IBM to Refocus on Rebounding Home PC Arena : Computers: The latest entries by several companies promise to have ease of use, lots of power and reasonable prices.
When the personal computer first hit the market a little more than a decade ago, the sages of the day proclaimed that the machine was destined to find a home in every home. Then reality set in.
Consumers quickly discovered that it almost took a Ph.D. in electrical engineering to assemble the system and another advanced degree in computer programming to understand the user’s manual. Finally, when the whole thing was up and running, the real heartbreak hit: It was just as easy to use a pen and paper for most of the household tasks--balancing checkbooks, writing letters, updating address books--that the computer was supposed to do.
That’s when thousands of home computers were moved into garages and closets, and conventional wisdom of the mid-1980s pronounced the market dead.
But today, computer makers say they are seeing important signs that the home market is ready for a comeback. They cite plunging PC prices, growing computer literacy, a new generation of easy-to-use software and lack of another “gotta have” home electronics gadget competing for the consumer’s pocketbook.
And some of the industry’s biggest players are lining up to cash in.
On Tuesday, International Business Machines, whose first home computer product in 1983 was an embarrassing flop, is scheduled to unveil its latest entry. Analysts say the machine will offer many of the features of IBM’s top-selling office PC, the PS/2 Model 30, for between $1,000 and $2,000. Later this year, Commodore Business Systems, Apple Computer and, possibly, Atari Corp., plan to introduce their own lower-cost systems aimed at the mass market.
Analysts say the new systems, unlike some of their predecessors, are designed to serve a wide range of home uses--including education, business, household management and entertainment--with souped-up power and at a price that is only now possible.
Dataquest, a Silicon Valley market research firm, predicts that the home market will grow 16% per year through 1994 on the strength of renewed consumer interest and the latest offerings from manufacturers. It estimates that about 20% of the nation’s 90 million households have a PC now.
The new crop of home PCs provides fresh ammunition for what promises to be a prolonged, expensive and bruising battle between the computer and consumer electronics industries to deliver the most widely accepted “smart” information-retrieving and -storing appliances for the home.
The battle pits U.S. computer makers--anxious to spread their dominance in the office market to the home--against Japanese consumer electronics makers. The Japanese companies’ arsenal already includes a host of computerized household appliances, including videocasette recorders, telephone answering machines, televisions and video game systems.
It’s a battle that some analysts say the United States, even with IBM leading the charge, is unlikely to win.
“The general-purpose home computer is a quaint anacronism and a totally bogus idea,” said Paul Saffo, an analyst with the Institute for the Future, a Silicon Valley think tank. “It’s like a Swiss Army knife. It may do a lot of things, but it does none of them very well.”
“You can’t talk about the home as a single, monolithic market,” said Donna Bonyun, a Dataquest analyst. “The home is actually five separate activities or ‘mini-markets’ that can overlap.” They are the home-based business, the at-home worker, education, entertainment and household management.
IBM and others are betting that the at-home worker will lead the charge to the cash register. Analysts say IBM believes that its widespread acceptance in corporate America will spur sales of home models to employees who want to work at home, then transfer their material to their desktop computer in the office. They also note that the growing popularity of IBM personal computers in schools will provide a strong secondary reason for a family to purchase an IBM system.
“People do want to use the computer at home, but there is no single reason,” said Stewart Alsop, publisher of a personal computer newsletter in the Silicon Valley. “There are multiple reasons for using the computer at home, and there are multiple users.”
Details of IBM’s new at-home models have been spreading though the computer industry the past several months. Some sources say the lowest-cost model of the new four-model line will sell for under $1,000, possibly for as little as $650 in discount houses.
The computers will use Intel Corp.’s 80286 microprocessor, making them compatible with scores of software packages used in business. The machines are expected to include a popular software package from Microsoft Corp. that combines a word processor, a spreadsheet and a communications program to run the modem, analysts said.
Some, or possibly all, of the models will contain a built-in modem, which allows computers to hook up to distant computers or data services--such as CompuServe--via telephone lines.
The computers also are expected to have a built-in program that will link them via phone lines to Prodigy, a computer service that provides such things as home banking, shopping and airline reservations, said Rick Martin, an analyst at Prudential-Bache Securities Inc. Prodigy is a joint venture between IBM and Sears, Roebuck and Co.
Sears is expected to be among the major sellers of the new computers, along with other mass merchandisers and possibly traditional computer stores, Martin said.
“The thrust of this seems to be going after the family,” said Bruce Stephen, an analyst at International Data Corp., a research firm in Framingham, Mass. “They sense that there is some kind of perceived demand that, increasingly, families view a computer as a necessary home appliance.”
HOME PC MARKET
Home personal computers shipped as a percentage of the total PC market (unit figures are in thousands):
Home PCs Total PCs Home PCs as Year Shipped Shipped % of Total 1984 4,171 7,768 53.7 1985 2,609 6,072 43.0 1986 2,705 6,814 39.7 1987 3,169 8,715 36.4 1988 3,350 9,960 33.6 1989 3,733 10,789 34.6 1990* 4,077 11,680 34.9 1991* 4,533 12,770 35.5 1992* 5,194 14,258 36.4 1993* 5,993 16,088 37.2 1994* 7,476 18,768 39.8
* Estimated
