Computer Chronicles Revisited 79 — The Kowloon Hotel, Exchange Square, CitiCorp Center, and the HSBC Main Building

On December 19, 1984, Prime Minister Margaret Thatcher of the United Kingdom signed a “joint declaration” with her counterpart from the People’s Republic of China, Zhai Siyang, formalizing the return of the British colony of Hong Kong to China on July 1, 1997.

The United Kingdom first claimed the island of Hong Kong as a colony in 1842 after imposing a treaty on China’s Qing dynasty following a conflict known as the First Opium War. After a subsequent conflict–the Second Opium War–the British forced China to cede adjacent territory on the Kowloon peninsula in 1860. In 1898, the British demanded even more land for their expanding colony, which led to a 99-year lease agreement for what became known as the “New Territories.” Although this lease technically applied only to the New Territories, the 1984 joint declaration provided for the return of the entire colony, which only made practical sense since by the 1980s most of Hong Kong’s population resided in that area.

The joint declaration came at a critical time for Hong Kong’s commercial property owners. During nearly a century of British colonial rule, Hong Kong became a major center of commerce in Asia. But in mid-1982, the colony’s real estate market collapsed. According to a February 1984 Los Angeles Times report, the values of many Hong Kong properties dropped by “a third or more.”

Hongkong Land, the colony’s biggest commercial landlord, was hit especially hard. The Times noted that just before the market collapsed, Hongkong Land had paid $732 million to purchase an old bus terminal. The company planned to redevelop the property as a new headquarters for the Hong Kong Stock Exchange, to be known as Exchange Square. The $1 billion project was projected to pay for itself in 8.5 years following its estimated 1986 completion. But the Times said that with rents in Hong Kong now less than half of what they were before 1982–and only one tenant aside from the Stock Exchange signed up to lease space–it might take 15 years or more to recoup the construction costs.

Lest you worry that a company built on British colonialism would somehow fail, Exchange Square opened on April 1, 1986. By that time Hong Kong’s economy had rebounded, in no small part because the joint declaration had reassured foreign investors that there would no longer be any political uncertainty surrounding the colony’s future. Hongkong Land did quite well on Exchange Square and continued to build its portfolio, and even today is still the largest landlord in the now-Chinese Special Administrative Region of Hong Kong.

Would Intelligent Buildings Make Prisoners Of Their Occupants?

If you’re wondering what any of this has to do with Computer Chronicles, well it’s because Exchange Square was one of the featured “guests” in this next episode from January 1987. Stewart Cheifet and company were not interested in the economic and political history of Exchange Square so much as the computers inside the finished complex. Exchange Square was among the first of a new wave of “smart office buildings,” which promised tenants a full range of computer-based automation services.

Most of this episode consisted of remote reports from Hong Kong. Stewart Cheifet and George Morrow taped a brief introductory segment in the San Mateo studio. Cheifet showed Morrow an Apple II program called Power House that allowed a home user to control the electrical and electronic appliances throughout their house. The main menu consisted of icons representing the various rooms in the house. Cheifet showed how you could zoom in on a particular room–at best could be represented by Apple II graphics–and see the specific appliances connected. This effectively turned your home into an “intelligent home,” he noted.

Cheifet said the subject of this episode was “intelligent buildings,” specifically commercial buildings. What did Morrow think about this concept? Morrow said installing computers in buildings would become absolutely essential when it came to controlling communications. But when it came to controlling the building itself–the lights, the elevators, the doors, et al.–he saw the risk of computers making prisoners of the people trying to run the business. So it would be a rocky road unless there was a lot of flexibility built into the computer systems.

The Kowloon Hotel

Cheifet narrated the first remote segment, which focused on the Kowloon Hotel, an “intelligent hotel.” (Throughout this segment, there is B-roll footage of Computer Chronicles producer Sara O’Brien in the hotel.) Messages at the Kowloon were transmitted by a local area network (LAN) directly into television monitors in each room. Guests could retrieve their messages at any time by pressing a key on the telecenter’s main control panel. Messages were entered into the main system as they were received, either at the front desk or the communications center.

