Could a brilliantly conceived product spell disaster for Coleco?
Having somehow got wind of VCI’s cover story for this issue, a fictional reader stormed the offices of Ion International and demanded an explanation. What follows is the account of the fictional confrontation that ensued.
Outraged Reader: What’s this **?!!$ about an Adam bomb? Have you closely examined the Adam computer?
VCI: No, we haven’t. Not yet.
OR: And you’re condemning it? Who are you going after next? UNICEF?
VCI: Calm down. Have a danish. This is not a hardware review. If the Adam does what Coleco claims it will do—and we have grave doubts about that but are willing to be convinced—it should be marvelous. We’re simply afraid that, on a marketing level, Coleco may be headed for disaster on this one.
OR: Disaster? They’re offering a stepped keyboard, daisy wheel printer, mass memory drive that will store 50K, built-in word processor, a game port for their incredibly popular ColecoVison games, a Buck Rogers supergame—and they’re offering it all for six hundred dol—
VCI: Seven hundred.
VCI: The suggested retail price has already been upped to seven hundred dollars.
OR: Whatever. It’s a heckuva bargain.
VCI: Agreed. The industry press, this magazine included, has trumpeted the Adam as God’s gift to computing. To owners of ColecoVision, certainly it is more computer than they could reasonably ask for. Understand, we admire and respect Coleco. We hope that Adam goes through the roof for them.
OR: You certainly have an odd way of showing your good wishes, you hypocrite.
VCI: Hey, lighten up. Our publisher, Michael Schneider, is not from Missouri, but he coins that state’s slogan in his appraisal of the Adam’s chances: Show Me. If Coleco can deliver all they promise for easily a third to a half of what other companies are currently charging (including Commodore, who has never been shy of cutting prices), then fine. If they can keep it serviced and software-supported, wonderful. But Coleco has to expect some skepticism. They have to expect to be scrutinized very closely.
OR: They have shown the Adam. At the Electronics Show in Chicago, to leading editors, to the infamous Boston Computer Society a few weeks ago…
VCI: And each time they’ve shown it, glitches have surfaced.
OR: Big deal. A machine of any complexity is going to have to be debugged.
VCI: Granted. But time is running out on Coleco. Face it, they made exorbitant claims, set a schedule for themselves that they couldn’t possibly meet. I don’t think you realize what an incredible gamble they’ve taken with Adam.
OR: Sounds like a sure thing to me.
VCI: You are wrong, byte breath. For example, they have shut down production of ColecoVision units to concentrate on Adam. Yes, I know they have a warehouse full of ColecoVisions stockpiled, but that only serves to illustrate the breadth of the gamble. If ColecoVision units sell well during Christmas, then Coleco is in danger of running out of them, falling behind—serious damage. If the units don’t sell, then Coleco has inventory problems, cash flow problems—serious damage. The company is practically at a standstill, except for the Adam project. They’re throwing everything they’ve got into the thing; double shifts are working to debug Adam and assemble the units. They’ve promised retailers around the country a half a million Adams by the end of the year. The retailers are dying for them.
OR: Sounds good to me. Can I use your phone? Contact my broker. Buy Coleco!
VCI: Wait. Eat your danish. The problem is: Adam is already late. It looks as if Coleco may have already missed the Christmas season.
OR: That doesn’t sound good.
VCI: It isn’t. As of this writing, Coleco is still claiming that they will ship a good percentage of their 500,000 Adams by mid-October. Many people doubt that, with good reason. Analysts have been saying for months that shipping half a million units from the Coleco facilities was an unreal goal; the slightest problem could topple the entire plan. It is beginning to look as if that has happened. They are apparently having more problems than they anticipated with the mass memory drive. It was not as durable as it needs to be and the digital datapacks were not performing as required. Those problems have been cleared up now, but the process cost them a crucial two months.
OR: I heard that at the demonstration in Boston in September Adam responded beautifully.
VCI: That was a carefully orchestrated demonstration. Later, Bob Davis, a reporter for the Wall Street Journal, tinkered with the unit and found some glitches in the word processor function. Apparently, in the debugging process, Coleco had to sacrifice some editing functions. It is difficult to move blocks of text higher on the screen, difficult to mark text that is off the screen, and a few other minor complaints. But—now sit still and listen to this—but when Davis pressed them, Coleco executives admitted that a “utility pack” would be needed to make Adam’s word processor function perfectly, professionally. That utility pack will cost an additional thirty dollars or so, and won’t be available until early next year. (The Outraged Reader said nothing, but only sat glumly picking sesame seeds out of his danish.)
I got sidetracked. I was talking about the damage to Coleco if they can’t ship enough Adam units in time for Christmas. The retailers are looking at empty shelves, you see, and getting very nervous. Today we heard reports that a million dollars worth of orders (supposedly uncancellable) on Coleco products have been cancelled. Though many disagree—Coleco included—Wall Street analysts estimate that for every month that delivery of Adam is delayed past the initial September 1 target date, Coleco will lose sales of 100,000 units. Consider that each of those lost unit sales represents—what?—the loss of five, ten software purchases in the years to come. But that’s looking far down the road. If Coleco loses Christmas, they may never recover.
