IBM, Sears Plan Home Computer Shop Deal
Computerized at-home shopping, information and entertainment services have been an expensive graveyard for many ambitious business ventures.
Yet the nation’s largest computer company, International Business Machines, and the nation’s largest retailer, Sears, Roebuck & Co., are expected to unveil plans today for such a service that would start Oct. 1 in the Los Angeles area.
Called Prodigy, the service offers some new twists on the myriad of similar computerized systems that have flopped in the past five years.
Richard Adler, an analyst with the Institute of the Future in Menlo Park, said it may be years before enough consumers are ready to shop, entertain themselves and gather information with home computers.
“The promise is high, but the benefits are marginal for many consumers,” he said. “Just because it’s Sears and IBM doesn’t mean it’s automatically going to work. It still faces the same challenges as other systems.” Adler estimates that the venture has cost far more than $250 million to develop.
In the past several years, there have been several notable failures in the field, sometimes known as videotex. Knight-Ridder Newspapers, after spending about $50 million on its program, backed out of it. Times-Mirror Co., publisher of the Los Angeles Times, ended its experimental program in 1986 after failing to attract enough subscribers. Time Inc. and Keycomp Publishers have also abandoned the field.
Like many of its predecessors, Prodigy will link a personal computer with a telephone to tap into an encyclopedia of information, entertainment and shopping services.
However, unlike its predecessors, Prodigy will charge a flat monthly rate of $9.95 rather than a per-minute usage fee. Also, the system will work with any IBM PC or compatible machine and, eventually, with Apple computers. Some of Prodigy’s predecessors required subscribers to use company-provided equipment.
Prodigy executives say they are betting that the consumer is better equipped than ever to use their service. They point to the rapidly increasing number of computers in homes today; analysts say about 4 million homes nationwide have computers.
Prodigy will be sold in a variety of consumer outlets, including Sears. A starter kit, which includes three months of service and the software and instruction book, is expected to retail for $49.95. The price goes up to $149.95 if the PC owner needs a telephone modem.
Prodigy has been test-marketed in San Francisco, Atlanta and Hartford, Conn. CBS, an early partner in the joint venture, pulled out in 1986.
