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IBM To Try Home Computer Market - Again - After PCjr’s Flop

June 26, 1990

NEW YORK (AP) _ IBM’s last attempt at a low-priced computer designed for home use could be a model for a business-school study of marketing disasters.

The PCjr was introduced in November 1983 with one of the biggest marketing blitzes in computer industry history. But it turned into one of the biggest embarrassments ever for the world’s largest computer company.

PCjr suffered from a toylike keyboard - which later was replaced with a larger one - and limited computing power. It was priced too steeply for home computer users, but did not offer enough performance to compete with machines in its price range.

International Business Machines Corp. yanked PCjr from the market a year and a half later, as 200,000 of the machines sat unsold in warehouses.

On Tuesday, IBM will try again to tap the home computer market. This time, the Armonk, N.Y.-based company reportedly has taken great pains to avoid some bad reruns.

The low-end model of the new four-model line will sell for under $1,000 - possibly for as little as $650 in discount houses - according to industry analysts.

The computers will use one of the most popular microprocessors, Intel Corp.’s 80286 chip, making them compatible with scores of software packages used in business. And they will have adequate, though not overwhelming, memory.

Some, or possibly all, of the models will contain a built-in modem, which allows computers to hook up to distant computers or data services, such as CompuServe, via telephone lines.

The machines are expected to include a popular software package from Microsoft Corp. that combines a word processor, a spreadsheet and a communications program to run the modem, analysts said.

The computers also are expected to have a built-in program that will link them via phone lines to Prodigy, a computer service that provides such things as home banking, shopping and airline reservations, said Rick Martin, an analyst at Prudential-Bache Securities Inc. Prodigy is a joint venture between IBM and Sears, Roebuck and Co.

Sears is expected to be among the major sellers of the new computers, along with other mass merchandisers and possibly traditional computer stores, Martin said.

Though IBM never comments on unannounced products, one of its top executives told industry analysts several months ago that the company wants to tap the potential market among the millions of people who have little or no experience with computers.

Critics say other computer makers have tried to sell to that market for years, with less-than-overwhelming success.

But IBM apparently believes these millions have been exposed to enough information about computers that they now will be willing to take the plunge, said Bruce Stephen, an analyst at International Data Corp., a research firm in Framingham, Mass.

″The thrust of this seems to be going after the family,″ Stephen said. ″They sense that there is some kind of perceived demand that increasingly families view a computer as a necessary home appliance.″

IBM could market the computers as a way for families to keep track of personal finances and taxes, to do shopping and investing, and to use educational software, Stephen said.

But he noted that families are offered many other expensive temptations, such as camcorders and large-screen TVs, and that with consumer spending down, this may be the wrong time to launch such a product.

Critics say the new line, which some reports say will be called the PS-1 (IBM’s major full-sized personal computer line is the PS-2), may have some of the same drawbacks as the PCjr.

For example, the new home PCs are said to lack so-called expansion slots that would allow customers to increase the machines’ memory or hook them to a computer network. In addition, the keyboards will not be full-sized, analysts say, though they will be more acceptable than the rubberized ″chiclet″ keyboards that helped do in the PCjr.

Some analysts say those design limitations were intentional, to avoid cannibalizing sales of IBM’s higher-priced PCs. That could be a major issue with the specialized computer stores that sell IBM’s conventional computers, Martin said.

End Adv Monday, June 25, and thereafter

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