OR: Now just hold it right there. You’re overdoing it with this Christmas thing. Computers aren’t tinsel or Santa beards! With a product as strong and as attractively priced as Adam, they’ll make up the sales next year.
VCI: We hope you’re right, we really do. But if the retailers are forced to run around at the last minute frantically filling up shelf space they had reserved for Adam—are they likely to reorder from Coleco next year? Coleco is losing credibility within the industry and with consumers by making promises they can’t keep.
OR: If the Adam is a winning product, the retailers will carry it.
VCI: You have a chicken/egg dilemma there, but I’ll pass on dissecting it. I’d rather discuss the competition for all that shelf space. The world is anxiously awaiting the Peanut from IBM, for example.
OR: Poor example. The Peanut (if it is released soon which I doubt because IBM won’t want to undercut sales of their runaway bestselling PC) will sell for around $1200. Different ballpark.
VCI: That’s very good. Are you a spy for one of the other magazines? Still, IBM has become a major force in the industry without even trying. And the force will be with us, always.
VCI: Seriously: the IBM name represents permanence, reliability. They’re not going anywhere, they’re not going out of business. They don’t gamble either. They play the game as carefully as possible. And don’t discount Atari. They’ve got Alan Alda (who doesn’t believe him?) and he’s hawking a system comparable to Adam in capability and price. And, while both the Adam and Atari’s 600XL are late to market, look to good old Timex Sinclair to fill the void. They managed to grab a huge share of the market with that glorified calculator, the 1000. Now they’re releasing their 2068 with 64K and a system price lower than Adam. But divide tip the market any way you like. Remember that the impulse buyers, many of them, already own computers. The careful ones remain. A lot of careful people will wait for, and spend a little more money for, a careful machine from a careful company.
OR: Of all the oversimplified, under-researched bull…! Let’s look at the facts, shall we? Fact: Coleco has proven that they are innovative and that their marketing skills are second to none. They have proven that they can beat the big guys (Atari, Mattel) at their own game. They have proven that they can satisfy customers—ColecoVision owners are ecstatic! They are aggressive, they are determined to hold a dominant position in the consumer electronics industry. Look: they just signed a deal with AT&T for a phone-transmitted games and information service, they copped the hot Dragon’s Lair license, they make games for other systems, hand-held games, you name it! They know what they’re doing!
VCI: We won’t underestimate them if they will agree not to exhibit overconfidence. For example, “hand holding” is becoming a crucial aspect of the purchase of a computer, from the consumer’s point of view. Many sales are lost because salesmen are not trained properly to answer questions; much good will is lost because salesmen do not follow up the sale with advice and guidance. Well, Arnold Greenberg, president of Coleco, appeared on the TV show The Wall Street Journal Report—
OR: What is it with you and the Wall Street Journal?
VCI: —and Greenberg was asked about salesmen across the country and their ability to answer questions on the Adam and follow the questions up after the purchase, hand-holding, you know. Greenberg’s answer was not one to inspire a whole hell of a lot of faith. Basically he said that the salesman should tell the consumer: everything you need to know is in the box; what you saw on TV is all here. That’s a paraphrase, admittedly, but a politician’s answer (no answer) would have put us more at ease on this point. Coleco, with a background in toys, may be underestimating the amount of care and nurturing purchasers require…and deserve.
OR: Aha! I’m glad you brought that up. Coleco’s image is of a toy company, games, Donkey Kong, fun. This undaunting image may be just what consumers need. The very fact that hardcore computer stores may turn up their noses at Adam may be the very thing that makes it a smash. People won’t be intimidated.
VCI: Point noted. So much for the novice user. What about more experienced shoppers? Are they going to be pleased with the software situation?
OR: What situation?
VCI: Most computers one could choose to buy already have plenty of software in existence. Software is a major factor in a computer purchase decision. How much? How good? Well, Adam will be released with virtually none. Further: who is going to develop software for it? The fact that Coleco is going with an entirely new memory system—the digital data packs—is a gamble in itself. This isolates them utterly. And prior to the release of the format code, no other companies can come forward and announce that they will be developing software for it. Still more are going to wait and scrutinize sales. And if Coleco misses Christmas …
OR: Yeah yeah. We heard all that.
VCI: Everyone is watching, waiting. If sales are poor, it may be up to Coleco to support the Adam by itself. And with their record of promises made, promises kept…
OR: Coleco has said that many programs will be available simultaneously with the release of Adam, and that ten or more will be released over the months to follow. I believe them.
VCI: And we hope your faith is justified. Look, all we’re saying is that Coleco has taken an incredible gamble with this computer and with the haste in which they’re trying to release it. Quite a bit is at stake; at the same time, they stand to gain a permanent place for themselves in the computer market for years to come. We just fear that—
OR: Don’t say anything! You journalists! Always so negative! Always looking for something to tear down, never to praise. Well, I for one will wait for the Adam to be released before I make my judgement. I bid you good day. Oh, and by the way…that danish was stale. Horrible!
VCI: Bye now.
VCI Art Director: Anybody seen my gum eraser?