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The pioneers of the small computer business will also soon face stiff competition from the Japanese, who will begin landing their first machines in the U.S. this spring. Commodore Founder Jack Tramiel warned a group of executives recently: "Gentlemen, the Japanese are coming." Representatives of Hitachi, Toshiba, Mitsubishi and NEC (Nippon Electric) have all paid calls on U.S. retailers to find out what products Americans want and how much they are prepared to pay. The Japanese are expected to enter the market with state-of-the-art machines that will be cheaper than competing American products. The first arrival is likely to be NEC, one of the world's largest telecommunications and electronics firms. Shortly thereafter Matsushita is expected to start selling a handheld computer under its brand names Quasar and Panasonic. An informal poll of American computer executives revealed that they expect the Japanese to capture a third of the market by 1985. Says Radio Shack Vice President Jon Shirley: "The Japanese are bound to be competitive, and I worry about the Japanese much more than IBM."
The rush of new firms into this flourishing market will result in a tumultuous battle for profits, and possibly some company failures. Says William Neal, group vice president of Automatic Data Processing Inc. in Clifton, N.J.: "There is going to be a tremendous shakedown and consolidation in this industry."
Growing as fast as the microcomputer manufacturers are the companies that design the programs that go into them. An Apple or a Tandy computer is a winking mute until detailed instructions or computer programs are fed into it. Producing these programs, which are recorded on cassettes or discs, is already a $265 million-a-year business that is expected to rise to $1 billion in sales by 1985 (see box).
Another expanding computer service field is data banks that provide information for personal computers. After an initial hookup fee of $100, for example, a home computer can be connected through telephone lines to a machine in Alexandria, Va., that houses an immense information service called The Source. Customers can tap into 2,000 sources of data, ranging from a nationwide listing of job openings and up-to-the-minute financial news to world airline schedules and the entire catalogue for the wine library of Les Amis du Vin. During evening hours and weekends, the cost of bringing this information into the home is $2.75 an hour.
Industry watchers predict that by the end of the decade a family's three largest investments will be its home, car and computer. With costs for the machines dropping quickly, some visionaries even foresee three computers in every home: one in the den for financial use, one in the living room for education and entertainment, and one in the kitchen for information. The current Shootout in the industry will determine whether brand names like Panasonic and IBM will soon become as common on small computers as Radio Shack and Apple.
—By Alexander Taylor. Reported by Michael Moritz/Los Angeles