Picture what can only be described as a "no-risk" personal computer: technically sound, decent graphics, expandable, smothered with available software and, yes, IBM-compatible.
What would you say if I told you that this top-notch clone could be yours for under $600?
That's right -- under $600.
I bet you would be pretty interested. If you already have an IBM-compatible PC at home, this could make a wonderful second machine for the kiddies. If you use an IBM at the office, this could be the perfect machine for work at home. If you don't own a PC, this is your no-risk best bet. For less than the price of an Apple, you can enter the womblike security of IBM personal computing.
Now for the bad news: I was just teasing. There is no $600 IBM PC clone.
But there are extraordinary things happening in the PC marketplace, all of which point to a continued drop in clone pricing: a drop so significant that it may ignite a new boom in PC sales.
Korean companies such as Hyundai are now mass-producing clones (those asking "where are the Japanese?" should look at the yen), and even some American companies have decided that competing on price can do wonderful things for the business.
Take the Tandy 1000 IBM-compatible PC. Even though Radio Shack doesn't release its sales figures, it's no secret that this is one of the hottest-selling machines. Sans monitor, this PC is on sale for $699.
That's a pretty good buy -- and you can be sure that Radio Shack isn't losing money at that price.
Furthermore, that price is less than 20 percent away from the magic $600 mark. Why do I say "magic"? Because, if you recall your PC history, the $595 price is the point at which sales of the original Commodore 64 began to take off. Don't ask me why.
But let's remember that we're talking about a sure thing here. Any buyer of a low-cost PC (henceforward a "cheaPC") doesn't have to worry about "is there enough software?" and "is my machine expandable?" and "can I get support if I need anything?"
In sum, cheaPCs offer something that the first wave of PCs couldn't offer: peace of mind. As restricting as they may be, there's something to be said for standards.
If this hypothesis is correct, the ramifications could be stunning:
The surge of clones-at-home will give a real shot in the arm to the software industry. More machines mean more customers.
School systems will be better able to afford PCs for their kids (time to to start worrying, Apple Computer).
The market for Commodores and Ataris may be displaced by people who simply would rather settle for a quality clone than a souped-up 32-bit microprocessor horse-powered Atari ST. (Indeed, Atari President Sam Tramiel expressed this fear at the June Consumer Electronics Show. And, yes, I know that Atari soon will be able to make the ST IBM-compatible -- but that doesn't weaken the argument.)
There could be a humongous boom in PC sales to small businesses that had been afraid of the up-to-$5,000 investment it takes to get a total PC system. (Mind you, it still will cost well over $1,000 to build a complete PC business system, but low prices spur curiosity.)
People who have IBMs in their offices may decide that they could and should have a machine at home. We will see two-computer households.
Obviously, low-priced PCs will scare the computer stores witless -- and they're coming up with their own "private label" PCs to give themselves greater price flexibility than they get from the IBMs and Compaqs.
But they -- and IBM -- should look at the bright side: These cheaPCs will be the first step of a migration to the more expensive PC-XTs and PC-ATs. These machines will whet the appetite for more power, and people will trade up, just as they do with automobiles.
So what IBM will lose in market share at the low end, it has the chance to make up on the higher end two or three years hence.
When will this happen?
I think we will see aggressive price cuts before the end of this year. What could break things wide open is if a K mart or a Toys 'R Us agrees to distribute hundreds of thousands of Korean-made clones through its stores at discount prices. Somebody has to think that discount clones will be a sure sell. Odds are that cheaPCs would be.
There are flaws in this scenario -- most notably that price alone is not enough to attract new buyers. But there is little question that the low end of the PC market is more price-driven than value-driven, so I think someone's going to give the $600 PC clone a shot. This could be a computer Christmas.