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A PC in every pad.

OF ALL CONSUMER ELECTRONICS PRODUCTS ever introduced to the market, surely none has undergone such dramatic transformations in such a short time as the personal computer.

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Just 15 years ago, home computers were primarily the domain of hackers and hobbyists. Soon, they became the obsession of those enamored with Space Invaders and other such cartridge-based games. Later, with the advent of disc-based software, they enjoyed a new incarnation--principally as glorified typewriters and calculators.

Today, personal computers are virtually unrecognizable as the descendants of home computers sold back in 1980. Granted, they still intrigue hackers, still play games and still perform word processing and number crunching feats--and do so better than ever before. But at the same time, they also transmit messages, plan menus, display merchandise, play music, answer the phone, receive television singals--and so many other things that they are being touted as the newest home appliance.

In short, personal computers in the 1990s have become increasingly invaluable tools for everything from research to communication, from financial management to entertainment, and much more. They are amazingly fast, powerful, versatile, easy-to-use and affordable--and because of that, they are being embraced by a rapidly growing proportion of average consumers.

Indeed, by the end of 1993, a full third of all U.S. households owned at least one personal computer, up from about a quarter of households a year earlier. That household penetration could jump to as high as 40 percent by the end of 1995, according to some research analysts; and by the turn of the century--a short five years away--a full half of all U.S. homes are likely to be plugged in to the PC phenomenon.

Already, one can barely read a newspaper or magazine without finding an article expounding the many benefits the average consumer can reap from owning a personal computer. Across the country, radio stations are launching call-in programs to share information and answer questions from an increasingly computer-aware audience. Plus, when they're ready to buy a new personal computer, consumers today can walk into just about any type of retail outlet and find a selection of models to fit their needs and budget.

"Not only are there a greater number of places consumers can buy a computer, but they are also easier to buy than ever before," said David Goldstein, president of Channel Marketing Corporation. "Everywhere you turn, retailers are offering deals with no money down, no payments for six months, and other enticements to buy."

"When you add in the fact that prices continue to decrease, you have a market where computers are affordable, you don't need money upfront to buy them--and customers know how to use them," he added. "And that all adds up to more consumers buying personal computers for home use."

MULTIMEDIA DRIVING THE MARKET

While the personal computer marketplace has been a steadily growing one for a number of years, the past year has seen it gain even more momentum, in large part due to the true emergence of multimedia computing.

One key manufacturer in the business put it this way: "There is a direct relationship between the increasing household penetration and multimedia. Multimedia is probably the area that has captured the imagination of consumers and provided for many of them the reason to buy--it has enabled them finally to see how a personal computer can enrich their lives."

Another manufacturing executive gave it this spin: "Multimedia is a great hook to attract customers into the market. It allows people to really have fun with both the input and output of their PC."

"One could make the analogy to trucks of 50 or 60 years ago," he continued. "Initially, people bought them because of a true productivity need. But gradually, they evolved to the point where they started being bought for enjoyment. The same holds true for PCs, particularly as their cost as a percentage of consumers' income has become much lower, too."

Because of the enjoyment factor, the executive added that "savvy marketers will recognize that their competition comes not just from other manufacturers, but also from a vacation in Hawaii, a new television and other things vying for consumers' disposable income."

Despite that competition for consumers' dollars, it is abundantly clear that personal computers are frequently winning out. Sales of PCs through consumer channels in 1993 were estimated at about six million units. And 1994 exhibited a growth rate of close to 40 percent in the home market, according to Channel Marketing's Goldstein.

"There's no question there will be a substantial gain in household penetration for 1994--and most of the customers will be first-time buyers," he said.

At the same time, the market is expected to get an additional boost from existing customers ready to trade up from slower, less powerful machines and take advantage of the new, state-of-the-art multimedia technology.

Noted the top marketing executive with one leading PC manufacturer, "There will be a high degree of replacement in the next couple of years as consumers start to upgrade from the older 286/386 models."

Agreed Raymond Boggs, director of small business and home office research for BIS Strategic Decisions: "All those who bought a personal computer three or four, even two years ago, are now looking at getting a new machine, especially with the advent of multimedia. That doesn't mean they are throwing the old computer out, but are maybe passing it along to another family member, and becoming a two-PC household."

