Widening Market for Miniature Computer

By Victor K Mcelheny
The New York Times

December 14, 1977

The three-year-old market for what is variously called the home, personal or hobby computer—but really serves mostly as a miniature small-business computer — is opening wider this Christmas, while the electronics industry watches warily.

The Tandy Corporation's Radio Shack stores are selling a microprocessor equipped keyboard and video-display screen called the TRS-80 for $595. The Heath Company of Schlumberger Ltd. is offering kits called the H-8 for $375 and H-11 for $1,295. Meanwhile, the industry leader, the Pertec Computer Corporation, widens its marketing of Altair micro-computers.

Industry analysts are fretting about how fast the public will catch on to computers that go far beyond the capabilities of even programmable video games to organize household finances, do the payroll for small businesses and help with the math

The business continues to attract new companies. One of the latest is Umtech Inc. of Sunnyvale, Calif., head-fid by former officials of two semiconductor companies, the Intel Corporation and the Fairchild Camera and Instrument Corporation.

Umtech already has begun advertising a $500 "video brain" keyboard and television set that is to be marketed next month through department stores and specialty electronics stores.

Like the Radio Shack TRS-80, the Video Brain setup comes equipped with tape cassettes carrying recorded computer programs for finances, mathematics and games.

Such programs are considered essential to developing a large mass market for miniature computers based on the capabilities of so-called microprocessors, which are computers laid out on one or more small chips of silicon.

Earlier this year, Donald M. Mailer, senior vice president in charge of Pertec's microsystems and peripherals group, described the problem this way: "For this market to take off, there has to be a canned product something roughly like the calculator in simplicity, with instructions that are simple enough so that it's a matter of only inserting a floppy disk to get your applications program."

The tapes used with the small computer setups being marketed this year foreshadow a later date when higher-capacity flexible plastic disks, already widely used with more expensive computers and "word processing" stations in offices, become cheap enough for the mass market.

Electronic systems like the personal computers, with possible appeal to the mass market, pop up frequently, exciting the entire electronics industry, but especially whetting the appetites of makers of electronic components, who sense an opportunity to make millions of a particular part instead of thousands.

But digital watches, pocket calculators, citizens' band radios and the like go through rapid product cycles in just a few years that resemble a rollercoaster ride. Demand mounts rapidly accompanied by dizzying falls in prices that convert complex electronic parts from jewels into what Andrew S. Grove, executive vice president of the Intel Corporation calls "jelly beans."

The dozens of companies typically entering such markets shrink swiftly to a handful. Electronics engineers in the meantime ponder the mysteries of human behavior manifested through consumer likes and dislikes, and repeatedly, like smokers giving up smoking, conclude that they have neither the experience nor the money for long survival in the consumer marketplace

Some companies, such as Intel and the Mostek Corporation of Carrollton, Tex., abandon consumer watch and calculator lines and return to their basic business of manufacturing ultra-compact electronic memories and computers on chips.

For others, such as the Digital Equipment Corporation of Maynard, Mass., whose sales are growing at better than 40 percent annually after 20 years of existence, the lesson is not to enter the volatile consumer markets directly at all, but to continue making electronic equipment smaller, cheaper and faster—and leave the packaging of innovations for specific markets to others.

This policy lay behind Digital's decision not to get into the personal computer market itself but to sell its LSI-11 microcomputer module to the Heath Company for use in its H-11 kit. The three-year agreement between Digital and Heath, signed last June includes a licensing agreement allowing use of several so-called "high level programming languages" with the H-11.

In a recent interview, Kenneth Olsen, Digital's president, called the personal computer business "very significant socially, a very significant market." He said the spread of such computers was bound to have the same effect as the growing use of computers in schools—increasing the level of knowledge about, and enthusiasm for computers in the society. The result should be an expanded market for all levels of computer complexity, he said.

Small computers now on the market are, from the top: Radio Shack's TRS-80 with keyboard and display-$595; Heath Company's H-11-$1295; Umtech's VideoBrain that hooks into a TV-$500.

c. 1977 New York Times Company