Michael S. Tomczyk
Atari's corporate character and projected company goals. The inside word.
Atari doesn't especially like my nickname for their 400/800 personal computer - "the poptop computer" - but it's a fact the computer has a "pop top" where the plug-in RAM/ROM cartridges fit, part of their innovative user-proof system which also includes interchangeable cards for the computer's various peripherals. Atari also has a growing array of educational and game software, including the most sophisticated real-time simulation game (STAR RAIDERS) in the galaxy ... a long way from "Pong," the game that started it all.
Atari's competitors in the personal computer market chuckle at what they see as the company's attempt to develop the "home" computer market, in the face of extensive market research that says the home market won't "happen" for another 4-5 years. Does that mean Atari is wasting its resources? Are they really going after the home market? Or are they laying the groundwork for a broader marketing program?
To answer some of these questions, I interviewed Atari's new Vice President-Sales & Marketing for Personal Computers - he's Conrad Jutson, who came to Atari in November 1979 with a scant background in computers but over 20 years experience in consumer electronics at G. E. (12 yrs.), Toshiba (6 yrs.) and Texas Instruments (3 yrs.).
Jutson began by describing what he sees as the outlook for the personal computer market: "Small business in the short run will account for fifty percent of the personal computer business, dollar wise," he predicted, defining small businesses as those with less than $1 million in annual gross revenues, employing 10-15 people, and usually involved in manufacturing or a service-oriented industry. Typically, they do their bookkeeping by hand through a full or part time employee, or have it done by a local service. The key to reaching this market, Jutson explained, is being able to show them that a microcomputer will increase their productivity and make the investment worthwhile.
The second broad market segment is the consumer market which, he said, consists of hundreds of subsets.
"If we were to profile the personal computer buyer in the early 80's, it would be a male or female head of household, most likely in a managerial, administrative or professional position, typically earning over $25,000 per year and falling into the 25 to 50 age bracket. Most likely, this person is already familiar with what a computer can do and can, in the home environment, identify a need for computing to address various problems and functions.
"There are several millions of these households in the U. S. that fit into the demographics I've described," he continued. "I don't believe personal computers will ever be an 'impulse item' off the shelf, partly because of the expense. So the logical question becomes, 'Why should I buy a personal computer and what will it do for me?'"
Jutson's answer to that question - what will a computer do for me - provided an interesting way of categorizing the personal computer market in terms of function. His list of personal computer uses included...
1) Planning and Record Keeping:
"I believe this type of managerial/administrative consumer does not pay enough attention to his own finances - this is confirmed by the rapid growth of financial-planning services. With the rapid inflation of the past few years, projected to continue through the 1980's, many consumers have found themselves in higher tax brackets with a higher cost of living that has made their lives more and more complex and difficult to manage. They've had to cope with budget planning, financial investments, mortgages, loan payments, credit unions, payroll stock plans, taxes, and pensions. In this new, complex environment, consumers have to organize their home record systems like they do at work - on a daily, year-round basis instead of just once a year at tax time. They have to look at their gross income, their investment tradeoffs, and I believe this type of consumer can justify the purchase of a personal computer with the appropriate software to meet these various needs ... given that the typical first purchase of a personal computer is around $2000-$2200."
2) Home Education:
The next category of purchase that adds value to the computer is home education. Jutson noted that a majority of schools and colleges are requiring some hands-on computer experience and more and more schools are bring computers into the classroom as instructional aids. There is already an enormous investment in home education being made by the American family - cutting across all demographic strata - in home courseware from encyclopedias to books. As a supplement to classroom education, this home courseware can be made much more exciting and "fun" through visual display and interaction with a computer, Jutson explained.
3) Personal Development & Interest:
There is also, he said, a huge market in how-to-books, all the way from how to fix your appliances to learning foreign languages. Literally hundreds of topics are addressed. Personal computers provide for active hands-on demonstration for all age brackets and interests, and speed the learning process.
4) Interactive Entertainment:
Having purchased a personal computer, we're all challenged by interactive entertainment, he said, whether the entertainment is one of skill or of strategy. The sale of strategic board games (chess, backgammon) never seems to let up and, in the skill area, the video arcades are doing extremely well. So entertainment accounts for a good deal of software sales.
5) Home Information/Communications:
If we move away from computation and hook up an interface and telephone modem, we have the capability to hook up to a timesharing service. Using the computer as a terminal provides a capability for dialing up and subscribing to a variety of evolving services. Some, like Micronet and The Source already have a fairly long menu. Atari has defined an information and communications strategy - obviously it will leverage our installed base of hardware to help our users gain access and may involve a wholly owned subsidiary like Warner Amex Cable. Some of the future uses of this home information system which we can envision include news, stock data and other services which will cut down driving time, mailing time, and minimize the hassle of shopping and bill paying. It's a question now of "getting the players together," he said, and making it happen.
6) Home Monitor & Control:
The decade of the 1980's will witness a growth of consumer electronic products deriving in large part from introduction of smart electronics into the home. The personal computer is the "leading edge" of these products. By the mid-1980's, he expects to see dedicated smart electronics - CPU devices which interact with the electronic environment - in the home. It's unlikely that we'll see one massive all-purpose CPU controlling everything in the home. It will happen step by step, beginning with stand alone appliances containing their own microprocessors and other smart electronics.
These, then, are some of the major uses which Jutson foresees for personal computers.
He goes on to say that the Atari product was designed to be easy to use by consumers, easy to access, easily loaded (cartridges), and easily connected (modular cords).
"Does the end user care about the architecture of the machine?" he asked rhetorically. "The answer is no. 'What will it do for me?' That's his major concern. We in the consumer electronics business are concerned with leveraging technology and bringing that technology to the consumer for his or her benefit, so why try to scare the consumer off by making it so he or she has to have a double E or be a computer programmer to utilize the full capabilities of a personal computer?"
He drew a parallel between the personal computer industry and the home stereo industry, pointing out that 15 years ago there were 1500 hi-fl salons in the United States and now there are about 15,000 outlets in the U. S. He feels that computer stores will become to the computer market what hi-fl specialty shops were originally to the hi-fi industry, and predicted that a number of stores will proliferate and become strong chains. A parallel development, he said, is the entry of general merchandisers such as J. C. Penney Department Stores into the personal computer distribution scheme.
He emphasized that Atari only started shipping late in the fourth quarter of 1979 and is just getting into the market with its 400/800 computers. Heavy advertising is planned for the second and third quarters of 1980, including a full dealer support program.
"Having just come out of the gate we have to and will continue to have, a lot of things to do to strengthen our position in the industry," he said. "Atari is a young company that has already, in a few years, achieved significant growth in consumer electronics products. We have a vertically integrated manufacturing capability, a marketing staff that understands marketing, distribution, sales, and sales promotion; and a large blend of research and development and engineering expertise.
"We believe that the Atari computers are different because from word one they were developed to take away whatever apprehensions a first time user might have and help him or her feel good about interfacing with our product. With Atari computers, you don't have to stop and think before you use them. Of course, more and more of the younger generation are learning to program and work with more sophisticated applications, and they will have the capability of doing so with our product."
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