Counterculture to Madison Avenue. (Reminiscence - technology and hardware) Chuck Peddle.

I believe that marketing is the key to the personal computer industry--its biggest opportunity and its biggest problem. Marketing is what this industry is all about.

To understand those statements, leths take a look back. The first question we need to ask is "Why do people buy computers?" The need for computers is predictable. Once you are attracted to computers, once you are computer literate, you ask yourself what happens when you become computer-deprived. My belief is that the industry began when people realized that they were computer-deprived and wanted to satisfy this new need. I think the need for computers is relatively strong, and I believe that the marketers of the industry capitalized on this need.

I believe that the industry really started with the Dartmouth Basic system. That was probably the first time that a relatively low cost computer--in those days a "relatively low cost computer" was several hundred thousand dollars--was made available on an "on demand" basis to a large group of people. The basic in the operating system allowed the student to be trained without listening to one lecture. He would sit down at the Teletype and he would learn how to program using only the Basic instruction manual.

The experiment was so successful that timesharing became immensely popular at universities across the country. Soon this popularity spread to business, and the availability of inexpensive machine time allowed a great many people to become computer literate. Technology

As timesharing became a way of life for both business and academic users, three things happened to turn the tide of computer events. In 1973-74 the first microprocessors were announced and threatened the livelihood of electrical engineers everywhere. Prior to 1973, an engineer could spend a whole month designing a single circuit; if he was really good, he could stretch out a small control design for a year. And no one could design it better than he could, so he had a career. Marketing

But with a microprocessor and two or three other control chips, he could sit down and hack out a design in an afternoon. Almost overnight a need (and hence, a market) for microprocessor literates sprang up, and engineers scrambled to find out what this infant industry was all about.

The KIM-1, the Altair, and various devices from Digital Group were among the products aimed at this market--the market of technicians and engineers who wanted to work on computers.

In 1975 we saw another landmark event: the opening of the first computer store--a store that sold products that people didn't understand but knew they had to have. The half dozen or so stores that opened that year sold only one product really; they sold computer expertise--the knowledge needed to build a computer. And the salespeople were also good at helping you to debug the products they sold.

Also important in the retail scheme of things was the rise of Radio Shack. Radio Shack dominated the retail distribution of electronic devices and parts; all they needed was a computer product. The original intention of the folks in Fort worth was to sell a computer for $300. The independent computer stores, they figured, would not be able to make a profit on a $300 machine and would soon go out of business as they tried to meet the competition. As it turned out, Radio Shack wasn't able to make a profit on a $300 machine either, and the original TRS-80 Model I was introduced at $600.

By 1978 we had set the stage. We had created the market, the new breed of computer literates; the technology; and the distribution channel. We had begun to satisfy the need of the market for personal computing.

What happened in 1978 was, perhaps, even more significant. That was the year that Steve Wozniak got fed up with waiting for programs to load into his 16K Apple from a cassette recorder. That was the year he introduced the first low cost floppy disk drive, an event that was to change the character of the market.

The next truly significant event occurred about a year later: VisiCalc was introduced by Dan Bricklin and Bob Frankston of Software Arts. VisiCalc was, in my opinion, the first commercial program that was written for the personal computer. It proved that with two disk drives and 48K of memory you could solve real world business problems--and solve them in a way that timesharing systems couldn't. It was a product created especially for this new market.

The point I want to make is that from 1976 to 1978 we were solving the problem of selling computers to people who wanted computers; we were satisfying the home market. In 1979, with the introduction on VisiCalc, we began to sell computers to people who needed computers; we saw the beginning of the business market. Two Computers Per Desk

The business computer market is very interesting. It is a market that will continue to consume computers up to and including more than one computer per desk. My personal belief is that businesses will buy computers until there are two per desk; if you really used the computer in the office and you believe in my theory of computer need, you will not be albe to work at home without a computer. Businesses will be forced to supply second computers to their managers for home use.

The transportables are a signal to the marketplace. Certainly, notecbook portables are a signal to the marketplace. The main problem with portables today is that they are not as powerful as the machines we keep on our desks.

As the machines on our desks become more database oriented, we will have to find a way to give computers at home th ability to access the same data we can get with our office computers. That will become an entirely new specialized market.

In 1980 we saw yet another land-mark invention: Clive Sinclair's disposable computer. Many people bought Clive's machine, and as soon as they became computer literate, many realized that the machine was inadequate. But by that time they were computer literate enough to justify the expense of a more powerful computer. The Sinclair computers fed the market in a completely new way. More Marketing

With the advent of the Sinclair computers and the Commodore Vic 20, we established a second, even more important, distribution channel. As the retail channel expanded to include K Mart and Toys-R-Us, the sale of computers reverted to the state in which we saw it back in 1976; computers were being purchased to satisfy the need for computer literacy. Now there were two ways to market a computer: through the computer dealer and through the mass merchandiser.

The problem that the industry faces today is still marketing oriented. The cost of getting a product to the marketplace is so high that there can be no more small entrepreneurial successes like VisiCalc. The cost of bringing a good software package to market these days is in the neighborhood of $5 million.

If we want to allow the industry to grow as it has in the past, we must create another step. We must allow the market to look at a product and decide "yes, that's what we really want," rather than letting the winners be chosen on the basis of packaging and promotion.

Today we face an industry that has evolved from a counterculture approach to a Madison Avenue approach. We see a market that may have outgrown its ability to create truly worthwhile products. Until we find a solution to this problem, I predict that the industry will stagnate.