Staking out market positions for what may be the hottest Christmas item
James Belmares watched intently as his six-year-old son James III eagerly pushed the keys of a Texas Instruments home computer in a Target discount store in Dallas. Belmares, the father of five children, had previously been scared off by the price tag on the machines, but last week the computer was only $299, and the company was offering buyers an additional $100 rebate. The tempting price and the unrestrained enthusiasm of his children made a purchase virtually inevitable. Said he: "The kids are wild about it. They are addicted to it. It's like a cult."
Belmares is one of the ever growing number of consumers being drawn into the market for home computers by an all-out price war that erupted last month. Spurred by the prospects of Christmas shopping, computer makers have slashed prices on their least expensive models. As a result, says Clive Smith of the Boston-based Yankee Group, a leading electronics analyst, sales are expected to explode from a mere 35,000 in 1980 to 1.5 million this year. Smith sees shipments rising to a dazzling 3.5 million in 1983. Says Barbara Isgur, an industry watcher for the Wall Street firm of Paine, Webber: "This year is the turning point. We have entered the age of personal computers."
While firms like IBM, Apple and Xerox are strong in the field of personal computers for the office, they have stood clear of the Shootout for the home market. The key players:
TEXAS INSTRUMENTS. The Dallas-based giant triggered the battle on Aug. 2 by announcing that beginning Sept. 1, it would offer the $100 rebate on its TI-99/4A personal computer, which has a list price of $299. Just two years ago, virtually the same model sold for about $1,000. Yankee Group estimates that Texas Instruments now has about 23% of the market for inexpensive home computers.
TIMEX. The watchmaker jumped into the computer fray last month with the lowest-priced system, the Timex Sinclair 1000, which sells for just $99. It has less computing power than its rivals, although its capacity can be upgraded. Timex Sinclair has an estimated 26% market share.
COMMODORE. Two weeks after the Texas Instruments announcement, Commodore cut the wholesale price on its VIC 20 by up to $40. The machine is now selling in stores for about $199. Commodore accounts for 23% of the low-price market.
ATARI. The king of video games, Atari is now offering home-computer buyers $60 worth of discounts on its extensive library of entertainment and educational programs. The Atari 400 model sells for less than $300. Atari officials like to point out that their computers also play many of the most popular video games, including Pac-Man, Asteroids and Space Invaders. Atari has about 17% of the inexpensive-computer market.
RADIO SHACK. The strong-selling TRS-80 Color Computer costs $399, down $98 from last year. Tandy Corp., which has previously sold through its Radio Shack stores, this month will begin offering a companion version of the Color Computer at independent television dealers. Tandy's market share for low-priced computers is 10%.