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The home computer is a long way from living up to the industry's original hopes that it would become as ubiquitous as the television set. Professionals ! use computers to work at home, and young people like to play games on the machines. But companies are struggling to find applications that will make computers an essential part of the household. Most families still prefer to keep grocery lists on paper or balance checkbooks with a pencil.
Softness in the home market could bring trouble for Apple Computer, one of the industry's superstars. The company outperformed most rivals with an 11% profit gain, to $10 million, in the first three months of the year, but new orders from dealers have slowed down. "It's clearly a period when the industry is pausing," says Apple President John Sculley. To keep inventories from piling up, Apple ordered weeklong shutdowns at three of its factories in March and at a fourth plant in April. In addition, the company canceled production of its top-of-the-line Macintosh XL, originally called the Lisa. Apple had cut its price by more than half, to $3,995, in an effort to boost sales, but the machine was not profitable.
Meanwhile, morale at Apple's Cupertino, Calif., headquarters has been sagging. In recent months several executives have sold part or all of their company stock, and some senior managers and engineers have resigned. Stephen Wozniak, who co-founded the company in 1976 with Chairman Steven Jobs, has left his day-to-day duties to start a new company. Since February the company's stock has plummeted by one-third to close last week at 20 1/4. That has generated talk in the industry that Apple will become the target of a takeover attempt or merger bid, possibly by AT&T or Xerox.
Apple is betting a large part of its future on its remaining Macintosh models, which have sold well since their introduction 15 months ago. Prices range from $1,490 to $2,090. Many consumers consider the Macintosh, which is based on a new generation of technology, more versatile and easier to use than any other personal computer. But Apple now faces a challenge from Atari, which made the only big splash at last week's Comdex show. Dealers gathered around for a peek at a new Atari machine that is similar to the Macintosh but will cost only $800 to $900. Though its official name is the ST, the computer has already been nicknamed the Jackintosh, after Atari Chief Executive Jack Tramiel. He built Commodore into a home computer powerhouse, but left last year and bought Atari from Warner Communications. Commodore, meanwhile, is expected to square off against both Atari and Apple with yet another low-price Macintosh-like machine, called the Amiga.
With competition in the home computer field growing more intense, Apple plans to try for a major foothold in the office market. The company has a networking system that will enable as many as 32 Macintoshes to communicate with one another and a high-quality printer known as the LaserWriter. But Apple will have to go head-to-head with IBM, which dominates the corporate computer scene the way Hulk Hogan lords over a wrestling ring. IBM holds about 40% of the market for office sales of personal computers, compared with Apple's 13%.