Artisoft: A Networker That `Just Shot Out Of Nowhere'

Jack Schoof knows a bargain when he sees one. The chairman of Artisoft Inc. recently bought a shiny new corporate headquarters in Tucson from the Resolution Trust Corp. for $26 a square foot--around a third of the cost of building one. For his growing collection of classic cars, Schoof just snared a '37 Rolls limo from a struggling real estate developer for $50,000. "I got a steal," he says.

C. John Schoof II's penny-pinching ways should come as no surprise to his customers. He has built a booming business by selling systems that link personal computers into networks at prices far below his competitors'. The company, which heads BUSINESS WEEK's 1992 list of Hot Growth Companies, has blasted from $2.2 million in sales in 1988 to what analysts estimate will be more than $70 million in the year ending June 30. Earnings growth has averaged 321% over the past three years. "They just shot out of nowhere," marvels Bradley K. Baldwin, a market researcher at Gartner Group Inc. in Santa Clara, Calif.

While the PC business is in a slump, providers of local-area networks, or LANs, are flourishing. For one thing, a network of inexpensive PCs can match the processing prowess of costly mainframes. Even small companies can save money by hooking their PCs together: A small network can share a single printer, for instance, saving the cost of buying one for each PC.

AMONG EQUALS. Artisoft has made its name in the $900 million LAN software market with an inexpensive product called LANtastic, a "peer-to-peer" system in which every PC on the network is an equal. Most competing systems, such as those from market leader Novell Inc., require that PCs become "clients" of a dedicated "server" computer--which means that companies must buy a new PC just to administer the network. Often, the system is so complex that companies must hire an engineer to manage it.

Artisoft's rapid rise has already triggered a rejoinder from Novell. In September, just three days before Artisoft went public, Novell announced that it was launching its own peer-to-peer design, at exactly the same price. Artisoft also must worry about Microsoft Corp., which is widely rumored to be upgrading its Windows software package to make it control peer-to-peer networks.

Schoof--rhymes with loaf--founded Artisoft in 1982 on $40,000. By 1984, after a couple of disappointing products, his bank balance was down to $1,800. He built a PC clone for himself, then another for a friend, and another, and another. By 1986, Schoof was running a $2 million clone oufit out of a Tucson storefront. Meanwhile, he was writing the software that would relaunch Artisoft as a LAN company in 1988.

Now 33, he's trying to move Artisoft beyond simply routing data through cables. A product called Sounding Board is a good example: It hooks a telephone handset to the computer so that users can send voice messages to one another through the network. And, of course, he hasn't given up his search for bargains. Schoof's latest acquisition was Performance Technology Inc., which will give Artisoft the ability to link much more powerful Unix computers. As for spending on himself, there are still five empty stalls in Schoof's 11-car garage.

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