On Sept. 1, Texas Instruments knocked the price of its home computer down by one-third, putting a $199 price tag on a $299 machine that originally listed for nearly $1,000.
It hasn't stopped there. Prices of so-called "personal" computer systems, selling in the $3,000 range, and "home" computers that sell for less than $1,000 are being trimmed as manufacturers scramble for positions in the economy's wildest product market.
In the bargain basement, Commodore's Vic-20 computer is priced at $177 at Reliable Home Appliance stores and other discount outlets, and the Atari 400 is down as low as $265. And, of course, the arrival of the Timex Sinclair machine at a discount price as low as $77 puts computers in the same price range as a pair of shoes.
Despite a confusing array of products whose capabilities are foreign to most consumers, this segment of the computer market is hot, from the Sinclair to the IBM Personal Computer--now rolling off the production lines at an estimated 15,000 machines a month.
The market is already estimated to include 2.25 million personal computer owners in both home and business plus the demands for software, which enable those machines to work.
Egil Juliussen of Future Computing, a Dallas research firm, estimates that sales of home computers selling in the $1,000 range will double from an estimated 1.1 million units this year to 2.2 million in 1983. Shipments of personal computers, in the $3,000 range, will grow from about 670,000 this year to 900,000 next year. Together, 1983 sales for both types will total $3.6 billion, he estimates.
"This is the first year that there has been a computer product to mass merchandize," said Walter Mooney, general sales manager for Reliable Home Appliance. The sales, he adds, are "phenomenal."
Technology gains have permitted price reductions, but the other major reason for this discounting is the strong belief that the real money to be made in personal computers isn't from the machines themselves but from the programs and software that run them. Marketers in the industry fondly refer to "selling the razor blades once they've got our razor."
The goal of the price cutting, agrees Juliussen, is "to establish a strong market share while everything is being formed" in the market. "Whatever you get in the way of customers in the next year or two will be hard to dislodge," he said. The sale of a computer is meant to be merely the first installment on future investments in games, software programs and printers, memory expanders and other add-on equipment.
The catch for the buyer is that technology blurs the lines between those different machines and markets. The same Motorola microchip that processes data for the Apple computer also runs the fun on Atari's home video games unit. The owner of a $77 Timex Sinclair Computer, with an investment in additional memory capability and software, can do sophisticated computations nearly as well as a far more expensive computer equipped with the popular VisiCalc programming.
In short, the personal and home computers are a bit like Proteus, the mythological sea god; they change form depending on how you grab and hold them.
Each computer manufacturer today is trying to position its digital Proteus as the one worth grabbing, spending millions of dollars in advertising to promote an image.
A basic distinction is between the home computers in the $1,000 range, or less, that are an outgrowth of electronic games, and the more expensive personal computers. The cheaper machines "are fine for training and they have all the elements of a larger computer," says Michael Loeber of Computerland. But they don't have printers and can't easily do sophisticated programming and their word-processing capability and ability to handle large amounts of data can be disappointing, he says.
That leads professionals and others with business uses for computers to the machines in the $3,000 range. "Apple is going after the professional market of managers and executives in the Fortune 1,300," says Esther Dyson of Rosen Research, a top industry analysis group. "Tandy/Radio Shack appeals to small business and professionals outside of urban areas; Commodore's strategy is based on price."
IBM's personal computer, contends Dyson, relies on the company's reputation for quality service and support. "It's a nicely designed machine," says Dyson.
Partly through its games emphasis, Atari has positioned itself mainly for the home market while Timex Sinclair's computer, asserts Dyson, "will bring in a lot of people who will eventually trade up to something better."
While each of the manufacturers are trying to dig into a comfortable niche, none are immune from the price pressures that are threatening to make personal and home computers commodity items, like television sets.
And if profits shrink on computers, they must be made up on add-on equipment and the software programs. The key to success in personal computerdom, asserts Eddie Currie, executive vice president of Lifeboat Associates. The New York software publishing house, with annual sales exceeding $12 million, is "bundling the hardware and software into useful packages.
"People don't care about technical details," Currie continued. "They care about use. Data entry and data output are what's important--no one really cares about what's really going on inside the computer."
The challenge, says Currie, is devising packages that let people easily insert the data to be processed and then withdraw it in the desired finished form in a manner that's both painless and quick.
