Although the Washington area may never be another "Silicon Valley" -- where computer firms are clustered south of San Francisco -- dozens of computer companies call it home.
They range from producers of state-of-the-art computer equipment to the writers of the programs that tell the equipment what to do; from brokers who sell the federal government millions of dollars in equipment, to consultants who tell the brokers how to sell it.
And while the federal government, to which many of them owe their existence, is becoming more frugal, nearly all the firms are riding the crest of a nationwide boom in computing that has affected companies selling hardware, software and everything in between. The other characteristic shared by Washington's computer firms is their origin -- nearly all were established after 1968 by small groups of computer specialists striking out on their own.
Nationwide trends are reflected in the strength of Washington's "software" industry. These companies write the programs that tell computer equipment, or "hardware," how to react to users' instructions. "I see fabulous prospects," says Russell C. (Rusty) Luhring, president of Ferox Microsystems in Arlington. "With hardware growing at 30 percent a year, demand for software is more than keeping up."
Ferox, which Luhring started with his programming talent and a second mortgage on his house, recently began marketing a software package for business. In two years Luhring's payroll has grown from one employe -- himself -- to eight.
Luhring's company produces only packaged software systems, intended to be copy-righted, reproduced and sold to a large number of customers.
CEXEC Inc., based in McLean, writes custom software as well, specializing in applications in banking and the federal government.
Still, says company chief Mark Veith, "Once we have developed a custom approach, if it proves out to be a good solution, we'll put it on the shelf and try to sell it in mass-produced form. "Sales have gone from about $250,000 when the company was started five years ago to more than $3 million this year, Veith said.
Among other Washington-area firms in the software market are the small, minority-owned Technassociates Inc.; American Management Systems, which offers a range of computer sevices, and businesses like the District's Aztech Corp., which provides software and other services to a specialized clientele.
It's no surprise that much of Washington's computer industry jumps when the federal government snaps. The government spends so much on computing -- various estmates put the annual bill at anywhere from $10 billion to $20 billion -- that Government Consultants Inc. has built a business around telling computer companies how to make such sales.
Terry Miller, who used to buy computers for the General Services Administration, set up GSC eight years ago, and it now has 10 employes.
C-3 Inc. of Reston, a publicly held firm, is one of the few computer equipment manufacturers here, and it too depends on the government market. C-3's role is to design, build and service custom minicomputer systems that fit government specifications. "It's a tremendous market out there," President John Ballinger said in a recent interview. "We see nothing but growth ahead."
Datatel Inc., cofounded by Earl Kendrick and Tom Davidson, ignores the executive branch to concentrate on the legislative, offering time sharing for 100 congressional clients. Datatel also provides computing to small banks -- 35 in the District and 65 in Virginia, according to Kendrick. Kendrick says sales rose to $13 million last year from $9 million the year before.
CEXEC is changing its customer mix to reduce its reliance on government contracts. "About two years ago we were 100 percent federal," says president Veith. "Now we're no more than 60 percent." The company has diversified into familiar territory: Most of its government work is for the Energy Department, and its new commercial business is concentrated int eh energy industry.
Aztech, which has 50 Employes, offers computer services tailored to the needs of trade associations. According to President John W. Rollins, who started the firm in 1968, Aztech integrates computer equipment made by Data General Corp. with its own software and its knowledge of associations' needs. Among its 150 clients are trade groups buying everything from processing time on Aztech's own computers to complete minicomputer systems that are designed, installed, programmed and serviced by Aztech.
American Management Systems is one of Aztech's main competitors for the trade association business, but its activities are much wider. AMS, a giant in the local industry, has 20 offices around the country. In addition to software services, it offers time sharing -- providing remote hook-ups to a computer at its office -- a variety of processing services, and a management consulting group that helps clients determine their computer needs.