The recent TI announcement of a pending second quarter loss in the $100 million range sent shock waves through the consumer computer end of the stock market. In two days, TI stock dropped almost 50 points before beginning a gradual upturn. What's happening out there in the trenches of this economic warfare?
It would seem that Commodore is remaining profitable by constantly refining, redesigning, and maintaining rigorous internal cost controls. Various manufacturers, including TI, have been pulled into the trap of selling computers at loss leader prices. The expectation (perhaps more accurately the fervent hope) then becomes that money will be made on the software. With so much competition for software dollars only time will tell, but Commodore's recent and aggressive software price cuts don't bode well for the loss leader philosophy.
In Tom Halfhill's noteworthy article in this issue you'll discover an incredible array of information on the Consumer Electronics Show. Items of particular note: Atari has completely revamped their computer line, and Coleco introduces "Adam," a computer package of tremendous significance.
Random Bits and Rumors: With the advent of "Adam," we can expect to see new packaged systems to appear, most notably in the $500–$700 range. One recent concern we heard voiced regarding price cutting for computers: do people treat them less seriously as prices drop (e.g., is a $299 VIC-20 "more" of a computer than an $85 VIC-20)? It would seem that the manufacturers will have to convey the message that these are powerful, capable computers, and back that up with useful software. Commodore's Magic Desk (see Tom's article) is a good case in point.
IBM's new home computer is still under the tightest wraps. We still expect it by September or October and still expect a price in the $700 ball park. There's always the chance that IBM will sit back and watch the battle for a while to let things shake out a bit, but we think not. The IBM home computer would appeal to many on name alone, and IBM's well aware of that.