In an announcement that could have broad implications for the music, video and computer industries, Tandy Corp. said Thursday that it has developed the first compact disc that can be recorded and erased at home.
The new technology, which allows repeated re-recording and erasing of various kinds of electronic information, is a major advance over existing CDs, whose contents cannot be changed. The announcement brought an immediate protest from the recording industry because it would allow easy--and high-quality--copying of compact disc recordings.
Tandy said its CD audio recorder-players would be priced at under $500. They will record music on blank compact discs, priced at under $10, that could be played either on the Tandy machine or any other standard compact disc player already on the market. Tandy said both of its new products would be available within the next two years.
Within three years, the company said it expects the erasable compact discs to be available to store computer data, a development that would allow a personal computer user to hold the equivalent of 1,528 floppy disks, or 275,000 pages of information, on a single 4 3/4-inch diameter CD.
Several Japanese companies are developing erasable CDs, but these do not conform to the audio CD standard now being used. Philips & Dupont Optical, the largest supplier of audio CDs, will offer an erasable disc later this year, but it is intended for computer-related use only. A spokesman for the firm said a musical version is also planned.
At a New York news conference, Tandy Chairman John Roach said the company's new disc, named Thor-CD, is expected to generate huge sales and profit for the Ft. Worth company. "We see the potential for tens of millions and even hundreds of millions of dollars in profit and royalties," Roach said.
Investors responded to the news enthusiastically. Tandy stock rose $2.625 a share to $45.75 in heavy trading on the New York Stock Exchange.
The recording industry, however, was upset.
"The technology will pose a serious threat to both record companies and recording artists," said Stan Cornwyn, president of Warner New Media in Burbank. "There is a reasonable chance that the industry will raise a hullabaloo."
The Recording Industry Assn. of America already has fought for more than a year to prevent the legal importing of Japanese digital audio tape recorders, another technology that is ideal for copying. Despite a recent unfavorable ruling by the federal government in that battle, the industry is also likely to oppose Tandy's Thor-CD.
Analysts showered the Thor-CD with such accolades as "blockbuster," "revolutionary" and "the first major technological advancement in a decade for data storage." Several analysts suggested that the breakthrough would help put the company, which has been best known for its Radio Shack outlets and laptop computers, into technology's big leagues.
"Tandy wants to be known as a state-of-the-art technology manufacturer, not just a retailer," said Lise Buyer, an analyst with Prudential-Bache Securities in New York. "The potentially tremendous ramifications of this product could be what they need."
"These guys are changing their image from being just a retailer to being an innovator," said Clifford Friedman, an analyst with C. J. Lawrence Inc.
Still, there were skeptics. "It's like a cure for cancer," said John Rutledge, an analyst with the Dillon Read investment firm in New York. "Let's see if it's real."
The CD announcement overshadowed Tandy's unveiling of its "clone" of an IBM PS/2 personal computer, an introduction that had been widely anticipated. The PS/2, IBM's new line of personal computers, was developed by the giant computer maker in an effort to regain dominance in the PC market.
Tandy's new personal computer, billed as faster, more powerful and less expensive than the IBM model, is expected to be shipped in July and is likely to be the first PS/2 clone to hit the market. Dell Computer Corp. of Austin, Tex., announced a PS/2-compatible machine on Monday, but said it would not be available until the final quarter of 1988.
Tandy tried to assure potential customers that the machine would not be knocked down by a patent lawsuit by International Business Machines. The company said the computer was covered by an existing patent cross-licensing agreement with IBM. However, it noted that certain PS/2 patents may be issued to IBM in the future that would require additional negotiations between the two companies.
The suggested price for one configuration of the new Tandy computer is about $6,500, compared to about $7,000 for the comparable IBM model.
The high-powered machine marks another step by Tandy, which sells 90% of its PCs to home users and small and midsized businesses, to establish itself as a key vendor among large corporate and government customers. Tandy recently agreed to acquire Grid Systems, which sells laptop computers almost exclusively to such "power users."