Perhaps the most overused analogy at last week’s Consumer Electronics Show was the old chestnut about a “Phoenix-like rise from the ashes.”
But in the case of at least two video game companies that embraced this image of rekindled strength--Atari and Nintendo--they can be excused. With their industry once again on the upswing, they do have some things to crow about, after all.
Having staged a spectacular financial turnaround and successful public offering last year, Atari is back in a position of strength after having been nearly written off not long ago.
The Sunnyvale, Calif., company’s history is well-documented, from its 1972 founding by the innovative Nolan Bushnell, to its 1976 purchase by Warner Communications and its subsequent dive into red ink. The company hit $2 billion in sales in 1982, but was nearly brought down by its freewheeling ways, which resulted in a 1983 loss of $500 million.
Along came hard-nosed Jack Tramiel, who emerged from a power struggle at Commodore International and bought Atari for $240 million in notes 2 1/2 years ago. Since then, the family-run company’s fortunes have, indeed, soared. For the nine months ended Sept. 30, Atari made about $21 million on sales of $165
million. Defying skeptical industry analysts, the company went public in November. Its two video game systems were sellouts in 1986, cementing its lead in the category.
“My philosophy in my previous life and now at Atari was always to give the most for the buck,” Tramiel said at a press briefing where the company introduced a promising personal computer compatible with the IBM ($499, or $699 with monitor), a laser printer and a new line of video games. “We feel that 1987 will be a very, very exciting year.”
Having become a top seller of computers in Europe, the company said it is now poised to “attack” the U.S. market for home and business computers, with punchy ads and competitively priced products.
Key to long-term profitability will be the ST line, for which Atari this year will begin an aggressive U.S. marketing push. At the Consumer Electronics Show, the company rolled out a Mega ST model for business users. With laser printer, it is expected to cost less than $3,000, which the company said is about half the cost of comparable units.
“Cleaning up the old Atari mess took time, (but) the suppliers got their money, every single cent, and are ecstatic,” said Jack’s oldest son, Sam, who is Atari president. “Now we have time to attack this giant (U.S.) market.”
Said father Jack, who introduced the first personal computer at the show 10 years ago: “I intend to be a big player in the U.S. market in the consumer and the business end.”
With all this good news to report, the Tramiels seemed scarcely fazed by a glitch in their presentation. A videotape about Atari had just started rolling, and the announcer had just said, “The new Atari has risen like a Phoenix from the ashes,” when the screen turned to snow.
Quipped a spokesman: “Even computer companies can experience technical difficulties.” The audience laughed, and, for the first time in a while, Atari could laugh with them.
KNIT ONE, NINTENDO: Atari’s booth may have been the most bustling in the Convention Center’s West Hall, but Japanese video game maker Nintendo was drawing a crowd at an offbeat knitting demonstration.
Knitting by computer? Yes, knitters can throw away those needles. By draping yarn across a loom-like affair that interacts with the company’s home entertainment system, the user can knit sweaters, mittens, socks--you name it--complete with patterns. And no more counting rows. The computer does it all.
“We’re showing this for business feedback,” said Gail D. Tilden, advertising manager. “We’re using entertainment technology to appeal to a broader base.”
Perhaps best known for its arcade game Donkey Kong, Nintendo since 1983 has sold its home entertainment systems to 25% of Japanese households and is making serious headway in this country. To quote the company’s materials: “Like the fabled Phoenix, the video game industry is rising from the ashes.”
There’s something to the notion. Video game sales peaked in 1983 at $3 billion then got zapped by sales of videocassette recorders and more versatile home computers, dropping to $800 million in ’84 and then below that. While the category is not expected to revisit its glory days any time soon, Atari, Nintendo and Sega Enterprises are enjoying the revitalization for now.
A sign of the times: Computer hardware and software company booths took up 30% more space in the West Hall this year than last.
RABBIT ON THE RUN: Waiting patiently in the long press-registration line on opening morning was Roger Dooley, who a year ago published the first issue of Electronic House, the Journal of Home Automation.
Dooley acknowledges that the magazine might be a bit ahead of its time. “We’re here in advance of the industry,” he said. “Right now many of the big players are waiting for standards to develop in wiring and communications.”
Once they do, these companies will be pushing home systems that will go far beyond such simple tasks as turning lights and coffee makers on and off. The new Space Age versions will “sense” intruders, smoke, light levels, temperature and occupancy and respond accordingly--basically becoming alarm system, thermostat, home entertainment, communications system and cook’s helper all wrapped into one.
An Electronic House survey showed the industry to be worth $300 million in sales last year, with $1 billion projected by 1990.
One relatively simple product along these lines that is a favorite of Dooley is a “video distribution system” by Rabbit Systems of Santa Monica. In its first year, the startup company sold 300,000 units of its VCR-Rabbit (suggested retail price: $89.95), which allows owners of videocassette recorders with more than one television to feed the video signal to any set in the house and control it with a wireless remote.
At its booth, Rabbit was also demonstrating a new product called Eye of the Storm, which contains harmless inert gases in a glass sphere. “The gases will interact with touch and respond to voice,” said Ken Holmes, vice president of sales.
Prepare to be mesmerized by this “living lightning,” which is also sensitive to ambient sound and music. Put your finger on the sphere, and streaks of magenta and blue light rush to meet it in a dazzling display. Comparable products generally cost $1,000 to $3,000, so customers are expected to rally around Rabbit’s $179.95 gizmo, due in April.
A + B EQUALS. . .: Hewlett-Packard came out with a razzle-dazzle, handheld scientific calculator that will warm the hearts of algebra and calculus students. At $235, the HP-28C is apparently the first to go beyond numeric calculations and use symbols or variables. “Problems can be solved conceptually and numbers plugged in later,” said product manager Clain Anderson, who boasted amiably at a breakfast: “We’re light-years beyond any others on the market.”
The introduction coincided with the 15th anniversary of the company’s HP-35, the world’s first handheld scientific calculator.