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Shakeout Begins for Home Computers Part 2

A similarly configured PCjr will cost close to $2,000, using both IBM and third-party hardware and software.

The Atari 800XL WritingSystem was promoted by VideoConcepts for $1,149.90 at Christmas. The system included the 800XL CPU, disk drive, AtariWriter software and a 1025 80-column printer. Adding joystick controllers and a popular game program will bring the price to $1,250, or more than twice as much as Adam.

Commodore, long the price/value leader with its C-64 model, comes closest to matching Adam in price with a system comparable to Adam costing approximately $800 at Toys “R” Us and other retailers.

Despite the apparent strengths of the Adam, a number of flaws may sour consumers on the system. While every store contacted during the Christmas season reported that every unit was sold within days of its arrival, the return rate was very high.

A store source at an Electronics Boutique outlet in King of Prussia, Pa., says between one-third and one-quarter of all Adams sold were returned for exchange. His figures were matched by most other retailers, who cited the tape memory drive as the culprit. On the other hand, Charles Lazarus, chairman of Toys “R” Us, says return rates were not greater than any other highly sophisticated electronics product.

Another problem that resulted in quick returns to the stores was the computer’s apparent inability to store dmm. “They may come in initially shopping for price, but most will step up to the models that have all the features they want.”

One discount buyer says the VCR is becoming a two-market product. “One group of customers is looking for a low-priced unit ($399) with limited features, while the second is going for full-featured, four-head machines,” says Frank Remaley of G. C. Murphy. “At the upper end, it’s still a name brand business. For basic machines, people would like a name brand, but they’re very willing to accept an off-brand or private label, much like the market for the best canister vacuum.”

The move to private label is showing up not only at the major general merchandise chains, but at specialty stores as well. And the non-branded machines aren’t always at the lower-priced end of the business. In a Christmas circular, VideoConcepts, Jact Eckerd Co.’s electonics specialty chain, featured its P/L VHS video recorder for $699.90, $100 below regular retail. In the same circular, opening price point ($499.90) units by Toshiba, JVC and Fisher were carried.

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Shakeout Begins for Home Computers Part 1

The long-prophesied shakeout in the home computer market got under way in the last few months of 1983, and already a new market structure is evident.

Following a topsy-turvy year with pricing, promotions, product availability and consumer demand changing course on what seemed like a daily basis, it now appears that the home computer business is settling into a three-way slugfest for a share of the low-end (under-$1,000) market.

Retailers and industry watchers agree that IBM, with its PCjr, will develop an overwhelming dominanace of the high-end home market, just as the company has already done in the personal computer business.

But this should have only minimal effect on general merchandise chain home computer sales. “IBM has proven itself to be a super marketing organization,” says Bob Harder, vp/electronics at Montgomery Ward, “but I dont’t think the PCjr is the key to the home market. It’s too expensive, and the channels of distribution aren’t really aimed at the mass market.”

The fact that the PCjr will be sold only through IBM Product Centers and other computer specialty outlets will limit its exposure before the general public.

And while GMers agree “Big Blue” will be able to sell every PCjr manufactured in 1984 and beyond, they point to the exceptionally high cost of PCjr configured to perfrom most home uses. By comparison, Coleco’s Adam, Atari 600XL and 800XL and the Commodore-64 are all at least half as expensive.

“I don’t think the home computer customer is willing to even consider a unit costing over $1,000,” notes Frank Remaley, electronics buyer for G. C. Murphy. “In fact, I feel $599-$699 is about as high as we can realistically go in pricing functional systems.”

“Coleco’s Adam is as close to a perfectly priced unit as is possible,” adds Harder. “The price points are going to have to be under $1,000 for a home computet that does something–and that’s for a complete system, not just a CPU.”

Adam, with its CPU, tape-driven memory system, built-in word-processing software, one-game cartridge and letter-quality printer, will carry a suggested retail price of approximately $750 (including an already announced price hike). During the Christmans selling season, discounters and department stores were promoting the system for as little as $525.