Written by David Tebbutt, MicroScope 06/85 - scanned
THE YEAR THAT THE COMPUTER BUBBLE BURST (column)
Boy, am I glad that 1985 is over! Who'd have thought that the personal computer bubble would have burst so suddenly? The first half of the year brought an end to a lot of false optimism as one computer company after another hit bad times. This period started with the Curry/Sinclair punch-up. Suddenly people began to lose confidence in an industry whose leading figures behaved in such an eccentric fashion. If it was a publicity stunt, I'd say it backfired.
Oddly enough, confidence started to return when Micro Focus declared its dreadful results for 1984/5. Once people realised that the company had done the right thing and straightened out its accounting methods, a new air of realism entered the marketplace. The hype was over. Suddenly we didn't have to pretend any more. For the previous six years, an annual doubling of profit had been regarded as the norm. Anything less was regarded as failure. In May 1985, the parameters of success were redefined and the personal computer business went out of fashion.
Things were very flat at that time. It was as if the industry had become pregnant. Remember, this was before the PC2, the Hard Fat Mac and the Amstrad 864. IBM was flushing PCs from its supply lines before announcing PC2. This proved to be harder than expected mainly because everyone knew that the PC2 was coming. The lookalike manufacturers were having an even tougher time trying to sell PC clones for the same reason.
A number of enterprising clonemakers rushed out AT compatibles to take advantage of IBM's inability to deliver the genuine article. Apple desperately wanted to make the Mac a credible alternative for business users but was hamstrung by its lack of speed and of real disk capacity. Atari decided to announce a Mac-alike using Gem environment which also stunted sales of the Mac. Commodore rather belatedly decided to bring out its IBM clone and, backing its horses both ways, announced a Gembased Mac-alike too.
In June, IBM put us out of our misery and launched PC2 a very fast, compact machine which was upwardly compatible with the PC but offered so many extra facilities that most PC users couldn't wait to upgrade their 'old' PCs. This was totally in line with IBM's objective of making the PC feel obsolete to its users. This attitude was brutally reinforced when the company relaunched the old PC at the domestic market at £800.
July and August saw the virtual disappearance of the shop-front approach to business sales. A few survived because they could show that they were more than just computer stores. In fact Personal Computers opened its second store in July. It was the 'shop-only' outfits that ' gave up the ghost or went underground.
In September, starting with the PCW Show, the Christmas announcements began. Amstrad, racking (sorry about the pun) its brains for a good gimmick, came up with the 864 stacked computer. Sinclair astonished us by announcing, not a computer, but its range of disk drives for the Spectrum and QL.
It was a smart move, because profit from sales of the disk drives far exceeded that from sales of Sinclair computers in the fourth quarter. The only other players of any note at Christmas were Enterprise (who gets my prize for perseverance) and the MSX brigade. In October, Apple finally released the machine we were waiting for: a Macintosh with a 30-megabyte hard disk built in. Suddenly, businessmen and women were queuing up to buy Macs. At just under the psychological 3000 barrier, Apple had no trouble shifting the machine and in fact took just three weeks to hit serious supply problems. In mid November, both Atari and Commodore announced that their machines would come out with hard disks at half Apple's price but they're still some way off (along with IBM's MSX and Sinclair's portable).
December brought nothing new. Christmas sales were better than 1984, thanks mainly to the advent of disks into the home market. Thank goodness the manufacturers decided to go for CP/M compatibility. Programs long since put out to graze will get a new lease of life. I envy the smart cookies who bought the rights to programs as the CP/M market evaporated a couple of years ago. They're really coining it.
1986 will see a ding-dong battle between IBM and Apple, with Olivetti gaining strength daily. By the time Commodore and Atari come on the scene, all the main contenders will have icon/mouse facilities. The home market is in for a boom as people discover that computers with disks are actually useful.
Unless IBM brings out its MSX machine, this year will see the death of MSX. Sinclair will bounce back to centre stage with an astonishingly-large-memory portable. But that's all for the future. I'm not really in the prediction business.
Happy New Year.