Ing. C. Olivetti & C., S.p.A.

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Ing. C. Olivetti & C., S.p.A.

Via Jervis 77
10015 Ivrea (TO)
Italy
(125) 525
Fax: (125) 52 2524

Public Company
Incorporated: 1908
Employees: 56,937
Sales: L9.03 trillion (US$7.13 billion)
Stock Exchanges: Milan Brussels Frankfurt Paris Vienna Zürich

Long a world leader in the manufacture and sale of typewriters, in the 1980s Olivetti plunged into the information-technology market, where it has become a top European maker of computers and computer systems. Olivetti’s transformation from a sleepy producer of office equipment into a multi-dimensional designer of information networks is due largely to the ambition and international perspective of the company’s chairman, Carlo De Benedetti. De Benedetti and his brother Franco gained effective control of the nearly bankrupt Olivetti in 1978, and, realizing that the computer was about to alter the office-products market, began building a company that would be able to survive in the increasingly competitive international information business.

The results of their efforts have been mixed. Streamlined into four autonomous operating companies, Olivetti is probably the European computer maker best prepared to weather the post-1992 open market; but it remains a question whether any of the European information companies will be able to withstand the continued invasion of Europe by U.S. and Asian competitors.

Olivetti was founded in 1908 in the small northern Italian town of Ivrea, not far from Milan. Camillo Olivetti had been much impressed, on his various trips to the United States, with the typewriter, already well established in U.S. offices but still largely unknown in his native Italy. Olivetti pulled together a modest capital fund of L350,000 and opened his own typewriter-manufacturing plant in Ivrea, employing 20 workers.

In 1911 he exhibited the first Italian typewriter, the Olivetti M1, at the Turin Universal Exposition. The M1 was not significantly more advanced than the U.S. machines on which it was modeled but, as Olivetti commented at the time, “the aesthetic side of the machine has been carefully studied.” The Ml’s “elegant and serious” design were typical of Olivetti. As the company grew, this preoccupation with design developed into a comprehensive corporate philosophy, which embraced everything from the shape of a space bar to the color scheme for an advertising poster. Many years later the Museum of Modern Art in New York City recognized Olivetti’s enduring commitment to design by mounting an exhibition of its products and honoring the company as the West’s leading design firm.

During Olivetti’s first 20 years, Italy suffered the effects of World War I, uncontrolled inflation, political instability, and finally the crash and Depression of 1929. Olivetti itself, however, enjoyed remarkable and lasting success in the relatively immature Italian industrial economy. The little plant in Ivrea expanded rapidly, adding both floor space and employees as fast as they could be assimilated; yearly machine production shot up tenfold between 1914 and 1929—from 1,300 to 13,000 typewriters. As the company added new models to its line—the M20 in 1920 and M40 ten years later—it opened sales offices in six foreign countries, originating Olivetti’s consistently international approach to business. In 1928 Camillo Olivetti’s son Adriano had opened the company’s first advertising office, which soon employed some of Europe’s leading artists to communicate Olivetti’s commitment to aesthetics as well as efficiency. Adriano Olivetti, born in 1901, gradually took on more of the company’s management, becoming general manager and effectively head of the firm in 1933.

The Olivettis also took an interest in the living conditions of their workers. The company began building housing for its workers in 1926, and made an effort to create a corporate environment designed to foster its employees. As Adriano Olivetti gradually gained control of the family business during the 1930s, he embarked on an ambitious plan for the entire town of Ivrea, building schools, housing, roads, and recreation facilities in addition to regularly expanding the Olivetti plant itself. Olivetti founded a magazine and later a publishing house to further his social ideals, and remained a leading force in European industrial philosophy until his death.

Providing the wherewithal to support such philanthropy was Olivetti’s continuing success in the marketplace. The company increased typewriter production threefold between 1929 and 1937, at which later date some 40% of its machines were of the new, portable variety introduced in 1933. Other new products were added during these years as well—office furniture, adding machines, and teleprinters—presaging the company’s eventual emergence as a diversified office-products manufacturer. Olivetti went public in 1932, initially capitalized at L13 million and managed to maintain its profitability through the worst years of the Depression. Within ten years, corporate capital had tripled, employees numbered 4,700, and Olivetti machines were being exported to over 22 countries.

As World War II dragged on, however, the position of the Olivetti family, which was Jewish, became untenable. Adriano Olivetti was forced to flee the country shortly after his father’s death in 1943; but when he returned at war’s end, he was able to pick up the pieces quickly and join the postwar economic boom.

Olivetti enjoyed unprecedented growth in the years following the war. The company expanded its export business to include the entire industrialized world. It also acquired Underwood, the American typewriter manufacturer, and built new plants in southern Italy, Spain, Brazil, Argentina, Mexico, and the United States. Its growing collection of office products all exhibited the aesthetic sensitivity that had made Olivetti famous in the world of design, and Adriano Olivetti pursued his vision of an industrial giant responsive to the needs of both consumer and worker.

In 1959, in addition to its line of typewriters, adding machines, teleprinters, and office furniture, Olivetti unveiled the Elea 9003, Italy’s first computer. This room-sized machine was built with an eye toward eventual competition with IBM and the other early computer developers, but within a few years Olivetti realized that it could not match strides with the more advanced U.S. products and abandoned the mainframe market.

