Families turn to them more for business than pleasure
Mountain View, Calif.
Brad Martin leans over the keyboard of the Apple II computer in his study. After a flourish at the keyboard, a voice that only Robbie the Robot could love issues from a small box sitting nearby. The electronic voice rattles off the greeting that Mr. Martin's friends hear when they call. The brown-haired Texan proudly demonstrates the telephone answering system he has assembled. ``It would have been cheaper and easier to have bought an answering machine, but this was more of a challenge,'' he explains with a touch of sheepishness.
As a home computer user, Mr. Martin is a real-life representative of a market that has lured, confused, disappointed, and humbled a number of high-flying computer manufacturers. Two that recently stumbled are the toymaker Coleco Corporation, which stopped producing its Adam home computer, and the veteran computermaker International Business Machines Corporation (IBM), which recently discontinued its PCjr. Both manufacturers faltered on false assumptions about the basic nature of the market.
An engineer who quit a lucrative job with the Bechtel Company to attend Stanford University School of Business, Mr. Martin estimates that he spends between 10 and 15 hours a week at his keyboard. Surveys indicate that the national average is 12 hours. Further, he estimates that about half of his computer time is devoted to schoolwork and half to personal uses. Here, too, he is typical. He also expresses considerable satisfaction with his Apple II. A survey last fall by the market research firm Dataquest found, to its surprise, that more than 90 percent of home computer users expressed satisfaction with their equipment.
Mr. Martin's serious applications include using an electronic spreadsheet (software that combines the characteristics of a business ledger, calculator, and pencil) to work out business problems and the computer's word processor to compose class papers. The major pleasure the computer provides him is a chance to tinker. The telephone answering system is an example.
His other personal uses include keeping a file of the names and addresses of several hundred friends and acquaintances. This allows him to find information easily and check suspicious numbers on his monthly phone bill. Mr. Martin tried a personal finance software package but found it ``essentially worthless.'' But he does maintain and periodically update a personal cash-flow analysis and a record of several dozen credit cards he has collected on the Apple.
The way this young professional puts his computer to use, particularly the heavy emphasis on serious or business applications, is characteristic of most home computer users. ``People seem to justify the purchase of computers on a business rather than a personal basis,'' reports William L. Coggshall, president of Software Access International, a market-research firm. In fact, he calls the so-called ``home computer market'' a phantom. Apple Computer's chief executive officer, John Sculley, is even more emphatic. ``There is no home market,'' he says categorically.
It is more accurate, says Dr. Coggshall, to think of it as an office-in-the-home market. The surveys he has conducted suggest that purely personal uses average fewer than 6.6 hours a week compared with a 12.2-hour weekly total. The bulk of nonpersonal use comes from business-in-the-home activities and job-related homework.
Mary Lou Maxson of Boulder, Colo., is an example of someone who runs a small business from her home with the aid of a small computer. An expert on Japanese crafts, she organizes folk art tours to Japan, imports and sells Japanese works of art, and is writing a book about the kimono. For two years she has used a Radio Shack Model 2 to organize her various efforts. Mrs. Maxson considers her computer ``just wonderful'' because it has greatly increased her productivity. She spends at least 20 hours a week at the keyboard.
The short history of personal computers suggests that serious uses of this sort are the predominant reason people acquire a computer. But only within the last year or so has the industry come to recognize this fact.
The mistaken perception that there was a mass market for computers contributed significantly to the IBM PCjr's much publicized failure. Its initial substandard keyboard and limited expansion capability were designed with a home consumer market in mind. But the people most interested in the machine were those who wanted to use it for business purposes. ``We had no idea that so many sophisticated users would be interested in buying a PCjr so they could do some work at home,'' one IBM representative commented privately. Because the machine was not suited for this purpose, sales lagged. Finally, IBM rectified the worst of its mistakes but found that it could not move the machine unless it cut the price to $800, a price at which it couldn't make a profit.
In 1983 all the publicity about small computers caused a brief surge in the purchase of inexpensive computers that were extremely limited, little more than glorified video-game machines. But interest could not be sustained when people realized the computers' limitations and the video-game fad faded. Despite the fact that a few fully featured computers like the Commodore 64 were introduced in the under $500 price range, the market has definitely shifted to the more expensive and more capable computers like those from Apple, IBM, and Tandy.
According to Joan E. Grimm of Dataquest, in February the number of US households owning a computer rose to 13 percent and the number of computers over $500 in homes surpassed the number in the under $500 range. ``The strongest motivation for purchasers was business and education. Price was not a major consideration,'' Ms. Grimm reports.
Brad Martin is seriously thinking about buying a second computer. This doesn't come as a surprise to the analysts who have found that computer owners are more than twice as likely to purchase a second machine than a noncomputer owner is to acquire a first computer.
This has some serious consequences for the market. The same limited group of people have been buying computers for the past three years, says Robert Lydon, publisher of Personal Computing magazine: ``The universe isn't expanding but is merely filling out.''
A standing question, then, is whether or not the market for computers will become saturated. According to surveys, the reason 56 to 60 percent of the people are not considering a computer is simply that they don't have any use for one.
The fact is that without a business application there are few persuasive home uses for a computer. As a result, a true home computer market will not develop until data-communications methods improve and the home computer can act as a gateway into a galaxy of electronic services that will save people time, effort, and money, a number of analysts agree.
Most of these services have already appeared but not necessarily in a cost-effective or convenient form. These include monitoring of security systems, energy management, electronic shopping and banking, and videotext services such as tele-learning and information retrieval.
Another 20 to 26 percent of the people resisting the computer sales pitch are more reachable. These say that computers are too complicated. This segment of computer abstainers is the group the industry is currently concentrating on. Apple Computer, with its Macintosh, has taken the lead in trying to make computers easier to use and less intimidating. Using such devices as crisp graphics and a pointing device called a mouse, the company has successfully reduced the difficulty of operating a personal computer. And this approach is being widely mimicked by others in the industry.
There is some evidence that this approach is succeeding. The demand for personal computers in the home continues to grow at a healthy rate. Dataquest estimates that some 6.8 million computers will be sold for use at home in 1985, up substantially from the 4.8 million machines sold last year. If this is the case, by the end of the year 1 home in 5 will have a computer.