f there's one lesson to be drawn from last week's Consumer Electronics Show here, it's that the computer is no longer being sold as a specialty item or a novelty. It is a mass-market product in exactly the same way as a bar of soap or a tube of toothpaste.
As if to underscore that, the celebrities are being rolled out to hawk the virtues of the new age of home computing. Atari has snagged Alan Alda of M*A*S*H and movie fame to be their corporate spokesman for home computers. Mattel Electronics will rely on Mason Adams, who played the fatherly editor on "The Lou Grant Show." Roger Moore, better known as James Bond, will reportedly speak for Spectravideo's computers.
It seems the question no longer is "what is a computer?" but "how the heck do we sell it?"
Price, packaging and positioning are now the watchwords of the industry. The computers themselves, along with the peripherals and software that run on them, have degenerated into the status of commodity.
One California company, Electronic Arts Inc., has taken a glossy, sophisticated approach to packaging its floppy-disk software for personal computers. "We package our software just like the record companies do" albums, said Trip Hawkins, president of the company and former marketing director of Apple Computers Inc.'s Lisa personal computer. Blending flashy graphics and clever documentation, the album-cover approach is designed to snag consumer interest the moment the buyer walks though the door.
On the hardware side, Coleco's Adam, a home computer system that comes complete with its own daisy-wheel printer for $600, demonstrated how personal computer manufacturers were seeking to position themselves in the market with the best blend of price and performance.
Other companies, such as Mattel Electronics and Texas Instruments, also have explored this notion of wrapping their computer software and components into a package that the consumer simply plugs in for immediate access to the desired computing functions, whether they be word processing or computer games.
Commodore International's announcement that it would introduce a line of powerful and versatile software all for under $100 also snagged a lot of attention. The move puts enormous price pressure on software companies that usually charge hundreds of dollars for their product.
Of course, Commodore, a major personal computer manufacturer, could choose to sell its low-cost software with its computers to make buying the machines more attractive. This practice, called "bundling" in the industry, has piqued a lot of industry interest.
"It is an option we are exploring," said William Grubb, president of Imagic Inc., a Los Gatos, Calif.-based video-games design company. The basic idea would be that a software company like Imagic would give a volume discount to a computer manufacturer promising to package their programs with the machine. The computer company enhances its machine and the software firm gets revenue and, more important, exposes its name to potential buyers.
"It's not out of the question that by Christmas you will see maybe a dozen software packages bundled along with some hardware units," said a marketing executive of a major home computer company.
This kind of bundling may do some very interesting things to the business side of the personal computer market. The vast majority of the software now sold to the home is for entertainment, such as games, with educational programs coming a far-distant second. Now, with Commodore's incursion into the market with low-cost word-processing, data-base management and financial planning software, the lines between the home computer and the business computer have blurred.
"We are aware of that and we will exploit that," said Sig Hartmann, who heads Commodore's new software division. Hartmann asks rhetorically why a businessman would need a different computer for the home and the office if the same one can handle the array of software he needs for both locations.
This lends support to one industry observer's contention that Commodore is positioning itself to compete directly against IBM when the world's largest computer company finally makes its move into the home market.
Of course, Tandy, with their Radio Shack computers, and Texas Instruments have also positioned themselves to market both to home and business.
Though the marketing of the machines has gained pre-eminence over their technology, there were a number of items at the Chicago show illustrating that the fundamental structure of the consumer electronics industry will continue to change as new technology is introduced:
Telecommunications may be the future of software distribution, says Paul Terrel, president of Romox Inc., a year-old California company hoping to revolutionize the video games business with its approach. Through a network of special terminals set up in stores around the country, Romox hopes to transmit the latest in video games for sales. Instead of a games manufacturer producing millions of games cartridges, the games would be stored on a central computer called up by store owners when a customer wants to buy. The game would then be electronically printed onto a blank cartridge. The cartridges would be reusable. This way, games manufacturers could avoid the problems of excess inventory while at the same time keeping a close track of what games are doing well in what parts of the country. However, says one games company engineer, "How many sales do we lose if the machine breaks?"
Tomy of Japan, best known for its toys, introduced a $149 home computer at the show. Since practically everybody was selling a computer, that wasn't unusual. However, the Tomy machine has a 16-bit microprocessor, while virtually all of the home computers today are run on 8-bit microprocessors. A 16-bit microprocessor can manipulate larger computer "words" than an 8-bit processor--roughly analagous to letting computers speak in words of two syllables instead of one syllable. The Tomy machine has the potential to run extremely powerful and sophisticated software. However, said a company spokesperson, no major software announcements were planned. The Tomy announcement, though, is a signal that a new generation of low-cost computing power is in the offing.
The Quazon Corp. of Texas offered an interesting telecommunications terminal for $199. For that price, a customer automatically has limited access to three major computer information networks: Dow Jones News/Retrieval, CompuServe and The Source, the McLean, Va., company owned by Reader's Digest. Quazon recently signed a deal with a major hotel chain to install its terminals in rooms across the country.
On a more chilling note, a tiny company called Vidco was showing off a device it called the Copy Cart, which is the equivalent of a Xerox machine for videogames. For $59.95 and the price of a blank games cartridge, a customer could duplicate videogames and distribute them to friends to their heart's content. Needless to say, representatives of video games companies expressed a blend of fear and extreme annoyance. But the legal implications of such video-game copying are still unclear, falling into a gray area of the law similar to the unresolved issue of royalty payments when movies and television programs are copied on home video cassette recorders.