Protecto Enterprizes: What is was and wasn’t

Last Updated on April 24, 2024 by Dave Farquhar

Protecto Enterprizes (not Protecto Enterprises), and Computer Direct, one of its divisions, are names that come up occasionally in retro circles. They were a company that advertised heavily in computer magazines in the mid-1980s, and their inventory is frequently interesting to retro computer collectors. But sometimes it’s a little unclear what this company was, and I think that was by design.

Protecto Enterprizes/Computer Direct was a computer mail order discounter based out of the Chicago area from 1979 to about 1995. They were not a manufacturer nor were they strictly a liquidator, though they did sell a lot of closeout inventory and private label products that made them look like they may have been more than just a distributor.

Protecto Enterprizes: A cottage enterprise that looked bigger

Protecto Enterprizes was founded in 1979 by John Scheele in the basement of his home in Franklin Park, Ill., a suburb of Chicago. Scheele was a World War II veteran and a former executive at Standard Oil and Montgomery Ward. After retiring from Montgomery Ward in his mid 50s, he started a mail order computer distribution business in his basement.

He had a simple business model. Advertise in the back pages of relevant magazines. Publish a phone number and PO Box address. Ship orders and repeat. Lots of other companies did the same thing. Some faded quickly. Others are still around today.

Protecto Enterprizes was somewhere in the middle. It ran out of steam in the 1990s, but its run through the 1980s was remarkable. It was always a family owned and operated business. But for about a decade it looked much bigger than that.

And many modern accounts of them describe them as a liquidator. They were very good at liquidating surplus inventory. But they were more than just a liquidator.

The Interact and Imagination Machine

Initially, Protecto Enterprizes dealt in niche computer brands, starting with the Interact computer, a short-lived 8080-based microcomputer that only had a few thousand units produced. When supplies ran out circa 1981, they switched to the APF Imagination Machine, a platform based on the Motorola 6800 that could be sold as a standalone computer or as a Coleco Adam-like upgrade for APF’s MP1000 game console.

Protecto sold the computers and software by advertising in the back pages of consumer electronics magazines. Soon they cornered the market on hard to find accessories and software for these machines and providing support. The formula was not unlike that of a modern sales engineer. When you called them on the phone to place an order, the person you talked to was familiar with the product and could make recommendations. It was good for repeat business. They’d sell you a starter bundle at a good discount, and then you’d come back for software or more accessories.

Once supplies of those machines started drying up around 1981, Protecto needed something else. They found it in a big way.

Protecto leveraged their relationship with these magazines in 1983 when they advertised a legendary vaporware Atari 2600 compatibility product for the VIC 20. That product never materialized, but Protecto did go on to move a lot of other Commodore gear.

Commodore and Protecto Enterprizes

In 1981, Protecto placed its bet on Commodore. In an interview with Ahoy magazine published in their January 1984 issue, employee Bill Badger said initially they were only interested in the VIC-20 and the Commodore 64. They had no interest in the PET line. They established relationships with as many software publishers as they could and built up a catalog of software and peripherals to go along with the computers.

Whether you were buying your first computer or looking to accessorize what you already had, Protecto had something that would interest you.

Commodore didn’t really know what they were doing when it came to selling computers at retail. They had a large network of independent dealers, but then they sold computers to the large national retailers, who undercut their prices. Many of the independent dealers changed brands or went out of business, and as Badger put it in 1984, Kmart carried computers but didn’t know anything about them. So it was a safer bet to call Protecto and talk to someone who knew something about the product. And then Commodore botched the relationship with Kmart.

Protecto thrived on the chaos. Soon they outgrew the basement and moved to a warehouse in Barrington, Ill. And by 1983, they expanded next door to occupy the whole building, doubling their space.

Even though Commodore was a growth market in the early 1980s, Protecto found they were able to apply their experience selling orphan products to this booming market as well.

The surplus business and blowfish strategy

When surplus inventory came available, they would act as a liquidator, sometimes relabeling the product and selling it under their own brand. In other cases, they would negotiate a deal to sell a product as a private label product at a slight discount. They did this with printers, but also with other expansion products like video boards, light pens, and joysticks.

