Analysts Doubt IBM to Quit Home Computers
Some say it was bad marketing strategy to name it the “junior,” but that turned out to be an appropriate moniker for giant IBM’s ill-fated entry into the market for cheap computers.
The PCjr has managed only a pint-size sales record since its ballyhooed introduction in November, 1983. Now, International Business Machines Corp. has given up on the home computer and will stop production for good in April.
“They’ll probably sit back and lick their wounds and watch the market for a while,” said Tim Caffrey, microcomputer analyst at International Data Corp. in Framingham, Mass.
Analysts say this week’s decision should temporarily help Apple Computer Inc. of Cupertino, Calif., whose Apple II line was hurt by last year’s sharp price cuts on the PCjr. But many industry observers believe that IBM will eventually be back, unwilling to abandon the part of the market whose youthful customers become tomorrow’s serious spenders.
“IBM is not giving up on that niche,” said an executive at a competing firm. “IBM takes the long view. The PCjr was just part of their R&D; expenditure. They’re not giving up on the 10-year-old kid who’s going to be a purchasing agent someday.”
The PCjr was aimed at schools, video-game players and those who were thought to be interested in balancing their personal checkbooks on a $1,000 computer. But IBM was not the first to learn that the demand for such machines was limited. Mattel Inc., Texas Instruments Inc. and Coleco Industries Inc. abandoned their own home computers, and market leader Commodore International Ltd. saw profits nearly disappear in the October-December quarter.
Market researchers first predicted that the PCjr, developed under the code name Peanut, would sell as many as 1 million copies in 1984. Instead, despite sharp price cuts for the Christmas selling season, IBM sold just 240,000 of the machines last year, according to Cupertino-based Infocorp.
“The PCjr was a premature product. The market wasn’t there,” analyst Caffrey said. “The junior wasn’t the only failure.”
David McDonough, co-owner of a ComputerLand franchise in La Jolla, said sales of the PCjr were fine as long as IBM kept the price of a well-equipped machine in the $800 range. He said that, since Christmas, when rebates and dealer incentives were removed, “it’s been pretty slow. They found the price they had to have to sell it, and they weren’t making any money on it.”
McDonough added: “They’re due for a new machine.”
The only “new machine” believed to be forthcoming from IBM’s personal-computer division is the PC2, a machine more powerful than the PC but less powerful than the company’s AT. Analyst Jan Lewis of Infocorp said that its introduction might take place in June and that it might result in price reductions on the PC to get it closer to the territory now occupied by the PCjr.
“There’s a limit to how low the PC can go” in price, Lewis said.
