When people here at the Winter Consumer Electronics Show talk about going to Jack-in-the Box, odds are they aren't talking about fast food.
They're likely talking about Jack Tramiel and Atari's splashy return to the personal computer market, and the potential battle looming between Atari and Commodore International for supremacy.
Tramiel is the man who built Commodore International into a billion-dollar leader in home computer sales before his surprise resignation a year ago. Skillfully blending technology and hype, he has transformed Atari from an ailing video games firm to the most-talked-about company at the show.
The focal point of excitement is Atari's new line of sophisticated ST personal computers that resemble Apple Computer's popular Macintosh machines. Nicknamed the "Jackintosh," these computers use the same microprocessing chip employed by the Macintosh and an internal software system called Gem, which emulates the display and interaction capabilities of the Mac.
Touted as having "power without price," the "Mac-alikes" are expected to retail from $399 to $599 in the second quarter of this year -- well below the current $1,500 charge for Macintosh.
"The industry was becoming very stagnant, everybody was trying to get fat," said Tramiel, who took over Atari from Warner Communications in the middle of last year. "My technique is to lower the prices of existing products. My pricing is based on cost, and I always want to be in a market with a product below $1,000."
In effect, Tramiel is repeating at Atari what he initiated at Commodore: redefining the home computer industry along the dimension of price. Tramiel has essentially repackaged Macintosh-like hardware and software into a cheaper box. As a result, he not only has put pressure on Apple computers, but has set a new standard of technology for most existing home computer companies such as Commodore.
"There's a cautious excitement about Atari," said Charles McKennon, president of Leon's Computer Mart in Rochester, N.Y. Many retailers agree with that assessment. Critics say, though, that prices for the machines will depend on high-volume production and on Tramiel, who has yet to ink a deal with major distributors such as K mart and Toys R Us. Volume production requires capital, and Tramiel is purportedly seeking $50 million in venture capital to help finance Atari.
He also is said to be seeking up-front money and guaranteed purchases from mass merchandisers. He would not confirm those reports, but said Atari plans to file a public offering by the end of the year.
Tramiel ambitiously asserts that Atari will become a billion-dollar company this year and will ship more than 5 million computers. For the first six months of the year, 80 percent of the machines produced will be Atari's low-end computers that sell for under $200. During the second half of the year, these will account for only 20 percent of production, and 80 percent will be Jackintoshes.
One key to the success of Atari will be support for its machines from third-party software companies. People may be reluctant to buy the machines if software is unavailable for them, and software companies will be reluctant to write programs for the machines if not enough have been sold.
Tramiel's old company, Commodore, also is looking for new software and new computers to help it get out of a slump: Sales dropped about 20 percent in the Christmas quarter.
The company has introduced the Commodore 128, which is compatible with Commodore 64 software. In a move toward the business market, Commodore has introduced a lightweight portable computer that will be priced in the $500 range.
However, Commodore Chairman Irving Gould said in an interview that the next six months will be "a time of transition" for the company as it, which is "paying the price" for management moves made during Tramiel's tenure. Top Commodore officials said they expect flat profits over the next 12 months.
New marketing vice president Frank Leonardi said that Commodore will place its computers in speciality stores as well as mass merchandise outlets in a bid to keep profit margins up.