Ronald Suen, an assistant group controller with the Kowloon Hotel, told Cheifet that the Kowloon was owned by one of the oldest hotel companies in Asia and was actually one of the last to move towards computerization. Management was cautious in adopting computers, and when they did so the goal was to introduce a system that was faster and more efficient.

To a new guest, Cheifet said, the Kowloon’s telecenter acted like a “smart TV,” providing personal information like messages and the status of your hotel bill. The menu-driven system also featured general services like currency exchange rates and the local weather report. And if a guest was new to the area, they could call up a map or find out about tours to China. Guests could even request a keyboard-equipped telecenter, which then functioned as a telex and word processor.

Cheifet said that in order to provide these services, the Kowloon moved away from the conventional mainframe to its own LAN. Suen said this had the advantage of sharing resources and unlimited expandability.

The Kowloon’s advanced computer network was more than just a convenience for guests, Cheifet noted. The hotel’s billing records, guest history, and day-to-day accounting were all recorded online. If a frequent visitor called to reserve a room, the clerk could review the client’s particulars from room preference and room rate to the visitor’s special needs. The accounting system billed telephone calls and other charges to the guest’s room almost instantaneously.

Cheifet added that this network approach also extended to the restaurants and room service. Online cash registers checked to see if a guest was still registered before charging a meal. And while the guest was having lunch, room service accessed the network when refilling in the in-room minibar, with an attendant entering the coded information directly into the telephone keypad, which was linked to the online billing system. And there were future plans to have the room staff communicate with the host computer using a remote terminal similar to a cellular telephone.

In spite of the hotel’s commitment to its computers, Cheifet said, the management was not taking any risks. Electronic transactions were still copied onto paper. And the hotel’s traditions of personal service were not about to disappear. Suen said that for instance, there were no plans to replace waiters with computer terminals. But that waiter might have a computer to improve personal service and speed up the efficiency of the operation.

Exchange Square

The next segment focused on Exchange Square. Cheifet said that when construction began on the complex in 1984, Hong Kong was in the midst of a serious real estate recession. No one was leasing or buying anything. So the owners of Exchange Square decided to make their project stand above the crowd by making it an “intelligent building.”

Martin Spurrier, the communications manager for the Hongkong Land Group, reiterated that at the moment the company acquired the site, the property market crashed for the same reason as it had in other cities like New York and London. But the Hong Kong crash was exacerbated by the political problems and the negotiations between the United Kingdom and China. So the company realized in order to lease their new building, it simply “had to be the best.”

At first glance, Cheifet said, the success of Exchange Square could be due to its favorable location, magnificent views, or “graceful” lines. But hidden within the building’s glistening skin–okay, this is starting to sound like porn now–were “intelligent” features that might be the most advanced of any shared-use office building in the world.

Spurrier said the global, 24-hour office environment was going to be the secret for Hong Kong, New York, London, and Tokyo–the four financial centers of the world. The ability for a company to come into a building and operate on all those markets around the clock was a key feature of Exchange Square.

Cheifet noted that Exchange Square was the home of Hong Kong’s new stock exchange, an amalgam of four different exchanges into one highly computerized operation. The orderly trading floor was a sharp contrast to the noise and chaos associated with other stock markets. Traders sat at banks of computer terminals around a central LED screen. About the loudest noise on the floor was the constant ringing of telephones. Remote terminals provided brokers with instantaneous trading information in English or Chinese. And when the Hong Kong exchange was closed, they could trade in other markets around the world, day or night.

Along with 24-hour access to global stock markets, Cheifet said, new tenants of Exchange Square shared electronic “plumbing.” The computer center provided each office with voice and data communications, word processing and financial database software, and a message switch to link the services together. Eric Vincent, the manager of Exchange Square, told Cheifet that the idea of sharing a common exchange seemed to be a good idea. So then they thought why not share other resources that were quite expensive if you wanted a large number of facilities, which the average small tenant couldn’t afford.

Electronic plumbing made Exchange Square more attractive to tenants, Cheifet said, and more expensive to build. But the project’s architect, Remo Riva, saw no conflict between design and function. Riva told Cheifet that the means of technology were getting smaller and smaller to the point where you often didn’t need visible wires. The technology was effectively an “invisible network” that surrounded you without really affecting the aesthetics or the more traditional appeals of the building.