Adriano Olivetti’s death in 1960 brought to an end the Olivetti family’s direct management of the corporation. The company employed some 40,000 people, less than half of whom worked in Italy, in 1960, and its capital had reached L40 billion. Despite an impressive list of awards and international acclaim, the company entered a period of falling profit and gradual insolvency. Olivetti found itself in need of outside capital and management, and in 1964 it was rescued by a consortium of Italian banks and industrial concerns. Bruno Visentini was made president.

When Olivetti left the mainframe market during the early 1960s, it did not ignore the electronic revolution then just beginning. In addition to converting its adding machines to what we now call calculators, the firm began manufacturing electronic typewriters, banking terminals, and telecommunications equipment. Olivetti also entered two new markets, offering the Copia 2000 line of copiers and an increasing array of industrial-automation systems, including robots and precision machine tools. Most significantly, the company continued to produce smaller computers, and by 1965 was selling both minicomputers and an early version of the desktop micro. Olivetti thus survived a period of technological change and international competition that proved to be too much for many other long-established machine manufacturers.

Olivetti survived the Asian challenge, but it did not prosper. By the end of the 1970s the firm employed a peak of 62,000 individuals, and had L1.55 trillion in sales in 1978; but with corporate debt at an alarming level, Olivetti turned once again to the financial markets for help. Carlo and Franco De Benedetti, a pair of young entrepreneurs acquired 14% of the company for a bargain price of $17 million. Carlo De Benedetti brought to Olivetti more than an infusion of capital; he pushed the company to drop its traditional corporate style. Despite the recent electronic overhaul, the company had remained relaxed and rather friendly. For years Olivetti had supported various artistic and philanthropic projects, building day-care centers for its employees as well as beautiful typewriters for its customers, but it had not been especially concerned with efficiency and profit. De Benedetti realized that such a business would not survive the challenge posed by Asian international competitiors.

Olivetti continued its expansion in the information-technology market, but with new vigor, efficiency, and aggressiveness. Olivetti accordingly added new products, like cash registers, automated teller machines (ATM), and advanced copiers, to its line of electronics systems and made a major commitment to its micro- and mini-computer divisions. Its 1982 personal computer, the M20, was widely recognized as a solid machine, but it was not IBM compatible. The following year Olivetti pushed into production the M24, which was not only IBM compatible but an attractive enough product to bring De Benedetti the international trading partner he had hoped to find. AT&T offered to sell Olivetti micros under its own name in the United States, while Olivetti would sell AT&T minis outside the United States. In addition, AT&T agreed to buy 22% of Olivetti, retaining an option on a further 18%.

The deal was signed in December 1983 and was an immediate success. AT&T sold the Olivetti machines as fast as it could get them, distributing some 200,000 units in 1986 alone, while Olivetti produced more modest but acceptable sales figures with the AT&T minis. De Benedetti made the cover of Time as Olivetti sales reached L7.3 trillion and profits hit L565.5 billion. Olivetti, however, was late on several key innovations in 1987. As a result, AT&T’s sales fell off drastically, bringing with them Olivetti profits, and the two partners nearly ended relations in April 1988. Amid mutual recriminations, De Benedetti reaffirmed his faith in Olivetti by upping his share in the company to 20%, which also made a takeover by AT&T less likely. Profits continued to fall nevertheless, from a 1986 high to a 1988 low of L356 billion, as Olivetti’s stock price and market share both took a beating in the tightening computer race.

De Benedetti took decisive action in the beginning of 1989. He and Vittorio Cassoni, the new managing director of Olivetti, completely revamped the firm’s lines of command, creating four new and separate companies under the ownership of Olivetti. In order of decreasing sales, these companies are: Olivetti Systems and Networks, which handles the production and marketing of all professional level personal computers and minicomputers; Olivetti Office—which manages the bulk of the company’s traditional business in fields like typewriters and calculators, as well as personal computers, photocopiers, and facsimile machines for home and office; Olivetti Information Services—which offers a wide variety of information services, including software, large-scale integration projects, and custom-tailored information networks for large users; and the Olivetti Technologies Group, a collection of 24 smaller companies engaged in the ancillary computer hardware field and the development and management of large-scale industrial projects. De Benedetti and Cassoni hope that the new organization will provide a more efficient format for Olivetti’s extremely wide variety of products and technologies.

Olivetti’s leadership is well regarded and bold, as demonstrated by Olivetti’s ascent to the number-two position in the American ATM business, and its purchases of Acorn Computer in Great Britain and Triumph-Adler in Germany. De Benedetti is clearly commited to making Olivetti a leader in value-added information services, steering clear of head-to-head hardware battles with companies like IBM. Olivetti has apparently patched up its differences with AT&T, which remains a potentially valuable partner, but in an industry which undergoes technological revolutions every 18 months, it is hard to say who will remain a viable manufacturer of world-class computers and who will finally be remembered only as a maker of antique typewriters.

Principal Subsidiaries

Baltea S.p.A.; Olivetti-Canon Industriale S.p.A.; Ibimaint S.p.A.; Olivetti Information Services S.p.A.; Olivetti Office S.r.l.; Olivetti Systems & Networks S.r.l.; Olivetti Sanyo Industriale S.p.A.; Olteco S.p.A.; Tecnost S.p.A.; Teknecomp S.p.A.; Olivetti-Logabax S.A. (France); Scanvest Olivetti A/S (Norway); TA Triumph Adler AG (Germany); ISC-Bunker Ramo Corp. (U.S.A.); S.I.A.B. S.A. (France); Acorn Computers Ltd. (U.K.); Olivetti-Hermes S.A. (Switzerland); Pegasus Inc. (Japan); Decision Systems International; Olivetti Management of America, Inc. (U.S.A.).