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Some game companies have tried to insulate themselves from the crush by producing educational programs, but they are running into competition from specialized firms like the Learning Company. Founded in 1979 by Ann Piestrup, a former Roman Catholic nun and an educational psychologist, the company has been partly financed by a grant from the National Institute of Education. In January it unveiled five new programs, including ReaderRabbit: Fabulous Word Factory, which develops reading skills for children ages five to seven.
As the software business gets bigger, the cost of admission is going up. Lotus Development set new industry standards by spending $6 million on the development and advertising of 1-2-3. Last month Ashton-Tate announced Framework, a new business program, and the company figures its introduction will cost $10 million. "The investment in marketing is ratcheting up higher and higher," says Julian Lange, president of Software Arts. "It's become difficult for two guys in an attic to launch a product like VisiCalc."
To increase their visibility, software companies have begun using a time-tested sales technique: celebrity endorsements. Electronic Arts has put out a computer basketball game featuring a match-up between Larry Bird and Julius Erving. Micro Education Corp. of America in Westport, Conn., is beginning to introduce programs that carry the names of well-known writers: Andrew Tobias' Managing Your Money ($199.95) and James F. Fixx's The Running Program ($79.95). Both Tobias and Fixx say they helped develop the software, though neither is a programmer.
Some major corporations with only scant connection to high technology are getting into the software business. Late last year McKesson, the drug and healthcare giant (1983 sales: $4 billion), acquired a half interest in SKU, a software distributor. Both CBS and Warner Communications have started software units. Also investigating or developing their own software are publishing nouses (Simon & Schuster and Random House), toy firms (Fisher-Price and Parker Bros.) and movie companies (United Artists, MCA, Walt Disney and Lucasfilm). But small firms seem to do best in the innovative world of applications programs. Cautions Software Publishing's Fred Gibbons, who runs one of the fastest-growing companies: "Being big does not help you become good in the software business."
All the firms in the field are now reaching out to discover even more inventive ways to put computers to work. At times the future seems so vast that even industry leaders are amazed by its potential. Says Microsoft Programmer Charles Simonyi: "It's hard to describe how wonderful software will be. There will be a tremendous amount of simulation. You will be able to inspect or take apart anything you want on a computer. You will be able to simulate a journey on the space shuttle or a trip to Paris. You will not just be able to shop from home, you will be able to look through a catalogue, take an item and then inspect it from different angles and really take it apart."
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