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SCIENCE FICTION TO SCIENCE FACT

The idea of computers being a virtual necessity in the average household today would have been laughed off as science fiction a relatively recent 30 years ago. In fact, looking back, the evolution of the computer marketplace to its current status has taken place with almost dizzying speed.

Those who are at least forty-something will surely remember the days when the word "computer" conjured up images of an entire room filled from floor to ceiling with beeping, whirring and blinking instrument panels. The idea of any kind of miniature calculating or communicating device was something relegated to the pages of comic books.

In fact, as portrayed in the popular entertainment of the time, early computers tended to be either comical or menacing. If they weren't uncontrollably spewing out reams of punchcards to the dismay of frantic office workers, they were likely to be displaying an independent and malevolent bent toward sabotaging the affairs of unsuspecting, helpless humans.

Obviously, those characterizations reflected the general public's lack of understanding of what this new-fangled technology was and how it worked. Except for those people employed by the large corporations or government agencies that were early computer users, it was certainly not a technology that touched people's lives in any direct fashion.

Even through the 1960s and '70s, as the industry refined the intricacies of mainframe computing and gradually shrank the technology into minicomputers, its immediate effect on John and Jane Doe remained minimal. That remained the case, too, with the launch of the first home computers in the late 1970s. Interest in those early machines was limited primarily to hobbyists, whose chief use for the devices was programming. In fact, the very first models were actually sold as kits, further restricting their mass appeal; and even the Apple II, introduced around the same time, received initial response largely from the early hacker audience.

Then, in the early 1980s, along came a group of home computers for which many average consumers suddenly saw a purpose they could relate to: that of playing games. These modest computers, such as those from Commodore, Atari and Texas Instruments, featured a one-piece construction of processor and keyboard with a slot for software cartridges, and attached easily to a color television set. While some enthusiasts surely dabbled with programming in the machines' BASIC languages, most users quickly accessorized the computers with joysticks and other peripherals to enhance their playing of the plentiful game software.

Those limited-use computers, however, bore little resemblance to the PC of today, and their endurance was short-lived. In fact, credit for sparking the true birth of the personal computer--and even the nickname, PC--unanimously goes to IBM with its introduction in August 1981 of what would be the first popularly accepted desktop computers.

That introduction was followed shortly by the debut of Lotus 1-2-3, which finally set the stage for the growth of personal computing in the 1980s. The initial growth, though, came most heavily in the business community, where the functionality and applications of personal computers were more readily evident; because of the price point, the complexity of the technology, and the software then available, a home PC was simply not viable or desirable for most consumers.

Obviously, in just a few short years, all that has changed, with PCs now being less expensive, easier to use, and capable of running hundreds of software programs that fulfill consumer needs and wants for entertainment, education, and productivity at home. And with the blossoming of multimedia, it is safe to say, "You ain't seen nothin' yet."

In fact, developers have probably just scratched the surface of the potential for multimedia applications. Even so, it is clear that this is a technology that has taken hold like no other in the personal computing arena. Already, with manufacturers shifting most--or in some cases all--of their production to multimedia units, consumers would be hardpressed to find a non-multimedia-equipped PC on a retail shelf. But then, most consumers aren't looking for non-multimedia.

"Just a year ago, multimedia was a neat idea and was starting to grow. Now it's already the standard," stated Channel Marketing's Goldstein. "And whereas typically in the computer industry, manufacturers try to push a technology, that is not the case with multimedia. It is very consumer driven."

The popularity and acceptance of multimedia is unparalleled by any other development that has taken place in personal computing. Even the introduction of the Windows operating environment--considered a major milestone in making IBM and compatible computers easier to operate--does not compare to the broad-based lure of multimedia.

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INTEGRATION OF MANY FUNCTIONS

In a nutshell, what multimedia is doing is opening the door to the integration of home computing, entertainment and communication. Driven by the strong consumer interest in the technology, many manufacturers have made rapid strides in addressing the distinct needs of the home user by incorporating features to make their computers more functional, versatile and desirable.