Cheifet said that while not all tenants of Exchange Square used the shared resources, most companies found them worthwhile, much to the relief of the building’s owners. Spurrier said he was delighted with the way that things had gone, because nobody ever heard of “shared resources” before Exchange Square came on the map. At the moment, about 53 percent of tenants were using at least some of the shared services. Spurrier noted that rate compared favorably to other intelligent or shared resource buildings, most of which were in the United States, where there were only about a dozen up and running.

Exchange Square’s intelligence might not appeal to its larger tenants like IBM, Cheifet said, as Big Blue preferred its own computers. But it made sense to a lot of other companies like Baring Securities, which was the building’s first tenant. Baring, best known in history for having brokered the sale of the Louisiana Purchase, favored the idea of shared resources. William Phillips, a managing director with Baring, told Cheifet that one of the most expensive things about starting any office was the machinery, whether it was a word processor or PBX or telex machines. As a brokerage–essentially a cash business–Baring didn’t want to spend $500,000 to $1 million upfront getting all that machinery in place before they could start trading. So the advantage of going into an “intelligent” building was that you didn’t have to pay for any of it upfront.

Cheifet said in spite of the success of electronic plumbing in Exchange Square, some uncertainty remained, at least among the business users. Foremost among those concerns was security. Manager Vincent conceded that inevitably there always could be problems over security, although they had gone to great lengths to avoid any security problems. For instance, on the database computer system each terminal was connected to a port and the system had the passwords logged against that port. So even if one tenant learned another tenant’s password, he couldn’t go back to his office and access the system through his terminal.

The mixed group of over 150 tenants at Exchange Square presented another challenge to the designers, Cheifet said: How to provide companies with services to their individual business needs? Barings’ Phillips said that to find the common denominators for all the tenants was not going to be an easy task. But things like word processing, telecommunications, telex, fax, and telephone were standard for everybody.

CitiCorp Center

Wendy Woods popped in to present a segment focusing on the CitiCorp Center in San Francisco. (Today it is more commonly known as One Sansome Street.) Woods noted this was one of the few intelligent buildings in the city. The computers at the CitiCorp Center could do just about everything but make coffee in the morning. The computers continuously tracked the amount of electricity being used, adjusted air temperatures, and reported on the status of all the doors through the use of magnetic sensors to determine if they were open or closed. The computers also monitored the lights, turning them off and on at selected times.

But Woods said that the computer’s most important function was its management of the heating, ventilation, and air-conditioning (HVAC) systems to cut energy usage and utility bills. Dick Robinson, a leasing agent for CitiCorp Center, told Woods that the computers monitored inside and outside temperatures, mixed that with the desired temperature, distributed it effectively as to where it was supposed to go, and determined the minimum amount of energy required to bring about the desired levels.

And should a fire occur, Woods added, the computers would pressurize the affected floor and those above and below it, purge the air, send the elevators down to the lobby, unlock the stairway doors, and turn on the sprinklers–all before the fire company arrived.

Woods said there was only one drawback to intelligent buildings and that was their cost. They could add 2 to 3 percent to the cost of construction. And that could add up to millions and millions of dollars. Which was why intelligent buildings may be the wave of the future, but they weren’t necessarily the wave of the present.

HSBC Main Building

The final segment returned to Cheifet in Hong Kong. He said the colony’s status as a major financial and hi-tech manufacturing center had placed it at the forefront of new applications of computers. One such application was the new headquarters of the Hongkong and Shanghai Bank (HSBC), designed by British architect Norman Foster and reputed to be the most expensive corporate headquarters building in the world. (Foster is probably best known today in the United States for designing Apple Park in Cupertino, California.) And although the HSBC building was just a few blocks away from Exchange Square, it looked as if it could be on another planet. Cheifet said the HSBC building’s 47 stories sliced through an almost seamless skyline with a defiantly different profile.

Ray Guy, a senior manager with HS Property Management and not the former Oakland and Los Angeles Raiders punter who recently died, told Cheifet that the HSBC building had been designed to give flexibility and to have intelligence of its own in terms of operation. It was able to respond to changes in the law or technology. He said this was accomplished by taking the normal building plan and “turning it upside down.” For instance, the space that was normally occupied in the ceiling by lighting and HVAC systems was now under the floor. Similarly, the lighting and fire protection systems were built into a fixed ceiling.

