IN WHAT SEEMS like a re-run of the troubles in the United States, there have been reports of the possible demise of the micro-market in the U.K. Grundy Business Systems, makers of the Newbrain, have ceased trading and sales of the popular Dragon have been less than expected.
Against that must be set the news of increased profits for Sinclair Research. They rose by 65 percent to slightly more than 14 million pounds on turnover which was doubled to 55.5 million, compared to last year. Prism Microproducts, mainly because of its distribution link with Sinclair, recorded turnover of 10 million in its first year. Managing Director Bob Denton said the company is moving between 500,000 and 1 million pounds worth of Sinclair goods each week.
In addition, there is the news of the deal for the sale and making of ZX81s in China which opens vast new possibilities. The fact that the deal was agreed to so quickly shows how keen the Chinese must be to take advantage of this new piece of technology and join the computer age. Other business people who have tried selling in that market must be envious at the speed with which the business was transacted.
Despite the similarities between the United States and Britain, the underlying situation is different. The problems on your side of the Atlantic stem mainly from the continuing price war whereas the British difficulties are the result of particular conditions in which the companies find themselves.
Grundy was taking over a machine which was out of date by the time it was launched. What had been a new idea when it was conceived had been overtaken by the Sinclair machines, while its own future was being affected by delays. There is a chance that the Newbrain will survive but the market for which it is intended will have to be reappraised.
Dragon difficulties appear to be the opposite of those suffered by Sinclair. Instead of underestimating the market, the company was too optimistic of prospects and budgeted accordingly. It is also likely to be under pressure from its parent, Mettoy, the toy maker, which has been looking to Dragon to ensure its future. Last year it had to sell part of Dragon for new finance to enable the company to take advantage of growth prospects in the computer market, but Dragon is still its main source of income.
The lesson from both the problem companies seems to be that although there are great opportunities in the home computer market, it is not immune from the normal constraints of business. No one, not even Sinclair Research, can afford to ignore them, although Sinclair is probably in a better position than most. As it was first into the market, it has had a little more time than others to put itself into good shape, a process which has been proceeding since the company was started four years ago.
That kind of extra time does not exist for the companies which have since started selling computers. Even the production of a successful machine is no guarantee of business success. Dragon has regularly been one of the top-sellers but that did not prevent it running into difficulties.
As in all businesses, the route to success is to predict demand accurately and adjust supply to meet it. It would appear that demand for home computers is not so easy to predict as some would have believed. With a potential of all the homes in Britain and the sales having reached only about 10 percent of them, it would have been logical to expect that any machine with a reasonable specification and price would sell as fast as they were produced.
Dragon found that was not so. The conclusion to be drawn is that the potential market is not that big, as least not until the price falls to that of a large calculator.
Sinclair experience, however, is that it can sell all its Spectrums, yet the ZX81, despite its low price, is falling from favor. That can be rationalized by saying that Sinclair is in a class of its own and has found its niche in the market for a relatively low-cost machine with relatively high specifications.
The BBC Model B machine is in a similar situation but the rest are chasing what is left.
With more and more machines seemingly arriving every week, the chasing will become ever more frantic until the manufacturers that fail to get it right have to call it a day. It is unlikely that will happen before Christmas, given the pre-festive boom which can be expected. By this time next year, however, following the fall in sales in the beginning of the year, it could be that many of the less familiar names will no longer be with us.