ST GOSSIP from Hollywood, USA

By TG

What game machine image?

As Sherlock Holmes would say, "Quick, Watson, the game's afoot." Well, in this case, the game is an ST ... a 68000-based game machine to be exact. Atari is pushing a "game version" of the ST system for Christmas. How does a game version of an ST differ from the version you and I have been using for the last three years? For one, it doesn't have a disk drive, a monitor or, we hope, the ST name on the case.

Lots of people in the industry are curious about this move, since one major complaint among the dealers who are trying to sell the Atari to the business world is the company's "Game Machine Image." One group of people who are sure to appreciate the move, though, are the stockholders. Game machines are still hot, and an ST can blow the doors off some of the smaller units like the Nintendo and Sega. Of course, we all know that Atari feels it's in the toy business for the quick money, and it's in the computer business for the long-term profit. This leads us to think about...

How did they do that?

Six months ago Atari was at its lowest point in years in terms of user confidence Now, after six months of management changes, fighting off the chip shortages, postponing the new operating system, weeding out the weak dealers and putting the final touches on the mail-order shutdown, Atari has started to reestablish confidence in the minds of the consumer. This certainly had to be one of the most difficult periods in Atari's history, and yet they emerged from it in better shape than when they started. The new power of GDOS has certainly had a lot to do with it, and I think people are starting to feel that Atari does indeed have a long-range plan, one that we are not privileged to share, but a long-term plan nonetheless.

Unless I miss my guess there will be some exciting specials from Atari for the Christmas season. Atari has been bringing some tried and true retailing plans to the computer area for the last year or so and they are starting to have some affect on its market share.

Random notes

How about that upgrade plan for single-sided drive owners? What do you mean, "What upgrade plan?" Oops, guess that one's out of the bag. See your dealer for details in the next 30-60 days.

Look for companies like Supra and ICD to be dropping the price of their hard disks soon. An informal survey of 25 Atari dealers shows that better than 35% are building and selling private-label drive systems, with 40-meg systems selling for less than the price of the "brand name" 20-megs.

I'm sure that most of you have been checking Atari's stock price now and then. Has anyone figured out how much you would have made if you had bought it when it first came out and again just after the market crash of early this year? Or how much you could have lost buying it at its high before the crash? This stock has provided more action than the average army barracks poker game. If nothing else, this fact alone should make it a stockbroker's nightmare.

Now that GenLock is really available, look for a high-quality picture grabber to be released within the next 30 days. The product is done and only awaits the availability of low-cost RAM chips.

With fewer, but stronger, Atari dealers in place across both coasts, it looks like Atari is ready to start the Big Push into the American business market. The software base is clearly better than it was just a few months ago, and the dealers who are left are the strongest of the crew that started this long, long summer.

Now it's time to see if Atari has anything up its sleeve for 1989. You can look to the next three months to serve as a guide to the future of Atari throughout 1989. If the plans I've heard about actually come to pass, you might not recognize Atari one year from now. The guys at Sunnyvale have been acting more and more like their European counterparts for the last six months, quietly calling in dealers from around the country to meetings at the corporate headquarters to lay plans for what they hope will finally be the Big Push. Time will tell, but the simple fact they have been consulting with dealers marks a major change in the corporate thinking at Sunnyvale. Now, if they would just continue to beef up the developer support program and start a little institutional advertising....

. . . three year cycles

Many of those who have watched Atari for the last three years, and Commodore before that, realize that JT-controlled companies seem to follow three-year product cycles. We expect that there will be major changes to the Atari product lineup within the next months. It's highly unlikely that any products will be dropped, but I think you can look forward to major new products being released.

The advantage Atari offered to the typical user in 1985 was a chance to buy true state-of-the-art equipment at a price real people can afford. I believe the time has come (in the mind of Atari) to push the state of the Atari systems forward again. Each time Atari—or in the past, Commodore—did this it picked up a year of free publicity.

You may remember when the newly purchased Atari Corp. unveiled the 520ST to an unsuspecting world back in 1985. The company received free ink in every computer magazine and most newspapers in the free world for the next three months. Industry people clucked and commented on this new, powerful, low-cost system that seemed to spring up from nowhere. Putting the money that other companies spend on advertising into product development can result in self-promoting products—if'you can bring in results on a regular basis and if you can keep your product development under wraps until you release the completed project upon an unsuspecting world. If Atari is going to do it again, then it will be in the next six months.