Cheifet noted the HSBC’s external appearance reflected a lot about its “uncomprisingly unconventional” internal design. The entry to the building was up an escalator that took you through the curving glass “belly” of the lower floor, one flight above the street. The floors were suspended on pillars at each corner of the building, forming a kind of vertically stacked suspension bridge. This design made it possible to add new floors simply by “hanging” them from the supporting masts. And instead of artificially lit corridors and confined offices, the lower floors were wide open and arranged around a 12-story atrium. A computer-driven external reflector directed sunlight to 480 ceiling-mounted mirrors, bathing the interior with natural light.

Almost everything in the building was visible, Cheifet continued: the offices, the escalators, and even the circuit boards in the elevators. Guy said the architect liked everything that has to work to be visible. The lift cars were one aspect of this as they allowed people to see how the building itself worked as they traveled around it. There was also an LED message system within the elevator to welcome people and provide them with local stock index information.

Cheifet said the building’s flexible design could be seen in its modular utilities. Removable floor panels contained electrical outlets, telephone and air-conditioning ducts were interchangeable, and no structural changes were needed to move an office. Lighting and ventilation were computer-controlled, but if someone needed to work late, they needed only to enter the right code into a telephone keypad to turn their area lights on again.

The bank’s modular design extended to its computer services, Cheifet said, which added building-wide electronic plumbing to the other utilities. An intelligent communications network included phone sets that were coded to the individual, so if you moved to another part of the building, you would take your telephone along. The system would automatically find the phone’s new location and forward calls directly to that unit.

Dr. Po S. Chung with the electronics department of the Chinese University–which I’m assuming was one of the HSBC building’s tenants–told Cheifet that “modularity” and “decentralization” were two key concepts in this type of intelligent building. Each floor could have its own LAN and shared resources. So you could add more networking facilities on a modular basis.

Cheifet said that HSBC’s computer network extended around the building and around the world. The system handled everything from office automation to global communications. Through an electronic banking network called Hexagon, corporate customers had 24-hour access to the world’s major financial markets. Peter Greene with HSBC’s electronic banking services told Cheifet that Hexagon was their way of using technology to keep customers up-to-date with what was going on with their bank and with financial markets around the world. From another point of view, he added, one didn’t need a branch network with a system like Hexagon, as it delivered to the customer at his convenience all of the banking services they could receive via traditional methods. Who needed a branch network when in 10 or 15 years there was a “cashless society”? (Uh, about that, Peter.) Hexagon was currently a special service for business clients, Cheifet noted, but the bank’s goal was to use the same technology to make all operations more efficient.

As with any other bank, Cheifet continued, security was a paramount concern. Computers were used to protect the bank and protect themselves. To gain entry to the main computer room required more than a password or magnetic card. The operations center was 100-percent redundant, and electronic data destined for outside terminals were encrypted before being sent. As for protecting the premises, the detective devices were elaborate. Ray Guy said the security system polled 3,500 points every 2 minutes within the building. They had computer-controlled patrols throughout the building where people had to check-in within a certain time limit or a patrol would be sent. There was also a computer-controlled surveillance system that selected cameras throughout the building and fed back into a main control room. At night those cameras also turned into motion detectors. They could detect something as small as a mouse walking around, Guy insisted.

While much of the bank’s business was conducted electronically, Cheifet said, for messages that could not be sent over wires, there were computer-controlled robots to deliver the mail. Lockable cars shuttled between floors on vertical tracks making pre-assigned stops. Each of these “rolling mailboxes” were programmable to go to a particular floor and alert the receiver of incoming mail.

Cheifet said that while computers were used heavily in the daily operation of HSBC, they were no less important in the design and testing of the structure well before it was built. Guy said the designers photographed the whole of Hong Kong and the computers then took that information to create a working model of the city. This was then used to calculate things like the potential impact of high winds on the building. Guy noted that the computer predicted that for a “1 in a 50-year storm,” the building could experience wind speeds of around 100 miles per hour. In fact, when Typhoon Ellen hit Hong Kong in 1983, there were recorded wind speeds of 93 miles per hour.

