Information Processing


Delayed dawn for home computing

Business Week

June 11, 1979

The outlook for the home microcomputer is still not as clear as the industry would like it to be. The big spring push that was to have kicked off the embryonic consumer product is not going to happen after all. The machines -- built around the computer-on-a-chip -- were to be priced low enough and to be simple enough to operate to start all ball rolling on what many people are calling the most important consumer electronics market of the 1980s.

Moreover, it was widely expected that Texas Instruments Inc., the high-volume Dallas electronics manufacturer, was finally going to introduce its long-awaited microcomputer for the home. Most people believe that it will take the marketing and production muscle of such large companies as TI to get this market going.

But TI's board of directors has reportedly decided not to introduce a machine at this time, although the Dallas company refuses to make any comment. TI was all set to announce its home computer in early June. But now the company reportedly wants to wait for the Federal Communications Commission to rule on its request for a waiver from current rules so that it can hook up its system to a television set and avoid having also to market a video monitor that would boost the price an additional $200 or more. The FCC says that it will not make its decision until the end of June, at the earliest.

Cooling off

But it is not just TI's decision to delay its home computer that is clouding the picture. There are growing signs that the rapid growth of the microcomputer market is slowing down. Earlier forecasts had put this year's market at 425,000 units, more than double the 1978 total. On top of that, many of the important new microcomputers being announced at the two big industry shows in New York and Chicago are not aimed at the consumer market.

Tandy Corp., which had been selling a bargain-basement microcomputer (averaging $1,000) at a $100 million annual clip through its Radio Shack chain, on May 30 introduced a much more powerful brother, the TRS 80 Model II, which costs six times as much (below). This machine is clearly aimed at one market -- the very small business.

The Fort Worth company "is going primarily into this market," says one close observer, "because there is not yet a consumer market. And the small-business man is now where the market is." The company's current product is not really a consumer product or a small-business product, he maintains, "and there is no hobbyist market any more."

In fact, Radio Shack's roaring business for the highly successful TRS 80 has slowed recently as the hobbyist market has peaked and the realization had grown in business circles that the TRS 80 lacks the muscle needed for general-purpose data processing in the very-small-business market. The new Model II clearly is designed to squelch that criticism.

Current sales of the TRS 80 "are not growing at the rate they were earlier, but they are still growing," maintains John V. Roach, executive vice-president for radio Shack. But one industry observer estimates that "the production rate now is 20% below fast fall, when the company was cranking out some 10,000 computers a month."

Where success lies

Another so-called home computer comes from Ohio Scientific Inc., a small, privately held Aurora (Ohio) company that expects to double its sales this year to $30 million with its line of microcomputers. But its new model will sell for $5,000 when it goes on sale in September -- a price tag that few homes can afford. Even though the new system comes equipped to control appliances, lights, and a home security system, any success that it finds will most likely come from small-business buyers. "A $5,000 machine is really a business machine," says Robert F. Wickham, president of Vantage Research Inc., a California home computer consultant. And he adds: "The worst thing that could happen to [Ohio Scientific] would be to be successful in the consumer market." There is no way that the company could expand rapidly enough to satisfy the volume demands of the mass retailing market and stay solvent, Wickham maintains.

Low end

Even so, Ohio Scientific is very interested in the consumer microcomputer business, and it professes not to be worried about such big competitors as TI. "We're prepared to enter the competition," declares Charity S. Cheiky, Ohio Scientific's president. "Our engineering department has designs waiting in the wings and we're ready to introduce stripped-down products," she says.

There is at least one new microcomputer aimed squarely at the consumer. APF Electronics Inc. is introducing a $499 unit that features a typewriter keyboard and a built-in tape deck. APF joins Mattel Inc. and Atari Inc., which have already introduced, but not yet shipped, microcomputers in this price range. "The APF machine makes sense, at least, in that it's at the major price point for a low-end home computer," says Wickham of Vantage. Whether such machines have sufficient capability or ease of use to open up the mass market has yet to be determined. And Radio Shack's Roach says of the APF machine: "I haven't seen a product from them yet that will be of any significance in this market."

Despite the surge into the so-called home computer market, many industry observers believe that most entrants will fail, and that it is still too soon to predict how fast the true consumer market will evolve. Says Raymond E. Kassar, president of Atari: "Everybody's rushing out with personal computers. I don't know how many have really thought out a strategy."

Copyright 1979 McGraw-Hill, Inc.