This allowed them to appear larger than they were. They even included the words factory direct in their advertising sometimes. If indeed they were shipping factory direct, they were drop shipping. It’s a necessity when you’re operating out of a basement. But it allows you to look bigger even once you have a warehouse.

And when they liquidated a product, such as surplus IBM PCjr printers, they used hyperbole like, “We bought out the factory.” This made it sound like they bought the rights to continue producing the printers, even if the reality was closer to buying up all of the remaining inventory and then liquidating it.

It was good marketing in the 80s. But it causes some confusion today.

The Commodore B-128

Initially, Protecto wasn’t interested in the PET line. But when Commodore discontinued the B-128, which was the last of the PET line, they liquidated the remaining inventory of computers and disk drives through Protecto. They just dusted off the formula they’d used on the Interact and Imagination Machine. They cobbled together complete systems, offered them at a steep discount off the original retail price, and had upgrades and software available.

Protecto was also one of the few resellers of the Commodore SFD 1001 disk drive. The surplus Commodore inventory Protecto liquidated in the mid 80s are prized collector’s items today.

Other Commodore computers

In the end, Protecto ended up selling more of the common Commodore computers than its closeouts, including the VIC-20, C-64, and C-128. It would bundle Commodore computers and peripherals, often substituting aftermarket peripherals to lower the price point. It was one of the leading resellers of the Excelerator Plus third-party disk drive, both alone and bundled with a Commodore computer.

Computer Direct

For a couple of years, Protecto was content to specialize in Commodore. In the mid-1980s, Protecto branched out into other brands. It started with printers, such as the IBM PC Compact Printer, as they were able to get interfaces produced so it would work with a variety of computers, not just Commodore. Before long, there were also selling Atari 8-bit computers and the Laser 128 Apple II clone, alone or bundled with a cut rate printer and monitor.  They formed a new division, which they called Computer Direct, to specialize in the non-Commodore side of their business.

They did stay away from the Amiga and Atari ST, but as the decade wore on, it became clear that IBM clones were the future. So they started reselling inexpensive IBM compatible computers. But their strategy was to go after the low end of the market.

It’s easy for me to say but I think they were aiming too low. And this left them vulnerable to ending up with a bunch of sales proof inventory if they weren’t able to sell it quickly enough. Based on what they were advertising in 1992, I think that’s probably what happened to them. They advertised 12 MHz 286 and 16 MHz 386sx systems without hard drives at prices of $300 and $400 in mid 1992. At the time a more realistic system sold for more like $900 or $1,000. They had those too, but they were promoting the bare bones systems.

Online presence

Computer Direct ran a multiline BBS for its customers in the late 1980s. This allowed them to provide support more easily than over the phone, in addition to allowing users to support one another. But unlike some of their contemporaries, they did not make the transition to the Internet. Commercialization of the Internet came too late for that.

A change of tone and the end of the line

The blowfish strategy worked very well in the 1980s, but it lost steam after the turn of the decade. The last ad I can find for them was from 1992. And their tone in their 1992 advertising was very different. Gone was the implication  they were manufacturing inventory. Their 1992 ads had a folksy tone. They played up being family owned and operated since 1979. Their late ads even included a photo of the four Scheele siblings who were running the company by then.

But I don’t think they had a messaging problem. I think it was an inventory problem.

The early 90s were a fast moving time. In the 80s, it was OK if some of their inventory took several years to sell through. Based on what they were advertising in 1992, I think they had too much tied up in 286 and 386SX based systems and they ended up with too much stale inventory. Intel was pushing the market with their own advertising and the tide was too much to fight.

I wasn’t able to find a dissolution date. Their warehouse still stands. But don’t get any ideas of a Computer Reset repeat. The former Protecto warehouse now houses two unrelated businesses, a bathroom remodeling company and a commercial printer. By 1995, one of the Scheele brothers moved to another state and bought a UPS store franchise, and another was working as a software developer in the Chicago area. So it appears Protecto was out of business by 1995.

It was a good 16 year run. Most small businesses fail within two or three years. And few small businesses still have people talking about them a quarter century after they close.