Feature

Blast from the past

In the first of a three-part special on the PC industry in the UK, we look back to the earliest beginnings of the desktop computer and discover how the first versions of the machines we have come to depend on first worked their way into our lives

The world of computing is dominated by the Far East and the US and we Brits don't get much of a look-in. Finding examples of home-grown talent is difficult and once you have listed the most well known - Mesh and Centerprise - things start to get tricky. But if you were to step back 20 years and walk down your nearest high street or pop into your local dealer, things would be totally different.

For a start, you might be surprised to find Boots and WHSmith, as well as Dixons, selling computers. And your jaw might drop even further when you saw what they were selling: British and more British. Sinclair, Acorn, Dragon and Oric all popped up in the first couple of years of the 80s and were joined by Amstrad in 1984.

By selling at prices lower than anyone else, the British microcomputer manufacturers arrived in 1980 from nowhere and by 1983 had all but conquered the high street and grabbed a huge slice of the European PC market. The only fly in the ointment was Commodore, but that aside, the first three years of the 80s were tremendously enjoyable ones for anyone making and selling British micros.

Revolutionary beginnings
The earliest part of the British micro story that really grabs interest takes us back to 30 January 1980, when a bearded, bespectacled man, smiling and holding onto a white box with a 'qwerty' keyboard on the front, graced the pages of national newspapers. The arrival of Clive Sinclair and the ZX80 filled just a couple of column inches, but it would revolutionise the home computer market.

In just a few months, 10,000 ZX80s had been shipped, and with a price tag of £100, people who had never considered buying a computer found it within their reach. The impact of a low price tag cannot be underestimated and although Sinclair would be labelled as a boffin rather than a marketer in later years, he broke through the £100 price barrier and delivered a marketing masterstroke.

The home microcomputer market before 1980 was littered with kit suppliers targeting 'hobbyists', the sort of person happy to tinker with a soldering iron and build their own machine. The ready-built market was priced way above the levels that would spark off mainstream consumer demand, which meant computing stayed out of reach of the vast majority of people.

The UK lagged behind the US, which already had a number of products in circulation, including IBM and Apple, but it was more open-minded towards home computing than France and Germany and quickly outpaced its European neighbours in computer consumption.

Sinclair delivered the breakthrough that sparked off the consumption by offering the ready-built ZX80 for £100. It didn't take long for UK rivals to catch up and start competing with similar pricing, Acorn Computers being typical by adapting its Atom kit computer to a ready-built product for £150.

Sinclair broke the rules again with the launch of the ZX81. The machine was more powerful than the ZX80 - and it was cheaper, costing just £80. The combination of offering technological advances at very reasonable prices would become a formula that would be used again in 1982 with the launch of the ZX Spectrum and in 1984 with the Quantum Leap (QL), which came with a software bundle of four business applications.

The early 80s resulted in a British micro revolution that became the envy of the world. Surveys of the microcomputer market carried out in 1983 by Mintel, the Economist Intelligence Unit and Keynote quantified the scale of the low-priced micro explosion (see The Micro Revolution box).

The surveys claimed a fifth of UK households already owned a computer and analysts expected the level of ownership to rise to a quarter by 1986. The British market was worth £93.5m for home micros and a healthy level of units were selling - Mintel estimated the total number of microcomputer units sold, including business machines, had reached 920,000 by the end of 1982.

Initially, the main route to market was via mail order, with the retail and dealer channels slightly too immature to cope with a product that was rewriting the rules about demand.

Systems for schools
Meanwhile, the other main British player in the home market, Acorn Computers, was picking up the sort of support most computer companies could only have dreamt of. Firstly, the Cambridge-based firm got the backing of the BBC to make the micros that would accompany a series it was broadcasting on computer literacy. Secondly, it was awarded, along with Research Machines, the status as a preferred supplier to the education market as part of the Department of Industry's attempts to get computers into every school.

The Department of Industry (DoI) launched its Microcomputers in Schools scheme in April 1981 with a target of getting one computer into every primary and secondary school in the country. The scheme operated by offering a 50 per cent subsidy to schools buying computers. By the time the scheme ended in March 1984, a total of £14m had been ploughed into helping schools join the technological revolution.

The BBC microcomputer series provided Acorn with a steady income and a strong reputation in schools and although the government later added Sinclair to the roster of approved suppliers, Acorn managed to take 80 per cent of the UK schools market.