One leading manufacturer, for instance, recently introduced a new generation of home PCs that are not only powerful multimedia computers, but that also double as a television set, complete telephone communications center and stereo sound system.

Channel Marketing's Goldstein said: "Ever since 1991, we've been forecasting that as home computing becomes distinct from the office, the computer will take center stage in running home entertainment and information. It is on its way to becoming the software player of choice in America's homes."

Obviously, multimedia computers, with their requisite CD-ROM drive and a pair of stereo speakers, are a natural for playing audio CDs. And as Goldstein pointed out, with new MPEG standards for full-motion video compression, it will not be long before consumers will pop out to the video rental store and bring home movies on CD to play, not through a dedicated video player, but through a computer.

"In the not-so-distant future, audio, video and computer systems will merge into one device," Goldstein added. "And the audio and video business of the future will be routed through the home computer. Already, you have traditional consumer electronics companies working on multimedia televisions; and the biggest competitors for computer manufacturers going forward may be the Sonys, Panasonics and Toshibas of the world."

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FUTURE TECHNOLOGY TODAY

As much excitement as multimedia is creating in the consumer marketplace, there are other technologies and advances coming quickly down the pike that promise to exert their own influence on the future of personal computing.

For one thing, many are eagerly awaiting the release of Microsoft's newest operating system, Windows 95. More than a simple upgrade of existing Windows software, Windows 95 marks a shift from a 16-bit operating system to one that processes data in 32-bit chunks, allowing it to take advantage of the 32-bit design of 386 and 486 processors, as well as make good use of the 64-bit design of the new Pentium processors. In other words, users will be able to perform more tasks at the same time and perform them more quickly.

Windows 95 has also been designed to incorporate a number of new interfaces and innovative features meant to simplify computer use--including a Plug and Play feature for effortlessly installing new peripherals.

"The industry has been rapidly moving toward Plug and Play, and Windows 95 will complete the circle," says one computer company executive. "It will definitely be an important part of our program in 1995."

In addition, the move to incorporate Pentium chips in personal computers is expected to accelerate in models for the consumer market in '95, although the price premium will still postpone widespread sales of the super-fast PCs.

Noted one manufacturer: "The trend in chips is one of the main issues we're looking at right now, and it is assuredly heading toward Pentium. But for the moment, it is a side road, and probably won't be a major factor in the consumer market until 1996 or 1997. However, the emergence of the PowerPC standard is on the horizon."

Concurred another key manufacturer: "Pentium is a widely recognized name because of all the advertising Intel is doing, and it is now beginning to have a high degree of visibility in the retail market. But up to this point, the pricing has been too high to be applicable to the average consumer."

"So far, prices for Pentium units have been around $2,500, and there are not too many households that want or need to spend that type of money on a PC," he added. "But as prices start coming down in 1995 and start hitting the teens, Pentium will be more widespread and more important in the consumer market."

Looking further ahead, the industry will be keeping close tabs on developments in the recently announced alliance of IBM and Apple to build a personal computer with shared hardware design. Using the PowerPC chip developed by the two companies in conjunction with Motorola, the advent of the shared computing design is seen by many as a first step toward a more universal desktop computer, and less confusion for consumers due to incompatible systems and software.

But whatever comes down the road in the way of new technologies, there is no question whatsoever that personal computers will continue to be an increasingly integral part of the everyday life of consumers.

Summed up one manufacturer: "I would describe the personal computer business as booming. The consumer retail market for PCs is very healthy, especially in the area of multimedia."

"Personal computers are now fully-featured appliances for the home, combining productivity, entertainment and education with integrated audio, video and telecommunications features," he continued. "Just as multimedia has redefined personal computing, these new computers are redefining multimedia and allowing more and more consumers to see the full benefit of owning a PC."
COPYRIGHT 1995 MacFadden Communications Group LLC
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 1995 Gale, Cengage Learning. All rights reserved.

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Title Annotation:Buyers' Guide to PCs; personal computers
Author:Gill, Penny
Publication:HFN The Weekly Newspaper for the Home Furnishing Network
Article Type:Industry Overview
Date:Jan 2, 1995
Words:2534
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