Microcomputers Taking Over Industry From Minicomputers

Microcomputers Taking Over Industry From Minicomputers

The Wall Street Journal

January 13, 1983

PERSONAL COMPUTERS AND OTHER MICROCOMPUTERS ARE BECOMING THE BIGGEST PART OF THE COMPUTER INDUSTRY.

JUST AS AUTOMOBILES SURPASSED TRAINS AS THE BIGGEST SECTOR OF THE TRANSPORTATION INDUSTRY AFTER THE TURN OF THE CENTURY, MICROCOMPUTER SALES WILL SURPASS MAINFRAMES DURING THIS DECADE, EXPERTS PREDICT. SO FAST ARE SALES SOARING THAT, ACCORDING TO SOME ESTIMATES, SALES OF MICROCOMPUTERS WILL EXCEED $6 BILLION THIS YEAR, TOPPING THE 20-YEAR OLD MINICOMPUTER INDUSTRY.

MINICOMPUTERS--WHICH ARE SMALLER AND MORE ACCESSIBLE THAN MAINFRAMES AND OFTEN BEAR PRICES IN THE $20,000 TO $100,000 RANGE-WERE THE FASTEST-GROWING SECTOR OF THE INDUSTRY DURING THE 1970S.

NOW, HOWEVER, MOST INDUSTRY OBSERVERS THINK MICROCOMPUTERS WILL SQUEEZE ALL BUT THE MOST POWERFUL MINICOMPUTERS OUT OF THE MARKETPLACE. MICROCOMPUTERS ARE BUILT AROUND MICROPROCESSORS-COMPUTERS ON A CHIP OF SILICON THE SIZE OF A FINGERNAIL.

MAINFRAME MAKERS SUCH AS BURROUGHS CORP. AND NCR CORP. THAT MOSTLY MISSED THE MINICOMPUTER BOOM ARE RUSHING OUT MICROCOMPUTERS. OLD-LINE MINICOMPUTER MAKERS SUCH AS DIGITAL EQUIPMENT CORP. AND HEWLETT-PACKARD CO. ARE SCRAMBLING TO CATCH UP BEFORE THE NEW PRODUCTS EAT AWAY THEIR TRADITIONAL BUSINESS. HOWARD ANDERSON, PRESIDENT OF YANKEE GROUP, A BOSTON-BASED CONSULTING FIRM, ESTIMATES THAT 150 COMPUTER MAKERS ARE SELLING MICROCOMPUTERS.

MOST OF THESE OUTFITS BUY MICROPROCESSORS FROM SEMICONDUCTOR COMPANIES SUCH AS INTEL CORP. OR MOTOROLA INC. AND LICENSE THE NECESSARY SOFTWARE. SINCE THE DEVELOPMENT WORK IS LARGELY DONE ELSEWHERE, COSTS ARE LOW, AND A COMPANY CAN PRODUCE A WORKING MODEL WITHIN A YEAR.

HERE IS A LOOK AT HOW THREE DIFFERENT TYPES OF COMPANIES-A MICROCOMPUTER COMPANY, A SOFTWARE COMPANY AND A COMPUTER DISTRIBUTOR-SEE THE MARKET AND THEIR PLACE IN IT. ALTOS COMPUTER SYSTEMS INC. MAKES A LOW-PRICED COMPUTER FOR THE SMALL-BUSINESS MARKET. ALTOS CHOSE TO SELL SYSTEMS USING STANDARD MICROPROCESSORS AND OPERATING SOFTWARE. THAT WAS A DEPARTURE FROM THE MINICOMPUTER COMPANIES' STRATEGY OF WRITING SOFTWARE THAT WOULDN'T RUN ON ANOTHER COMPANY'S COMPUTERS.

ALTOS SALES ROSE 139% TO $51 MILLION FOR THE YEAR ENDED LAST JUNE, BUT ITS SALES GROWTH IS SLOWING, AND IT RECENTLY DISCLOSED PROBLEMS PRODUCING A NEW MICROCOMPUTER. THE COMPANY SAYS THE MINICOMPUTERS HAVE ALREADY LOST THE SMALL-BUSINESS MARKET.

FINANCE AND ACCOUNTING SOFTWARE WRITTEN BY MCCORMACK & DODGE CORP. RUNS ON MAINFRAME COMPUTERS AT DOZENS OF THE BIGGEST U.S. COMPANIES. THE COMPANY IS DEVELOPING FOR ITS CUSTOMERS SOFTWARE THAT WILL MAKE IT EASIER FOR A MICROCOMPUTER USER TO EXTRACT INFORMATION FROM CORPORATE DATA BASES STORED ON MAINFRAMES. "WE'RE LOOKING AT THE MARRIAGE OF MICRO AND MAINFRAME," THE COMPANY SAYS.

PLANS SUCH AS THIS COULD MEAN LARGER SALES OF MAINFRAME COMPUTERS.

ON/TRAK DATA SYSTEMS SELLS MINICOMPUTER SYSTEMS TO SMALL BUSINESSES AND HAS BEGUN SELLING MICROCOMPUTER-BASED SYSTEMS AS WELL.

ON/TRAK IS CHANGING ITS STRATEGY. "IF WE WERE TO SELL ONE OR TWO AT A TIME, IT WOULD BE CATASTROPHIC," THE COMPANY SAYS. SO INSTEAD OF DEVELOPING SOFTWARE FOR SMALL BUSINESSES, ON/TRAK BUYS SOFTWARE PACKAGES. THE COMPANY SAYS SOFTWARE COMPANIES CHARGE ABOUT HALF AS MUCH MICROCOMPUTER SOFTWARE AS THEY WOULD FOR MINICOMPUTER SOFTWARE BECAUSE THEY EXPECT TO SELL IT MORE CUSTOMERS.