By the time the first of the LEO II’s had been delivered, technology had moved on again, as it invariably does. Transistors, despite being developed in the late 1940’s, were now coming into an age of their own. It was seen that new electronic devices could be built using transistors, which would mean the devices themselves would be smaller. The main reasons transistors had not been used much in the construction of computers up until then had been primarily down to the fact that at the time machines such as LEO I and even LEO II were built, the advantages of transistors were not fully known. The view of computer designers was that it could have been the case that the more costly transistors would have been only as efficient as the valves they replaced, if not less efficient. Computer manufacturers could not take the chance with unproven technology. It was better in that instance to use the technology which had already been shown to work. Of course, cost proved to be the other factor which prevented the use of early transistors.

Thanks to the Cold War, spending on electronics had increased dramatically in the US, meaning that semiconductors and transistors had improved somewhat, and also reached a point where the price had fallen drastically as production had also increased significantly.

The result of the introduction of transistors and semiconductors was what became known as the ‘solid state’ age. The computer industry suddenly had the ability to produce solid state machines, which became known as second generation computers.

Some of the first computers to come from this were the EMIDEC 1100 and the IBM 1401. Both of these met with success, the IBM in particular selling over 12,000 worldwide.

At Leo, the idea of a second generation computer was very much in the minds of the designers, and had in fact started its development long before LEO II was sold to a customer outside of Lyons. John Pinkerton had started the design work, with a view to building a machine with eight times the memory store of LEO II, whilst being able to run at least ten times faster. The most advanced feature of LEO III was going to be the ability to run multiple programs at once – time-sharing. Whilst the most run at one time was three or four programs, LEO III could in fact run up to thirteen different programs at the same time.

LEO III would also make use of microprogramming. This was developed by Wilkes at Cambridge University, and was a way for programmers to be more flexible when writing programs for the computer. This was because most of the simple operations which the computer would have to perform were placed into a magnetic core, allowing them to be brought from memory when required. This turned out to be of great benefit, as programming for LEO III was considered a challenge. Ernest Roberts came to program the LEO III, and using the idea of microprogramming, created something the Leo pioneers called the ‘Master Routine’. This effectively was an operating system for the computer, much in the way that most computers today run on Windows.

One of the less successful innovations regarding LEO III was the introduction of a programming language. It was not so much the idea of implementing a programming language, more so the choice the Leo team went with in terms of the language they used. Raymond Thompson had personally developed a language for use on LEO III, called CLEO (Clear Language for Expressing Orders). This was the language that was decided on for the LEO III, despite the fact that other languages such as COBOL existed at the same time. They were not the only company to come up with a programming language of their own. A number of companies decided that this would be the best thing to do. As such, the mistake made by Lyons became one shared by many computer companies.

Maddeningly for a company having to fight to maintain its place in the computer market, there was very little marketing of the new LEO III. At the time of the machine’s launch, Leo computers was focusing its efforts instead on opening up a new service bureau. In a logical move, Leo Computers were looking to open their new bureau in South Africa. Talks began for the new bureau in 1960, with the company Rand Mines in Johannesburg. From a business point of view, the opening of a new bureau made perfect sense. Leo computers were struggling in a global market against competitors who had far more resources available to them, and a lot more money to spend on research and development. In order for the company to be able to compete against the bigger competitors on a global scale, it was logical to open a new bureau. Had Leo computers continued to receive orders and become a larger success, it is reasonable to believe that this new bureau would have been the first of many; however, this sadly would not be the case.

In a move which further diminished the experienced staff at Leo Computers, Leo Fantl was sent by David Caminer to train and recruit new staff to the company in Johannesburg. What was considered originally as a temporary move became permanent when Fantl declared his decision to start a new life there. While trying to expand Leo Computers to compete in a larger market was a good idea, its timing was considered poor. It meant that resources were stretched to their limits in setting up the new office, as well as trying to promote the fantastic new computer that had just been developed. Not everything was going to work, and unfortunately, getting the message out about LEO III suffered.

The first order for LEO III was from Dunlop tyres. With the completion of the order, another key member of the Leo Computers staff was lost. This time Peter Hermon had been offered as part of the contract with Dunlop for the LEO III. He left to take up a position as head of data processing. David Caminer saw this as frustrating, as the team which he had helped to build was slowly being reduced in number, with few people interested in joining the company to replace them. Despite this, Leo Computers had a staff of over 400, and orders were finally coming in for LEO III.

The late fifties and early sixties saw a worrying time for J. Lyons Co. as the profits it usually reaped from the teashops it owned were beginning for fall. Other establishments were opening, offering more competition, which meant that the usual crowds which had filled the stores for years had disappeared. Unfortunately, their subsidiary, Leo Computers was also showing a net loss of over £300,000 since it began operations. In 1962, as reports was commissioned by Lyons as to the ability to remain in the field of computing as a business. In the summer of that year, the reports was published, and stated in short that in order to survive as a competing manufacturer of computers, Leo would have to invest up to and probably exceeding £50 million. This sum was probably a little on the small side, as to become a true competitor in the market where the likes of IBM had enjoyed years of spending thanks to defence budgets of the Cold War, a large sum of money would need to be spent just on catching up in areas where IBM had started to take a small lead, such as peripherals like printers.

