INDUSTRY DOUBTS ATARI'S NEW STRATEGY
Reprinted from New York Times. May 13, 1985
ATLANTA, May 8th, -- Atari Corporation made an
unexpected appearance at the Comdex personal computer trade show here to
convince a sceptical industry that the company was viable and that its new
products would soon come to market.
But after two days of statements that seemed
contradictory, vague promises about the future of a new computer and sketchy
descriptions of future models, there seemed to be more doubters than ever.
"We've seen marketing strategies changed before our
eyes," said Barbam Isgur, an analyst and consultant who follows the consumer
electronics industry, as she emerged from an Atari meeting.
Others expressed amazement that Jack Tramiel,
Atariís tough-acting and unpredictable owner, was still the center of industry
attention, even while his products and his company faced an uncertain fate.
Ousted From Commodore
Mr. Tramiel bought the company from Warner
Communications Inc. last year, after he was ousted as chief executive of
Commodore International Ltd., Atariís archrival. The deal involved no cash, and
gave Warner a 32 percent stake in the company. The company bears little
resemblance to its old self. Mr. Tramiel has replaced all of the executives and
is rapidly replacing the product line.
Everywhere that Mr. Tramiel went in the
sprawling Georgia World Congress Center, where the Comdex show was held, he
seemed to leave a trail of confusion. Most of it concerned an innovative, new
home computer, called the Atari 520ST. Like Commodore's forthcoming Amiga
computer - which was shown only to a select few in a hotel room near the
conference --- the Atari machine sports the fancy graphics and easy-to use
features of Apple Computer Inc.'s Macintosh. Both will sell for about a third
of the Macintosh's price.
The Atari computer's graphics are stunning, and
unlike the Macintosh, it works in color. Many in the decimated home computer
and software industry are rooting for Atari, hoping it will make consumers
excited about computers once again.
But Atari's first promise is already going
sour. Early in the year, Mr. Tramiel said shipment of the 520SL would begin by
April - a statement Atari now denies was made - but at Comdex the shipping date
became July. With July two months away, it was still not clear where those
shipments would be headed. . In January, when he first showed the computer, Mr.
Tramiel said the 520SL would be sold in the same manner as previous Atari and
Commodore home machines: through mass marketers such as K Mart and Toys "R" Us.
Plan Is Changed
But by last Monday, the plan had suddenly changed.
Mr. Tramiel said the machine was too complex for un-trained salesmen and
competed with far more expensive models, so it would be sold through computer
specialty stores, alongside IBM PC's and Apples.
At a news conference on Tuesday, he changed
the plan again. The sophisticated version would be sold in specialty stores,
and a stripped-down, less-powerful model, the 520ST, never before publicly
mentioned would be on mass-marketers' shelves by August. "The press seems to
have trouble getting this right," Mr. Tramiel said.
When Atari officials were asked at the news
conference to list the computer dealers that would be handling the 520ST when
volume shipments begin in July, they could not name one.
As a result, few in the industry believe they will
ever see production models of the 520ST. And those who do, doubt that it will
happen any time soon.
Computer specialty stores have been shy of
Mr. Tramiel since his Commodore days, when he first sold his inexpensive
computers through them, then abruptly provided the products to discounters.
That left the specialty stores with large inventories of overpriced machines,
and few warm feelings for Mr. Tramiel. In the absence of many other computers
to offer home users, however, especially after the demise of IBMís PCjr,
retailers may have no choice but to deal with Mr. Tramiel.
"IBM and Apple are really not treating the low end
of the market right," said William E. Ladin Jr., chairman of Computer craft, a
chain of 61 computer stores in the Southwest. "Jack Tramiel has the right
idea. I'd like to see it all work out. "
Even Mr. Ladin, however, worries whether it
is worth the effort to sell an $800 machine. "It took far more hand holding and
explaining to sell a PCjr to a first-time customer for $800 than to sell a $5000
PC-AT to a veteran," Mr. Ladin said, recalling IBMís Christmas promotion of the
PCjr. "We sold a bunch, but my salesmen hated me."
Software is another problem for Atari. While the
new Atari machine is similar to the Macintosh, it uses an entirely different
operating system, called Gem, that was designed by Digital Research Inc.
Atari officials assert that more than 100
software titles will be available for the machine, most written by small
software houses that desperately need work. At the show on Monday, Sigmund
Hartmann, a former Commodore executive brought in by Mr. Tramiel to head the
software effort, also hinted that the prestigious Microsoft International Inc.
might be preparing a program or two for the Atari machine. "We're shipping them
a machine and they're real interested," he said.
But on Tuesday, Microsoft's chairman,
William Gates, said, "At this point, we have no plans for the Atari machine,
nothing under development". Atari's future may be ultimately determined by its
finances, not its new products. The company's financial situation is poor,
because sales of Atari's old line are "very, very slow," Mr. Tramiel said, in
part because of continuing legal wrangles with Warner and Commodore. A lack of
funds could slow development of two other long-promised Atari products: a 32-bit
computer for business use, which the company has yet to show, and a $500 compact
disk reader - similar to those used for high-quality music recordings - that,
can store vast amounts of information.
"We'll have them by fall," Mr. Tramiel said,
adding that the compact disk drive would make it possible to put encyclopaedias,
legal casebooks and patents in electronic form, all available to consumers for a
relatively low price. "My slogan is the best value and the highest technology,
and that is what I will deliver."
Mr. Tramiel is a tough competitor, and while
he rarely delivers all that he promises, he has always delivered something. Not
everyone is willing to write him off.
"Obviously, they are having pains," said Dick Bratt, vice president of
engineering and development for Spinnaker Software, a Cambridge, Mass., concern
writing programs for the company. "There's a temptation to jump on the coffin
and start spitting nails in. But Jack Tramiel is a winner. I wouldn't bet