  Germany-specific - step towards computerization. The Logatronic was not the  first product that did this,   but theirs was the gold standard. Thanks to  the use of transistors and core memories,   the Logatronic was small enough to fit  inside a desk. It came with peripherals   like printers and punch card readers. And very  importantly, it did not cost an arm and a leg. Though LFI designed and built the Logatronic,   it was first sold and distributed by a third  party: The aforementioned firm, Wanderer. But after Wanderer fell into financial turmoil,   Nixdorf bought them in April  1968 for about 17.5 million. With that, the Logatronic was  then renamed to the Nixdorf 820.

The Turnkey Integrator

The Wanderer acquisition gave  Nixdorf a valuable large sales   distribution network through  which to sell their computers. This all happened at the exact right time  because medium data computing in Germany   began to take off in the late 1960s. Two  out of every three small digital computers   sold in West Germany were sold by Nixdorf  Computer, with 15,000 total sold by 1970. But by the early 1970s, the  820 started to show its age.   Competitors were coming out with similar  devices. And old-fashioned core memories   were giving way to more capable  magnetic hard disk storage. Nixdorf responded with several new products.  To help businesses input data, they struck   a deal with a Massachusetts-based company  producing data entry systems called Entrex. They sold Entrex’s data entry products  in Germany as the Nixdorf 620. They would later acquire Entrex outright -  merging them into their American subsidiary. Then in 1975, Nixdorf brought  out its big successor to the 820:   the 88-line of magnetic  disk drive-based computers.   The first model of the line was the Nixdorf  8870, a disk-based computer with time-sharing. It ran a complete business  application suite called COMET.   Nixdorf COMET handled financial accounting,  stock control, order processing and more. Written by a company division  based in the Netherlands,   COMET was said to be very customizable. It let  customers lay out their templates and invoices   how they wanted, so any two COMET instances  might look very different from each other. Many customers - especially those in medical,   banking and retail - across Germany,  Holland, and France bought Nixdorf’s   computers. Nixdorf would later claim some  80,000 COMET instances across the world. Nixdorf produced software like COMET  because they wanted to produce everything.   Not just the hardware, but  also the software applications,   integration and maintenance  services, and even financing. This was a critical business strategy for them.  Heinz explained that IBM and other companies were   ignoring customers who wanted a turnkey small  or medium-sized computer from a single vendor   they can trust. Nixdorf wanted to be that  vendor. One analyst explained it as such:

[Nixdorf made its market by] providing a safe,   reliable step-by-step approach  to computerizing a company. The president of Nixdorf’s American  subsidiary Carl Janzen told Datamation: We offer our own operating system, software,   peripherals, and support - the works, the  total system … Now when IBM slashes its   hardware prices and makes up its margins  with software, we’ll be able to do the same.

Selling Nixdorf

So Nixdorf styled itself as the IBM  for the small to medium sized business. Which meant having a formidable  sales organization. Another key   reason for the company’s  success in the early 1970s   was that it built its own internal sales teams -  ending cooperation agreements with third parties. Nixdorf salespeople were go-getters.  They didn’t require permission to do   things like borrow a company car  to drive off to the client site.   The client’s needs were what  mattered, not bureaucracy. The company paid special attention  to trade fairs like CeBIT.   Such big shows were often high-stakes affairs.  Before each show, both technical and sales   staff were relentlessly drilled on  key talking points at boot camps. One night before a show, the sales team  discovered the stand was missing something.   So they, the designer, and a hardware technician  rented a truck, drove through the night,   and bribed a security guard to let  them in and build the missing stand. The company attended up to 160 shows each  year - maintaining its own internal warehouses   and stand-building department so that  they can keep up with the cadence.   They worked hard and played hard.

The United States

Nixdorf was one of the few European companies   to challenge IBM right on its  home turf in the United States. This entrance began all the way in  1979 when they acquired an American   software company called The Computer  Software Company - which produced   an IBM-compatible operating  system called “Extended DOS”. In order to provide their  trademark fully-integrated service,   Nixdorf spent large sums of money  on setting up research centers   as well as a nationwide sales and  support service in over 120 cities. While they did not garner major market share in  the American small business market, they were   able to sell computers to the US Government  and big corporations like Phillips Petroleum. They made such a splash that the New  York Times wrote about them in 1984.   Even so, the Times could not help but lead  off the article with a light-hearted jab:

A good German computer company, according  to popular wisdom here, is about as improbable   as a Silicon Valley steel mill. But  Nixdorf Computer A.G., one of Europe’s   fastest growing and most profitable computer  companies, is proving the doubters wrong.