The result of the report, originally written by Lazards, was that Lyons decided to withdraw from the computing market. Over the next few months, talks began with Lazards about a merger between Leo Computers and another computer firm. In perhaps one of the biggest betrayals on behalf of Lyons, the merger talks were held without the knowledge of the board members of Leo Computers, with the exception of John Simmons and Raymond Thompson.

The fact that merger talks came about in the first place was a shame for all involved, but the timing of the talks could not have been worse. During the time all of this was happening, a faster version of the LEO III had been built, called the 326. This machine had really did have an advantage of rival computers, and was one of if not the best on the market at the time. This drew the attention of a number of businesses, who started to place large orders for the computers with Leo. Amongst these orders was one from the Post Office. Their order alone was one of the biggest to date in Europe, and a sure sign that Leo Computers was finally beginning to put up a fight in the wider market.

Despite the success of these orders, talks continued about the possible merger of Leo Computers. At one point, a massive collaboration of a number of companies was considered, including Siemens, Olivetti, Bull, and Leo Computers. The result would have been a Europe wide computer company, with the might to take on the best that IBM and its American counterparts had to offer. Unfortunately this plan was too ambitious, and never came to fruition. Instead, a merger was set up between Leo Computers and English Electric, an electrical company who manufactured everything from refrigerators to cookers. They had some experience in computing, and had a range of computers on the market; some for scientific use, others such as the KDP10 for business customers. It seemed like this would be a good option for Leo in a possible merger.

In February 1963, a deal was made and the merger made official. Lyons were the owners of half the shares of the new company, while English Electric, whose computer division had merged with Leo, owned the other half. One of the conditions of the merger was to be that English Electric would no longer produce computers, as the subsidiary English Electric Leo (EEL) would now be doing so.

EEL as a company did not last long on its own. In 1964, Marconi, a division of English Electric wanted again to be able to produce computers of its own. At the same time, Lyons was struggling even more with losses from the teashops, and decided to sell their shares in EEL to English Electric for what amounted to around £2 million. This ended the relationship between LEO and Lyons, after decades of hard work and progress, the company were happy to sell the computer division for an amount which valued at around the same as Lyons had invested in LEO over the years. The company were happy; as they had the computers they had sought after in the beginning, and had overall paid next to nothing for them. The staff of Leo Computers felt betrayed, as the company they had worked for all those years had betrayed them without so much as notification.

English Electric Leo Marconi Computers Ltd was announced in October 1964.

The two teams of staff within the new company clashed with each other in terms of working from day one. Those who worked for English Electric had always worked towards each person having a job, and manufacturing the computer. Leo staff however, still followed the working style which had been implemented during the construction of LEO I. Leo staff still spent time with customers analysing their needs and making sure that the job was done well. The clash between these two cultures was immense. Worse still was the fact that EEL had a range of computers from two different companies, none of which was compatible with the other. Whilst English Electric had manufactured their scientific computers such as the KDF9, LEO III and the 326 were the most advanced computers of their kind for business customers. Unfortunately, English Electric also produced the KDP10 for business customers. Whilst the LEO III and the 326 were far more advanced than KDP10, the director of EELM W.E. Scott, former head of the English Electric computer division refused to remove the KDP10 from sale. Dividing loyalties between both models was a poor decision as marketing to new customers proved difficult. Not only was the analysis gone which would have shown what the customer wanted, but now there was the decision of whether to market the LEO machines, or the KDF.

Eventually Scott decided that in order to compete with new models released by IBM, and to draw a line under the in fighting between the Leo and English Electric staff, a new line of computers should be launched. The new System 4 range was announced, based on an American design. The launch of this new range ended any attempts to market LEO III and the 326. Despite this, there were still a number of successes to come for the LEO computers. Sales to the Post Office continued, resulting in thirteen having been bought by them by 1969. Elsewhere LEO computers were sold to numerous UK companies, including the Royal Dockyards, Manchester Corporation, and the Ministry of Defence to name a few. LEO IIIs and 326s were also sold internationally, in countries such as South Africa and Austria. The final total of LEO III and 326s sold was 59.

Throughout the late sixties, IBM’s power threatened the British computing industry, until through mergers and takeovers; there were only four companies left - EELM, ICT, Elliot Automation, and Plessey. Due to this, the British Government finally took a stand in what had to be done to protect British interests. A new Ministry of Technology, with its own computer division was set up, its goal to protect the interests of British companies. The division attempted to make sure that British computer firms would be used by companies, in order to ensure that they stayed in business, in what was a case of too little too late. After a few years, it became clear that the UK computer industry could not compete with companies such as IBM in their current state, and proposed a merger between the four remaining companies. The new company became known as ICL (International Computers Limited) and was the only British produces of computers until the early 1980s. Sadly, with the birth of this new company, the name LEO was lost. Gone for good was the name which had meant so much in the early days, and had shown so much promise.

In a final act of triumph, the LEO III still had one more customer to fulfil, as shortly after the formation of ICL, the Post Office came to the company with a request for five more of the computers. Despite their initial reluctance, ICL agreed to the request, producing the machines for the biggest customer LEO ever had, whose machines were running operations until 1981. Ironically, in 1984 STC, the very company which had let down Lyons in the construction of magnetic tape drives for LEO I, took over ICL. It was taken over again in 1998 when bought by Fujitsu. ICL has since operated under the name Fujitsu Services. No records of anything relating to LEO are held by the company.