Stac Electronics

Stac Electronics

Stac Electronics was an engineering company founded in 1983 by seven friends at Caltech. Originally headquartered in Pasadena, California and later in Carlsbad, California, the company developed interesting hardware and software technology, but struggled financially, until the release of Stacker disk compression software in 1990. This product was a runaway hit in the days when disk drives had relatively small capacities (20 to 80 megabytes) and were very expensive. Stacker doubled disk capacity (on average), and usually increased disk performance by reducing the amount of data that had to be read or written. Stac sold several million units of Stacker over the product's lifetime.

Microsoft lawsuit

In 1993, Microsoft released MS-DOS 6.0, which included a disk compression program called DoubleSpace. Stac executives were outraged, as Microsoft had previously been in discussions with Stac to license its compression technology, and had discussions with Stac engineers and examined Stac's code as part of the due diligence process. Stac sued Microsoft for infringement of two of its data compression patents, and won; in 1994, a California jury ruled the infringement by Microsoft was not willful, but awarded Stac $120 million in compensatory damages, coming to about $5.50 per copy of MS-DOS 6.0 that had been sold. The jury also agreed with a Microsoft counterclaim that Stac had misappropriated the Microsoft trade secret of a pre-loading feature that was included in Stacker 3.1, and simultaneously awarded Microsoft $13.6 million on the counterclaim.

While Microsoft prepared an appeal, Stac was able to obtain a preliminary injunction from the court stopping the sales of all MS-DOS products that included DoubleSpace; by this time Microsoft had already started shipping an "upgrade" of MS-DOS to its OEM customers that removed DoubleSpace. By the end of 1994, Microsoft and Stac settled all pending litigation by agreeing that Microsoft would make a $39.9 million investment in Stac Electronics, and additionally pay Stac about $43 million in royalties on their patents.

After 1994

At some time prior to 1996, the company relocated its main office from Carlsbad to Carmel Valley, in San Diego, and maintained a programming group in Estonia. After settling the lawsuit with Microsoft, Stac struggled to find its way as a public company. The aftermarket for hard drive compression software collapsed with the rapid fall in price of larger capacity hard drives. It had some successes, perhaps most notably with an acquired remote control product called "ReachOut". It invented a disk-based backup product for workstations and laptops, and marketed this product first as "Replica NDM" and later as "eSupport Essentials". While this was happening, Stac decided to get out of the compression business completely, and reorganized its compression hardware and software unit into a subsidiary called Hifn, which it spun off in 1998.

Stac then renamed itself to "Previo", and tried to reposition itself as a technology provider to helpdesk and support organizations. This effort was pursued while the dot-com bubble was bursting, and in 2002 the company finally threw in the towel. In an unusual move, rather than spend all its cash, the company sold off its technology (to Altiris) and returned its cash to its shareholders before dissolving.

References

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