Even in a project as meticulously executed as the HSBC building, Cheifet said, not every problem could be anticipated or solved with a microprocessor. The placement of HSBC’s famous lion statutes at the building’s entrance, as well as the placement of the two main escalators, was determined only after a consultation with an expert in feng shui, the Chinese belief in the importance of man’s harmony with nature. Guy explained that the feng shui expert worked closely with the architects to ensure the building was “socially acceptable.”

At a cost of $600 million, Cheifet said, the HSBC building was probably the most expensive ever built. But the owners expected to recoup their construction costs through the building’s intelligent features. Still, the expense of this type of electronic plumbing had restricted its use to only a small percentage of new office buildings. Dr. Chung told Cheifet that at the moment, these buildings mainly targeted business customers. In the future, if the public wanted to access such data network features, it had to be more cost effective.

Bush Expected to Spend Less on Computers Than Reagan

Although this episode was produced in late 1986 and first aired in January 1987, the copy available from the Internet Archive was a rerun broadcast sometime in January 1989. Cynthia Steele presented the “Random Access” for this rerun.

  • ABC News was marketing a Hypercard database containing information about the recent U.S. presidential campaign. (A similar database was used by ABC anchor Peter Jennings during ABC’s on-air election coverage.) The three-disk stack would sell for $295 and used an interactive LaserDisc to recall candidate information and actual video footage. Steele said the product was intended for the educational market.
  • Microsoft was offering a $75 rebate to Lotus 1-2-3 users who switched to Microsoft Excel. Steele said that users actually had to send their 1-2-3 system disks to Microsoft to claim the rebate.
  • MCI Mail would cut prices on February 1, 1988. The service’s 800-number would now be toll-free instead of 10 cents per minute. Short messages would now cost 75 cents each instead of $1, and changes in fax pricing would net about a 22 percent savings on a two-page fax. Steele added that MCI Mail would also eliminate monthly fees and automatically upgrade all users to “advanced” service status.
  • Western Union announced a new service called “Office Access,” which let you transmit documents directly from your office’s computer system. Steele said the new service would work with fax, telex, and Western Union’s Mailgram. Software was currently available for Wang computer systems, with versions for IBM and Digital Equipment Corporation machines expected by April 1988.
  • Experts predicted that President George H.W. Bush’s new administration would spend less on new computers and software than the Reagan administration and instead concentrate on making existing systems more effective. Steele added that many government employees were not happy with IBM’s OS/2, citing the extra memory requirements and lack of application software.
  • The Library of Congress disclosed that its main computer catalog system was struck by a virus in the fall of 1988. The virus was noticed by staffers who logged onto the system and found they had substantially less memory space than expected. Steele said the virus was believed to have originated on software obtained by a university, and fortunately it was rooted out before any data files were damaged. (The university in question was reportedly the University of Maryland.)
  • The renewal of a 10-year U.S. technology agreement with China “hit a snag” on the issue of software copyright. Steele noted that Chinese law made no provision for copyrighting such materials and the government there was not inclined to sign any agreement leading in that direction. China said software producers were protected by contracts with their buyers, a position disputed by industry groups in the United States.

Barings, HSBC Represented Legacy of British Colonialism in Hong Kong

Exchange Square’s first tenant, Baring Securities, was a subsidiary of Barings Bank, which was founded in 1762 by Francis and John Baring, the sons of a German wool merchant who had emigrated to Exeter, England. Francis Baring’s son, Alexander, was largely credited as the Baring who helped arrange the Louisiana Purchase in 1803. As Philip Zeigler wrote in his history of Barings Bank, Alexander Baring, then acting as an agent of the Dutch bank Hope & Co., negotiated the price of the purchase with Napoleon’s ministers, and Barings and Hope then “bought Louisiana from France and resold it to America.” The British prime minister at the time, Henry Addington, initially blessed Barings’ role in the deal despite knowing that Napoleon would likely use the money to finance a new war with Great Britain (which he did). The Barings and Hope banks happily pocketed about $3 million in profits according to then-U.S. Treasury Secretary Albert Gallatin, although Ziegler said the actual amount was unknown and probably lower than that.