Because of the protection offered by the BBC and DoI contracts, Acorn managed to keep its prices higher than rivals and only decided to venture into the low end of the market with the Electron in the summer of 1983.

No computer, no future
All of the micro manufacturers benefited from a strange atmosphere in the early 80s. The government decided 1982 would be Information Technology year, and with the introduction of micros into schools there was a feeling that a high-tech revolution had started and if you missed out, the future, which would be dependent on computers, would be one of unemployment and misery.

The British manufacturers were happy to exploit these worries and ran adverts that tapped into user hopes and fears. In the campaign for its BBC Master series, Acorn used the following text accompanied by a picture of a child in graduation robes: "Your child's degree ceremony might seem a long way off, but the BBC Master Compact is equipment to help at every step of the way. Our new micro can provide your child with constant support throughout their education, eventually graduating into business and professional use. Put it on your Christmas list. It should help to put a few letters after your child's name."

The micro manufacturers spent large amounts of money on advertising and glossy colour spreads - pictures of Amstrad and Sinclair products could be found in Sunday supplements as well as MicroScope. Television also provided a platform for vendors to use and after the launch of Channel 4 there were two commercial channels for them to advertise on.

The sums of money that went into supporting launches were running into six figures. MicroScope revealed the details of the advertising budget Sinclair intended to spend in the first few months of 1984 to reinforce demand for the Spectrum and the QL: £250,000 was earmarked for national press adverts, £2.5m for television adverts for the Spectrum, and the remaining £750,000 for press advertising for the QL and £600,000 on a QL television campaign.

The results were staggering, with sales increasing month on month, but by the end of 1984, some market analysts were expressing fears that the British market for home micros was nearing saturation point.Those fears were based on a slowdown in the market that began in the US in the summer of 1984 and hit the UK in the key Christmas period, leaving Sinclair and Acorn with millions of pounds worth of stock they had to get rid off.

Too little, too much
After starting by selling via mail order, it didn't take long for dealers to emerge and that was coupled with the growing importance of the high street. The costs of a slow market were felt even more by manufacturers, which had millions of pounds worth of products distributed across a wide channel.

Each time a retailer declared its intention to enter the market and start selling products, it managed to get hold of kit - and there was a strong argument to suggest that Sinclair, Acorn and Commodore products were over-distributed.

WHSmith made the front page of MicroScope with its decision to sell the Acorn Electron from launch, marking the first time a high street retailer had taken a product from release (see MicroScope, 8 September 1983).

WHSmith was selling computers through 250 stores, Boots matched that number and a host of other stores, including Dixons, Rumbelows, Argos and Laskys, also stocked micros. Add to the high street retailers a growing dealer network and the continuation of mail order sales and the reasons for overstocking start to become clear.

The other reason for overstocking in 1984 was the experience retailers had suffered in 1983. With 70 per cent of home micro sales coming in the last three weeks of the year, anyone who failed to get product in that time would miss out.

But because of the immaturity of the market and the recent decision by many other retailers to stock micros, when it came to ordering products for Christmas 1983, the big names in the high street exercised caution and placed conservative orders.

Unfortunately, they got it very wrong and empty shelves were proof that demand was, in fact, much stronger. Those manufacturers that were able to get product into shops enjoyed the sight of it disappearing into a shopping bag within minutes, but for others it was a blow.

Acorn missed out on a great deal of sales it should have enjoyed in 1983 because it was unable to deliver enough Electrons. Component shortages meant it was only able to deliver a few thousand when orders were running at 160,000. The main beneficiaries of its failure to get stock were Sinclair and Dragon.

But even Acorn's rivals struggled to meet their advertised delivery times and the Advertising Standards Authority (ASA) was forced time and time again to chide the industry and remind it of its obligation to customers.

The next step
If 1980 was a breakthrough with the ZX80, then the arrival of Amstrad with the CPC-464 in 1984 took the development of the micro to the next logical stage. By providing a monitor and a built-in cassette player included in the price, it removed the last couple of excuses users might have had for not buying a computer.

Sinclair relied on users providing their own cassette player to load programs and using their television set as a monitor. Amstrad's decision to sell an all-in-one tore up another page in the rulebook that declared profits should be maximised by selling peripherals separately.

