If the local market is any kind of bellwether, the center of activity in the microcomputer market has shifted from research and development to mass distribution in a variety of retail outlets.
Rapidly falling prices combined with vastly improved capabilities have created a demand for microcomputers by a wide array of consumers. As demand fans out through the marketplace, distributors have begun to focus on particular types of consumers.
"The thing that is driving the whole industry is distribution," said Joe Kapka, a securities analyst for Bateman Eichler. "The whole problem is that it is not economical to sell $3,000 to $5,000 computers one-on-one as they (distributors) did in the past."
Once prices fell below the $10,000-to-$15,000 range, a drop which occurred only recently, distributors could no longer make enough money and were forced to go to different channels, Kapka said. The computer specialty store was the first alternative that opened. Next, the company-sponsored store, such as those operated by IBM, Xerox and Tandy, hit the market. The latest distributors to enter the market are retail centers and department stores.
Department stores are jumping into the fray planning to catch the low-priced end of the market, while company-sponsored stores are aiming for the middle-range consumers and business customers. The international franchise operation ComputerLand says it would like to place a computer store in every neighborhood to cover off-the-shelf demand, while independent sellers have found a niche by providing expertise and service.
At stake is a share in a market with estimated 1983 sales of $5.5 billion, according to Future Computing Inc., a microcomputer market research firm in Richardson, Tex.
Future Computing, which says the industry's growth rate this year was 80 percent, projects a 45 percent rate of growth for 1983. Competition between distributors, therefore, has just begun. Most distributors say their main problems are keeping up with demand and following new developments in the industry.
"With the expanding market we line up as less competitive," said David Stang owner of Starware, in northwest Washington. "If someone sells 100 systems today, that's fine. It's no skin off our nose."
Market analysts say department stores stand to capture a large number of "average consumers" who are looking for home computers but who don't have extensive requirements or interest to research the field. This type of consumer is likely to settle for well-known brand names, analysts say.
"Where the demand is strong from the average guy on the street who looks at the computer almost like a fad--something to run games on and help the kids with education--he will probably do his buying at the large department store outlets," said L. Howard Nichol, a securities analyst with Advest.
"The department stores are going to have a rapid rate of growth in computer sales because they are just entering the market," said Nichol. "A lot of people are willing to shop in a place like Sears because they feel they may have better back-up of a large company."
Mike McConnell, senior vice president for ComputerLand -- the largest franchise chain with 365 stores in 20 countries -- said microcomputers designed for home use and priced under $1,000, such as the Commodore, Atari and Intellivision, will be the mainstay of department store computer sales.
"I think this is where the real mass merchandisers are starting to play," McConnell said. "Most of those machines are those which don't need training to operate and are priced low enough so lots of people can buy them."
Avner Parnes, president of The Math Box, the largest local computer store chain, agrees with McConnell's assesment and adds that the department stores will be likely to carry machines that do not need specialized service.
"The department stores will sell only the bottom of the line, the Atari, the Texas Instruments and the Commodore and no more than that," Parnes said. "From the nature of the business the department stores can't have the experts on the floor."
Sears is moderately optimistic about computer sales in its department stores, according to Sears analyst Stanley Iverson of Duff and Phelps. Iverson points out, however, that it is too early to make projections based on the company's computer sales since they were launched only in the last year.
Sears also has recently opened a chain of business specialty stores, a separate operation from the department store, in conjunction with IBM. The stores sell hardware and software packages for IBM computers and a wide range of other office products.
For microcomputers in the $2,000 to $4,000 range, such as the IBM, Osborne and Apple, the specialty computer stores control the market.
The largest of the specialty stores is ComputerLand, with projected 1982 sales of more than $300 million, up from $1.5 million in 1977, when the chain started with one store in Morristown, N.J., McConnell said.
The ComputerLand chain -- which has local outlets in Tysons Corner and Rockville -- has opened 100 new stores worldwide in the last three months and views itself "as a specialty store and a department store of computers," said McConnell.
The 20 ComputerLand satellite stores scheduled to go into operation this year will emphasize selling software over hardware, as in the main stores. Located mainly in shopping malls, the quick-stop layout is designed for convenience and to catch uninitiated consumers and introduce them to computers, McConnell said.
ComputerLand, McConnell said, is trying to wear two hats--first, as a low-overhead, high-volume retailer and second, as a specialty store geared to advising and educating customers. But competitors point out that while they are succeeding in the first area, they have not been able to meet all the demands for specialization in the second.
For Douglas Duncan, president of Computers and Solutions for People in McLean, Va., it was the lack of useful business application information from computer salesman that spurred him to open his own store.
"When I was looking at computers in computer stores I felt that I was not being heard," said Duncan, a business consultant for 18 years.
"They all seemed more interested in talking hardware," he said. "The business user doesn't want to know all that. He wants to know how it will solve his billing and word processing problems."
Duncan is targeting the sophisticated home user or business willing to spend about $10,000 for a Fortune System 5 or 10 or Zenith Z100 computer, a printer and a software package.
Computers and Solutions for People emphasizes the importance of software over hardware as the first step in developing a microcomputer system designed to meet specific requirements. The store has eight work stations where professionals in medical and dental practices, architecture and engineering, middle-level managerial systems, retail sales and accounting can test which computer best suits them.
Dedication to customer service through custom design of hardware and software packages is the calling card of many independently owned area computer stores. These stores are usually geared for the small business and office environment.
"The most important aspect of the business today is selling to businesses," said Parnes. "Number two is education, selling to schools. And number three is the home user. The potential of the home user is tremendous."
Some stores, such as Community Computers in Arlington, have staff engineers, programmers and accountants to help a customer incorporate the computer into a work environment. General manager Mike Versace said one of his biggest problems is finding qualified people to fill out his staff.
"There are lots of people who think they can program computers," Versace said. "But we interview 100 to hire one. We hire our software people for their business background. Their practical experience is far more important than if they went to computer programming school."