Atari, Commodore Target IBM, Apple In Market for Higher-Cost Computers

By Michael W. Miller, Staff Reporter
The Wall Street Journal

January 7, 1985

LAS VEGAS, Nev. -- Atari Corp. and Commodore International Ltd., makers of low-priced home computers, launched their first salvos in bids to gain a foothold in the market for more expensive, more powerful machines.

At the Consumer Electronics Show here, Atari, as promised, introduced a line of computers with the power and many of the same graphics features as Apple Computer Inc.'s Macintosh. Commodore introduced a version of its popular 64 model with twice the memory.

Atari's introductions surprised some industry members, who had doubted that the company would be able to design a new computer in the six months since Jack Tramiel bought it. But the success of Atari's ST line will hinge on the answers to two major questions: Will software designers write programs for a new machine that isn't compatible with any other computer on the market, and will Atari have enough cash to finance the production of STs it needs to become profitable?

Mr. Tramiel has said his strategy will be to try to challenge Apple and International Business Machines Corp. by undercutting their computers' prices and selling in mass-market retail chains. IBM and Apple sell their computers only in specialty computer stores.

Atari officials said the ST would be in stores by April, selling for $400 to $600, depending on the amount of memory. They said monitors and disk drives for the line would cost less than $200 each, making the total cost of a system $800, for about 128,000 characters of memory, to $1,000, for about 512,000 characters of memory. A Macintosh equipped comparably to the lower-memory ST system lists for $2,195, though retailers have been discounting it to as low as $1,700. A comparable IBM PCjr has been selling recently at a discounted price of less than $1,000.

Like the Macintosh, the ST lets a user enter commands with a "mouse" device that moves an arrow on the screen to point to symbols for different operations. That feature, which some users find easier than punching in commands on a keyboard, has proven to be one of the Macintosh's chief sources of appeal.

The ST also is built around the same chip as the Macintosh, Motorola's 68000 microprocessor.

Commodore wouldn't disclose the price of its new computer, the 128, but industry sources said it would sell for about $250 alone, or about $750 with a monitor and disk drive. The company also showed a prototype of a lap-top computer with liquid crystal display that is expected to retail for about $500. What is expected to be Commodore's chief bid for the higher end of the personal-computer market, the Amiga, isn't scheduled to come out until spring.

Like Atari, Commodore took specific aim with its new machine at the two companies that currently dominate the higher end of the home-computer market: IBM and Apple. As reported, consumers buying computers for their homes increasingly appear more interested in more powerful and useful machines than those at the lower end of the market.

IBM and Apple didn't attend this show, but they both cast long shadows on homecomputer vendors here. "Bad news for IBM and Apple," proclaimed the publicity for the 128, featuring an arrow piercing an apple and an IBM-logo Charlie Chaplin bowler hat. Atari was equally direct, with a series of rhyming billboards on a highway near the convention center here that read: "IBM Is This Price Right?" "Does Apple Need So Big a Bite?" "Atari Thinks They're Out of Sight."

As expected, a group of Japanese electronics companies showed home computers here built with a standardized internal design and able to run the same software and accessories. Microsoft Corp., the closely held Bellevue, Wash., software concern that did the internal design, called MSX, said the standardization would let users assemble elaborate home electronics networks, hooking computers to telephones, televisions, stereos and other equipment.

Whether consumers would buy the relatively low power, slower Japanese machines is questionable, as sales at that end of the market are declining.

The Japanese companies, however, haven't said when they plan to introduce their computers in the U.S., but Microsoft has said MSX-based machines will be in American stores by year's end.