Three years after concluding the Louisiana Purchase, Alexander Baring entered the British parliament as a member of the House of Commons, where he sat for the next 29 years. Towards the end of his tenure he also served briefly in Prime Minister Robert Peel’s cabinet. Peel elevated Baring to the House of Lords in 1835, where he remained until his death in 1848.

Barings Bank itself continued to survive despite several downturns in its fortunes, largely due to its strong political connections. And while the venerable company may have been riding high when it moved into Exchange Square in 1986, Barings would not survive to see the end of colonial rule in Hong Kong. In January 1995, Barings collapsed in spectacular fashion when the 28-year-old head of the company’s futures trading operations in Singapore, Nick Leeson, lost $1.4 billion in a series of reckless trades dating back to 1992. The Dutch banking group ING subsequently purchased Barings at liquidation for one pound and reorganized it as Baring Asset Management. That company was later split into two parts, with the Barings name and investment management business sold to the Massachusetts Mutual Life Insurance Company.

Like Barings, the Hongkong and Shanghai Banking Corporation also had its roots in British colonialism. According to Jean-Louis Conne, writing for Le Monde diplomatique in 2010, HSBC can actually trace its history directly back to the Opium Wars. In 1854, the British steamship company P&O merged with the British India Steam Navigation Company, with the latter’s owner, Scotsman James Mackay, becoming chairman of the combined company. As Conne explained, Mackay and his superintendent in Hong Kong, fellow Scotsman Thomas Sutherland, greatly expanded the opium trade into China during the 1850s and 1860s, which prompted the Second Opium War. It was the need to finance the opium trade that led Sutherland and a group of investors to found the Hong Kong and Shanghai Banking Corporation in 1865.

In 1993, HSBC reorganized as HSBC Holdings in London. This was a legal move made in anticipation of the resumption of Chinese sovereignty over Hong Kong four years later. HSBC has continued to use the Main Building in Hong Kong as its business headquarters up until the present day. The building actually gained notoriety as the site of a 10-month protest in 2011 and 2012, which was the local branch of the worldwide “Occupy” movement that spawned similar protests around the globe, including “Occupy Wall Street” in New York City.

Notes from the Random Access File

  • This episode is available at the Internet Archive and likely aired originally around January 20, 1987. As previously noted, the Archive version was a rerun first broadcast two years later in January 1989.
  • The earliest source I could find discussing the concept of “intelligent buildings” was a December 1983 article by Steve Brown for the Dallas Morning News. Brown noted that “smart office buildings” were now being built with three major types of features: automation systems, internal communications, and external communications. He credited this “revolution” in part to the breakup of AT&T and the resulting competition from telecommunications companies offering new services to business customers.
  • Martin Spurrier was a British Army officer before going into public relations in the late 1960s. Spurrier spent 13 years at Hongkong Land and later served as Asian regional chairman for Weber Shandwick. In 2002, he joined the public relations firm Edelman as an executive vice president. He stepped down from that position in 2008 but remained a non-executive chairman. In retirement, Spurrier moved to Billingshurst, England, and served as chairman of the local Chamber of Commerce during part of the 2010s.
  • Remo Riva is still an active architect and director with P&T Group in Hong Kong, the same firm where he designed Exchange Square.
  • William Phillips remained with Baring Securities until 1992 when he moved to Salomon Brothers in Honk Kong as a managing director. He left that position in 1997 to return to the United Kingdom, where he later co-founded FPR Investment Partners LLP.
  • ABC News marketed at least three different Hypercard-videodisk hybrid products in 1989. According to NewsBytes, one of the other interactive programs focused on Martin Luther King, Jr., including the uncut version of his famous “I Have a Dream” speech and “interviews with other civil rights activists.”
  • The Power House software that Stewart Cheifet showed in the introduction was part of a series of products known as the X-10. First developed by Pico Electronics in 1975, the X-10 protocol used signals transmitted through a home’s power lines to control devices. Clint Basinger of the YouTube channel LGR demonstrated the X-10 Power House using an IBC PC-AT in a 2017 video.