On the consumer side, games do all that perfectly. For business, Software Arts' VisiCalc Related story on page 27 fits the bill. Word-processing programs also provide the input/output ease-of-use service desired by professionals. "People also like spelling-checker and thesaurus programs," says Currie.
Data-based management systems -- which store, track and retrieve data by request (sort of an intelligent filing system)--have become increasingly popular. Programs and minicomputer languages that let people design financial models also do well.
But computers are also undergoing a profound shift in emphasis. The computer should be a communicator. "We want people to think of computers as data movers," says Currie, "not just data processers." Personal computers can be transformed into computer terminals that retrieve news and information from other computers and networks--such as The Source or Dow Jones Information Service.
Computers can also be used to send programs to other computers. In fact, says Currie, Lifeboat intends to distribute some of its programs by computer via the phone lines by next year.
One personal computer system that tries to meld all these disparate elements into one package is the Grid from Grid Systems in Mountainview, Calif., which went on sale this month. The Grid, priced at a hefty $8,150, has been described as "the Porsche of personal computers."
"Managers don't want to be a captive of their office," says Barry Margerum, Grid's director of marketing communications and sales support. "They spend a lot of time outside the office so we wanted to provide a portable decision-support system that weighed less than 10 pounds. But's it's not just portable--it's an integrated system because that's what the market wanted."
Within the size of a small briefcase, Grid offers a raised keyboard, a high-resolution video display screen that permits such things as computer graphics, a powerful processor and lots of memory.
All that hardware, says Margerum, is balanced with a software approach that the company describes as a breakthrough. "We offer a leveraged learning interface," says Margerum. "Once you learn a set of commands for one application, they're transferrable to other applications within the system."
"What's more," says Margerum, "you can save information as you move from package to package. You can go from the data-base manager to the financial modeller without any difficulty at all."
The Grid also is equipped with communications capability and Margerum expects it to be used when a manager is tapping into a computer network, sending electronic mail or hooking into Grid Central--the company's own network for transmitting software.
It's the software, ultimately, that drives the user to where he wants to go, says Alan Kay, Atari's chief scientist. Prior to coming to Atari, Kay worked at Xerox's Palo Alto Research Center where he supervised development of "user-friendly," but very powerful, computer languages in the course of trying to create what he terms "the dynabook."
Basically, the dynabook would be an "ultimate Grid -- a personal computer that would let the user write programs, play games, draw pictures, perform calculations and compose music all in a very portable package. Part of Kay's mission at Atari is to further explore the dynabook concept. The software, says Kay, must be designed around "what people actually do and how they feel about doing it."
"Humans are communications junkies," says Kay. "So when something like paper comes along it matters a great deal indeed. New communications media are very important and that's what a computer is.
"The other aspect is to let the individual enter a world which has simpler rules than the one they currently live in. The theater provides that, so do sports and games."
In fact, says Kay, "Atari's research is woven from the fabric of those two themes: fantasy and sharing."
By creating what Kay calls a pleasant "user illusion," people will interact more effectively with the computer. VisiCalc's success, Kay contends, is that it creates such a helpful "user illusion" by letting people enter a spreadsheet war.
But, Kay points out, these software worlds are also changing. "We should see 'self documenting systems' that explain the program to you while you're using it or come in to help you if there are any problems," he says.
Artificial intelligence techniques will gradually seep into the mainstream of personal computer software. Computers will evaluate information on the basis of rules-of-thumb and pattern-matching rather than just search-and-find calculations. "I wouldn't be surprised to see a breakthrough in artificial intelligence programs for the personal computer," says Kay.
In fact, says Dan Bricklin, president of Cambridge, Mass.-based Software Arts, his company's new TK!SOLVER incorporates several artificial intelligence techniques. TK!SOLVER (the TK originally stood for tool kit), says Bricklin, "lets you put a series of equations into the computer and then plug in the data." Then the program will tell you what variables are needed to solve the equations, or actually solve them by following a set of preprogrammed rules.
Software Arts has developed a whole set of specific applications for TK!SOLVER, including high school physics, architecture, and finance. Bricklin hopes the software package will be another VisiCalc.
Eventually, it all comes down to a system that people feel comfortable using and actually feel is useful. "The nature of the market and the industry is changing," says Lifeboat's Currie. "We're going into mass marketing. We have to be able to appeal to more people."
In hardware, software and price, the personal computer is still evolving. Where those three elements ultimately converge will determine whether the machine is a recreation, a specialty instrument, or truly, as its champions claim, an appliance for the mind.