Nixdorf as a Leader

As a leader, Nixdorf was brutal and hard-driving.   The company ran a flat organization  that completely revolved around him. One of his employees - Klause Lurse, who  worked in HR - recalled in an oral history   for Praderborn University that Nixdorf was  a decisive leader who knew what he wanted   and moved fast. Once things are decided,  the whole company moved without bureaucracy. He inspired fear in his executives - who  were warned never to repeat the same point   more than twice to him in a presentation.  Lurse called him a “cruel leader of men”,   openly harsh with direct subordinates.  Screaming and berating them as failures. But at the same time, Heinz was also  down-to-earth, especially with young people.   At the company lunch canteen, he stood in line  like everyone else. And after getting his food,   he liked to sit next to ordinary  employees and ask them about their work. He often walked the production floor, shaking  the workers’ hands and learning their names.   One time, he took off his jacket and got hands-on  with a product right alongside a factory worker. Heinz’s efforts helped create a high performing  yet fiercely loyal family atmosphere.   Unfortunately, I think that also set  the company up for its future decline.

The Microprocessor

In 1971, Intel produced the 8-bit Intel   8008 microprocessor - which they  marketed as a “computer on a chip”. Microprocessors were then an emerging category, so  Intel wanted to get a sense of how it might sell. Thus in the summer of 1971,  8008 designer Federico Faggin   went to Europe with colleague Hank Smith on  a fact-finding mission - showing the 8008 and   its predecessors to potential customers  under NDA and getting their feedback. Faggin told the Computer History Museum in  an oral history how the customers with actual   problems to solve were happy to have found  a solution to those problems. A great sign. But the customers who made and knew  computers reacted very negatively.   Perhaps they were irritated that a  mere semiconductor company thought   it can muscle into their world? Faggin recalled:

Where the people like Nixdorf — I went  to Nixdorf Computer — they crucified me,   because the 8008 was not fast  enough, and it didn’t have this,   it didn’t have that … You call this a  computer? … It wasn’t a real computer To be clear, their feedback did help.  Faggin and Intel incorporated some of it   into the followup Intel 8080. But it also  illustrates how Nixdorf Computer missed   both the microprocessor and the  PC revolution it later enabled. Looking back, one can find reasons. The first  PCs were seen in Germany as toys for consumers.   Nixdorf sold data processing  tools and services to businesses.   When asked about making PCs,  Heinz was reported to have said: “We are not building Goggomobiles”. “Goggomobil”   being a reference to a line of German  microcars being made at the time. Later oral histories from Nixdorf company  employees noted that the company’s success   in the 1970s and highly founder-centric  structure cultivated a rigid “yes-man” culture.   If Heinz was not for it, then woe be  to the one who spoke up against that. Or maybe, Heinz and management knew that pursuing  the PC would require radical and painful changes.   Nixdorf’s entire system - hardware,  operating system, software applications - was   closed and proprietary. One did not work without  the other, and it made them a lot of money. Whatever the reason was - and it was probably  a little bit of everything - Nixdorf remained   almost entirely focused on their closed  systems and large 88-series minicomputers.

The Rise of the PC

And initially, this did not affect  the company’s financial performance.   Nixdorf enjoyed rising revenues and  profits throughout the early 1980s. In 1984, with Nixdorf generating  nearly a billion dollars in revenue,   Heinz finally allowed the company to go public.  At the time, it was West Germany’s largest IPO,   and valued the company at about $1.2 billion. One major reason they did this IPO was to raise  capital for new products to address the company’s   existing threats. IBM was by then selling plenty  of PCs to small and medium businesses in Europe. In 1984, IDC calculated that Big Blue held  about 15% of the overall European market.   Nixdorf by comparison had just 6%. In the  company’s core market of West Germany,   Nixdorf held just 15% market  share compared to IBM’s 11%. Other European companies like Italy’s  Olivetti were making and selling PCs.   Nixdorf on the other hand was still selling the  88-series minicomputers - then a decade old. The massively growing PC - with its MS-DOS  operating system - was getting large enough   to pry open Nixdorf’s closed ecosystem. PCs  were sold through a wide number of channels   and their architectures broadly standardized 

• knocking down prices and pressuring margins. In 1985, Nixdorf Computer released the Nixdorf  8810 - an IBM-compatible PC. It looked a bit   like the Compaq portable PC - sporting an  integrated hard disk drive, floppy and monitor. The 8810 and its derivatives  were designed by third parties,   and you can tell that Heinz’s heart  wasn’t in it. They made it simply because   their customers demanded it, and it actually  sold pretty well over the next few years. Though making these smaller computers radically  changed Nixdorf’s factory shop floor. Workers   now had to make these very small circuit boards 
• requiring them to don lab coats and gloves.

UNIX

Rising alongside the PC were these “open” systems 

• often based on the operating system UNIX. These systems allowed customers to  port their unique software applications   from one piece of hardware to another. It  removed Nixdorf’s software and ecosystem lock-in,   so that customers can now buy from  a wide variety of hardware vendors. In response, Nixdorf decided that  its future would be in producing and   selling decentralized and distributed  networks of computers running UNIX.   Such computers can share data and  compute load with one another. In 1984, Nixdorf joined X/Open - a consortium of  European UNIX standards with members like AT&T,   DEC, Sun, Olivetti, and Bull. They then developed a new operating system based  on UNIX called Targon, initially created for a   fault-tolerant computer they were building  internally referred to as the Nixdorf 8832. Fault-tolerance refers to a computer  that stays running even when parts   of its software or hardware break. The  canonical company in this space was Tandem,   which produced computers for banks and  companies that cannot tolerate any downtime. They renamed the 8832 to the Targon/32 and planned   to transition all their hardware to the  platform. This would be mighty tricky.   Can UNIX - an academic and scientific  phenomena - work in the office? Will   moving to UNIX accidentally break down Nixdorf’s  proprietary moats and collapse their margins? It would have taken Heinz at the peak of his   powers and all his product and sales  savvy to pull off this transition.   Unfortunately by then, the heralded  founder was suffering from failing health.

