The computer store saga. (Reminiscence - software, stores and magazines) Stan Veit.

Ten years ago when Creative Computing published its first issue, computers were minicomputers and mainframes. They were sold by factory salespeople or by companies called OEMs that put systems together and sometimes provided software to make them run.

In January of 1975 the MITS Altair microcomputer appeared as a construction project in Popular Electronics magazine. A few months later, Ed Roberts, president of MITS, and his crew took it on the road to demonstrate its capabilities to a skeptical world.

One of the first places the MITS caravan stopped was in Southern California where a young couple, Dick and Lois Heiser, attended the show. Dick saw the Altair as the key to a business of his own and soon obtained a dealership from Roberts.

Not long thereafter, he opened a storefront computer company in Los Angeles called Arrowhead Computers and began to sell all the Altairs he could pry loose from the overburdened factory.

On the other coast, in December of 1975, an out of work technical writer decided to follow in Dick's footsteps. I begged and borrowed about $20,000 in starting capital from friends and family and opened the Computer Mart of New York in a few hundred square feet of space in Polk's hobby department store on Manhattan's famous Fifth Avenue.

Computer Mart was different from the Heisers' store because it sold more than one brand of computer. We opened as a dealer for Sphere, the first desktop computer, and Imsai, an 8080 computer that was functionally identical to the Altair.

One computer we did not sell was the Altair itself. Ed Roberts had granted the exclusive right to sell Altairs on the East Coast to The Computer Store, a company in Boston headed by Dick Brown. This situation turned out to be a blessing because, although Roberts believed that Altair dealers should sell only MITS products, his company could not produce enough machines to satisfy the demand.

Many new dealers, therefore, turned to the other S-100 company, and by the time of the first Atlantic City Computer Show in August 1976, Imsai was the leading manufacturer of personal computers. Ed Faber, who later founded ComputerLand, was the sales manager for Imsai at the time and offered a dealership to anyone who bought $2500 worth of Imsai hardware and promised to buy 25 additional computers that year. Under such liberal terms, computer stores began to proliferate. Many of them were basement or garage operations, and some, designed to allow a group of buyers to save money, existed only on paper. Hand-to-Mouth Operations

The Computer Marts (by this time there were stores using this name in California, New Jersey, and New England, all independent but loosely allied) sold Imsai, Sphere, Southwest Technical Products, Polymorphic, and Processor Technology computers. The method of doing business then was very simple. The customer would come into the store for a demonstration. He (and 95% of them were men) needed a good understanding of computers, because the salesman only spoke computerese and only went through the demo once. If he decided to buy, the customer would leave at least 1/3 of the price as a deposit on the computer.

When the retailer had orders for five or ten machines, he would put up the balance of the wholesale price and order the computers from the manufacturer, paying in advance. When the manufacturer received the money, he would buy the parts and begin to put the product together. It was a hand-to-mouth business.

At first there were no factory assembled units, only kits. You had to understand electronic schematics and have a good eye and a light hand with the soldering iron to build a working computer. The instructions were minimal: "First solder in all resistors on the top of the board." "Check the schematic for correct values." "Be careful not to cause any solder bridges." "Run a jumper wire from Q4-Base to C43+." Even much later, when stores discovered that they could make more money by selling "factory assembled" computers, the machines were really kits put together by local hobbyists. Magazines for the Mavens

One of the things that kept the computer retailers going was the sale of magazines. There were only a few personal computer magazines in the beginning, and they were sold only in computer stores. Almost everyone who came into the store left with a book or a magazine--usually several magazines.

Back then, there was no such thing as a back issue. People would buy any magazine they could get their hands on, regardless of the cover date, and certain favorite issues sold for many times their cover price. Hence, the birth of three volumes of The Best of Creative Computing.

Dave Ahl would sell his magazines anywhere there was a group of people with an interest in computing. He soon found that many of the same people who were interested in science fiction were also interested in computers, so he attended all the science fiction conventions in the New York-New Jersey area and sold his magazines.

Whenever Dave came to a convention in New York, he would also deliver a batch of his latest issues to Computer Mart of New York. It was quite a sight to see Dave arriving for a convention dressed in jeans and a T-shirt advertising Creative Computing and carrying a bundle of magazines in each hand. Computer Stores Proliferate

By the summer of 1976, there were quite a few new computer stores across the United States. The Computer Mart name was being used by John French in Los Angeles, Charles Dunning in Waltham, MA, and Larry Stein in Islin, NJ, and Computer Marts were due to open in Vermont and New Hampshire.

The first company to link the words "personal computer" was a store in Fraser, PA. This early retailer sold a system consisting of Digital Group computer boards in a fancy wooden cabinet as the Personal Computer, thereby christening a new generation of hardware.

Dick Brown's Computer Store was flourishing in Boston and had a branch in New York City. Byte'tronics in Knoxville, TN, and the Computer Systemcenter in Atlanta were two Altair dealers that grew into much larger businesses. Byte'tronics became Seal Electronics, a manufacturer of memory boards and computers, and the Computer Systemscenter was the foundation of what later became Peachtree Software.

In the Washington, DC area, the Computer Workshop of Rockland, MD was introducing little computers to Federal Government agencies, and down in Florida, we saw Sunny Computer Stores in Miami and Microsystems in Tampa.

The Micro Store of Richardson was the only computer store in Texas until Radio Shack opened a retail computer store in Fort Worth. And in the midwest, Data Domain of Bloomington, IN, was the forerunner of many stores in that region, including one called itty bitty machine company in Chicago.

Back on the West Coast, Paul Terrell had started his Byte Shops in the Bay Area, and this franchise was spreading like McDonalds down into Silicon Valley. By the summer of 1976, there were more computer stores in the San Francisco area than in the entire rest of the world combined. No Pot of Gold

Very few of these pioneer retailers survived the first decade of personal computing. Many were undercapitalized and, like the manufacturers from whom they bought, they were often caught in a cash flow squeeze when models changed and products became obsolete. The demise of suppliers like Processor Technology and Imsai spelled doom for many of their dealers.

A few of the early retailers have survived by going public to raise money for expansion. Computer Fractory of New York City and Prodigy Systems (formerly Computer Mart of New Jersey) are two examples.

The success of franchises like ComputerLand has provided retail outlets for many computer manufacturers, but the business is not the pot of gold that the pioneers envisioned. Even such giants as Texas Instruments, Xerox, and Digital Equipment have failed to find profitability in the retail computer store business. IBM and Sears will do well as long as they can continue to sell IBM PCs in a seller's market, but it remains to be seen how well their stores will do if the Japanese invade the industry and the market becomes truly competitive.

The history of electronic equipment marketing is a well marked path, with the entrance being high tech specialty stores owned by small companies. The path then leads through multi-store chains and larger retailers. Finally, it spreads to many branches, including mass marketers, mail order sellers, discount stores, specialty stores, catalog stores, direct sales, and every other form of retailing. And as distribution moves down this path, the percentage of profit diminishes, as does the amount of service offered to the consumer. There is no reason to suspect that things will be any different for personal computers.