The entrance of Amstrad into the micro market marked a change in the emphasis on marketing. Using the same techniques he had perfected in the hi-fi market, Alan Sugar, founder of Amstrad, stacked 'em high and sold 'em cheap. As with Sinclair before him, the sales were breathtaking.

The CPC-464, a 64k computer that cost £200 with a black and white monitor, with the option to get a colour monitor for an extra £100, quickly managed to take 20 per cent of the British market and sold 600,000 units in 1985.

Having recognised that price equated to sales, Amstrad used the same trick again with its next computer, the CPC-664. It managed to sell more than 2m machines, making it the most successful computer in Europe, largely due to its price - just £449 for a powerful computer with a colour monitor.

Selling an all-in-one package at a significantly lower price than anyone else delivered a high volume of sales and large profits, giving birth to the phrase 'Amstrad effect', which referred to Alan Sugar's ability to create a new market for products because of his ability to sell at low prices.

Nowhere was this more clearly demonstrated than with the PCW-8256 for £399. Advertised as a replacement for the typewriter, the machine, which included a monitor and printer, went on to break through the 75,000 units a year barrier for word processor sales in Britain, selling 350,000 machines during its first eight months.

Boom to bust
Low prices appeared to be a mechanism that would continually serve up customers, but there were dark clouds on the horizon. In the closing months of 1984, notice was served to the micro vendors that the appetite for technology was cooling, with only 1.3m units sold - 20 per cent less than expected.

The problem for those operating in the micro market was that a business model had been established that worked when sales were high and growing, but when they failed to continue the cracks started to appear.

If the first three-and-a-half years of the 80s were ones of success for some of the British manufacturers, there were already signs that it would not last. The next two and half years were not going to be an easy ride. Victims started to appear on the pages of MicroScope, with Dragon and Oric struggling and then disappearing.

As the dust settled after a mixed Christmas trading period in 1984, the damage to Sinclair and Acorn would become apparent. Amstrad carried on aggressively selling, but would be forced to move away from the home market to survive and sell to business customers.

After producing a home microcomputer revolution, the leading British companies connected with the meteoric rise of the market were about to find life getting far more difficult. The years 1985 and 1986 would not be happy ones for Sinclair and Acorn.

The micro revolution
In the space of two years - from the launch of the first ready-built microcomputer for £100 in 1980, to the end of 1982 - the market for microcomputers was valued by Economist Intelligence Unit at £93.5m, with Mintel claiming 920,000 units had been sold in Britain.

By 1983, with more computers per head of the population in the UK than anywhere else in the world, one in five homes owning a microcomputer, and expectations that the figure would rise to one in four by 1986, there were genuine fears from analysts that the market was reaching saturation point.

A survey of the average user carried out by The Financial Times revealed the effect on parents wanting to improve their children's grasp of technology had been significant. The FT defined the average user as male, in his early teens and having received the microcomputer as a present from his parents.

The major players
Acorn Computers
- Founded by Hermann Hauser and Chris Curry in 1978, the company's first product was the Atom. It then went on to develop the BBC microcomputer series. The Cambridge-based firm was rescued by Olivetti in 1985, and Hauser and Curry lost control of the company.

Amstrad - Set up in 1968 by Alan Sugar, the company initially traded in electrical goods making a name for itself in the hi-fi audio market before entering the computer market with its CPC computer range in 1984.

Sinclair Research - Started life in 1980 as Science of Cambridge headed by Clive Sinclair and retained that name until March 1981 when it became the familiar Sinclair Research. In April 1986, it sold the rights to all existing products to Amstrad, including the Sinclair Research name and logos.

The story of the development of the computer industry continues in next week's issue of MicroScope as we study the years of 1985 and 1986.

Ripping up the rulebook

Rule 1:
A microcomputer is expensive - ripped up by Sinclair in 1980 with the launch of its ZX80 for £100

Rule 2: Successive products are more powerful but also more expensive - ripped up by Sinclair with the launch of its ZX81 for less than the cost of the ZX80

Rule 3: Monitors and cassette players are sold separately - ripped up by Amstrad with the launch of its CPC-464, with built-in cassette player and colour monitor

Rule 4: Word processors sell less than 75,000 units a year - ripped up by Amstrad with its PCW-8256 which sold 350,000 units priced at £399 in the first eight months

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This was first published in October 2002

 

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