IBM unveils new home computer line
For years, International Business Machines Corporation has been a household name in the business computer market. Now, it's entering the household. IBM has introduced its first personal computer--with a starting price tag of
The entrance into the home computer market of IBM, which had sales last year of $26 billion, marks an acceleration of what Business Week has described as "the home information revolution."
With some 8 million households already hooked up to computer terminals of some kind, IBM's entrance into the $2.2 billion home computer market is sure to enlarge this market even further because of IBM's widely respected marketing skills and huge financial muscle, says one analyst. IBM's competitors say the arrival of the computer giant in the market will remove the "fad" image that so far has plagued home computers.
Through cable televison wires, the computers can be linked to information organizations such as Dow Jones. Soon they will be hooked up to banks to provide up-to-the-minute financial data. Retailers and brokerage houses are also experimenting with the use of cable to computer systems.
IBM indicated Wednesday that is computer will have the capability to tie in to such cable systems as well as to perform normal computer chores. According to IBM, the new unit will provide accounting help to businessmen, as well as aid students with term papers. An IBM executive, C. B. Rogers Jr. said the computer's aim was to "make a person more productive and creative."
IBM will provide the computer programs through a new division, the Personal Computer Softwear Publishing Department, and by reselling programs from outside sources. Businesses can purchase programs dealing with accounts payable and receivable as well as general ledger programs. The widely used VisiCalc, which has sophisticated programs for budgeting and financial analysis, also can be hooked up to the IBM model.
The company also has created its own computer game, called Micosoft Adventure , which will complete against such games as the popular Atari "Space Invaders."
The giant computer company will be challenging such smaller companies as Apple Computer (23 percent of the market), Tandy Corporation's Radio Shack (16 percent), and Commodore International (10 percent). Recently, the Nippon Electric has entered the home computer business, capturing 7 percent of the market, according to The Gartner Group.
IBM says it will begin selling its computers in October through Computer Land dealers as well as at Sears, Roebuck & Co.'s new business machines stores. Although IBM has used outside dealers in the past, this is the company's first major use of outside sales agents. IBM also will sell the computers through its own IBM Product Centers.
Although the lowest priced computer will sell for $1,565, IBM says it will have additional options that could bring a computer's price tag up to $6,000. According to the company, a typical system used by a school could cost about $3, 005. An expanded system for business--including color graphics and a printer--would cost about $4,500.
IBM's competitors expect a price war with IBM's entry. Massive discounting of computers is possible as the Armonk, N.Y.-based company tries to establish a market share. IBM indicates that it will discount computers on a volume basis. However, industry sources predict that price cutting also will take place on the retail level.
Although IBM did not indicate it will sell its home computer by mail, it also did not rule out his possibility. Initially, it will not be sold through the Sears catalog.
The computer also has been designed to operate in an non-air conditioned environment. Normally, computers must be used in an air-conditioned environment. According to Don Estridge, IBM's director, Entry Systems Business, the computer will use about as much electricity as a 75 or 100 watt light bulb.
The computers will be manufactured at IBM's plant in Boca Raton, Fla., but about 20 percent of the components will come from abroad. According to Mr. Estridge, the printer will be made in Japan and the display part of the computer will be manufactured in Taiwan. IBM refused to discuss who its suppliers were.