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Until the past few months, computers were sold almost exclusively in specialty stores that catered mainly to computer buffs. But now the inexpensive machines are popping up in an amazingly wide range of shops. Customers can find them for sale in supermarkets, drugstores, catalogue showrooms, boutiques and department stores. Toys R Us, the largest U.S. toy chain, did not carry a single computer last year, but it now has floor-to-ceiling displays of Atari, Commodore and Texas Instruments machines at all of its 144 stores. Safeway Stores are offering the Commodore at twelve supermarkets from Seattle to Anchorage. Michael McLaughlin, a vice president and computer analyst with the management-consulting firm of Booz, Allen & Hamilton Inc., estimates that nearly 30,000 stores sell computers, compared with a mere 2,000 just one year ago.
The electronic items quickly become bestsellers. Macy's sold 1,000 Timex machines in four days last month, after setting up a computer corner in its flagship Manhattan store. Says R.C. McAllister, marketing director of the southern region for K mart: "Home computers are the hottest category in our stores. There has been a lot of activity, and demand exceeds supply."
Many retailers joyfully look for computers to be a ubiquitous item under the Christmas tree this year. A Child World toy outlet in Chicago has added an entire new section to handle the anticipated rush. Says Store Manager Joseph Murphy: "We expect the home computers to be our biggest sellers this Christmas." At fashionable Bloomingdale's in New York, Warren Zorek, manager of the consumer-electronics department, predicts: "This Christmas will be the breakthrough in personal computers."
Manufacturers have been able to chop prices drastically primarily because the computer keyboard console is only the first of a series of items that buyers need. At a minimum, they must also have television sets or special video screens to display whatever the keyboard unit is doing, and software programs for the machines. Many customers also buy printers, memory boosters, telephone links, power cords and numerous other devices. The real cost of a computer often comes from these additional components. Industry experts compare buying a home computer with buying a razor. The initial cost is small, but total outlay is much higher because of later spending on blades. Notes Computer Analyst David Wu of Montgomery Securities in San Francisco: "They give people a cheap machine, and then they get them with the add-ons. It's like opium."
The cost of the extras can mount rapidly. The Texas Instruments TI-99/4A sells for just $199 after the rebate, for example, but buyers need to spend about $530 more on software and equipment to use a language program called LOGO, which the company is heavily advertising Those later sales are exactly what computer makers are looking for. Says William J. Turner, manager of the Texas Instruments consumer-products group: "For every $1 of console sales there is another $1 of peripherals and software. Next year that could rise to $2 to $3."