Failing Health and Death

In 1978, Heinz suffered his first heart attack,  after which his attentions shifted to health. He instituted a rigorous training regiment  for himself and his employees - letting   them train on company time and building  a public sports park on company grounds. Perhaps sensing mortality, Heinz stepped back  somewhat - working to groom various successors   in the business. Most visibly, vice chairman  Klaus Luft - who first joined back in 1967. But as the long-time HR executive Lurse noted,   Heinz’s successors tried to emulate Heinz’s  leadership style but did not have his credentials.   It only worsened the company’s  “yes-man” culture and gridlock. Then in early April 1986, Heinz  succumbed to his failing health,   dying at the young age of 60. While attending  a trade show at Hanover, he suffered a heart   attack while dancing at a party and passed  before he could be taken to a hospital.

Spiraling

So after Heinz’s tragic death,  Klaus Luft took over the company. In 1986, Nixdorf computer generated almost  4 billion marks or $1.75 billion in revenue.   So the company seemed strong at the time.  Revenue and profits were both growing. By then, Nixdorf had 23,000 employees in hundreds  of offices across 40+ countries. And despite over   half of the sprawling company’s workforce being  salespeople, Luft kept hiring until mid-1988.   The company added over 5,000 new employees 

• chasing growth at perhaps the wrong time. The company’s 8810-line of PCs sold well,  generating hundreds of millions of marks.   But Nixdorf failed to properly transition the  users of its important 88-series minicomputers   to the new Targon-based machines.  And competitor PCs were getting   more powerful by the year - encroaching  ever closer to minicomputer territory. Meanwhile, the company’s financial  structure sank from all the new hires   plus a horrifically uneconomic cost structure   thanks to multiple factories in high  cost locations in Europe and Singapore. I think anyone would have had a  hard time stepping into Heinz’s   massive shoes - facing the severe  issues that the company was facing.   But by expanding for growth that never came,  Luft put the company on the path to grave danger.

End

By the end of the decade, rumors began  circulating that Nixdorf was in trouble. 1988 saw Nixdorf turn an operating loss of  59.8 million marks. That was a substantial   drop from the previous year, when the company  reported an operating gain of 330 million marks.   It was only through property sales that  they managed to turn a net profit that year. No property sales to save things the  next year. The newspaper Der Spiegel   reported that the company may lose a billion  marks or roughly $267 million USD in 1989   due to compressing margins  and intensifying competition. Hardware prices in some areas  had collapsed 20% year over year.   The company halted dividends on special shares  of stock and buyout rumors began to circulate.   In 1989, they announced that they would cut at  least 1,600 jobs. In my opinion, too few too late. Luft had told Der Spiegel that Nixdorf “can  beat IBM” and had to “fight like never before”. Then in November of that year, he  unexpectedly resigned - perhaps recognizing   that he had lost the confidence of the board. In 1990, Nixdorf Computer announced that they   would sell to Siemens - the only plausible  German acquirer - for about $350 million.   The resulting Siemens-Nixdorf was Europe’s  second largest computer company after IBM. For the folks at Nixdorf, it came as a brutal  culture shock. Nixdorf ran a familial culture   where people helped each other  without thinking about the cost.   Siemens changed that, imposing strict  project billing and rigid hierarchies.

Conclusion

Before we conclude, I want to point you to the  work done by the Heinz Nixdorf Forum in the man’s   hometown of Paderborn. They have done amazing  work in documenting his legacy and life’s work. So what happened afterwards? Siemens  quickly realized that the idea of owning   Europe’s second largest computer company  sounded far better than actually owning it.   Integration struggles and the transition away  from minicomputers led to heavy financial losses. So in the late 1990s, Siemens decided to  split the company into three. In 1999,   they merged their hardware operations into that  of the Japanese giant Fujitsu - which contained   the remnants of the PC divisions of Nokia,  Ericsson and others - to create Fujitsu Siemens. Nixdorf’s retail and ATM banking  operations - which date back to a   Swedish bank terminal project in the 1970s 

• were spun out as a separate company. The private equity group KKR bought them  in 1999 and renamed them to Wincor-Nixdorf. They then took that company public in 2004,   eventually earning $750 million  on a $200 million investment. Siemens kept the IT services part  of the business for itself - later   selling it in late December 2010  to the European IT company Atos. In 2016, Wincor-Nixdorf was taken over by the  American company Diebold for about $1.8 billion.   The resulting combination - named Diebold Nixdorf 
• continues on as the world’s largest ATM company.   The Nixdorf name thusly lives on in  the hundreds of ATMs around the world.