Computers: A Flop Becomes a Hit

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Price cuts, new features and big promotions rescue IBM's PCjr

Only six months after IBM introduced the PCjr home computer in November 1983, the machine looked like one of the biggest flops in the history of computing. Despite IBM's towering prestige and a marketing budget estimated at $40 million, the PCjr sold as sluggishly as Edsels in the late 1950s. Consumers seemed to be turned off by the computer's toylike appearance and $1,269 price tag. Dealers, stuck with growing inventories of unsold machines, were beginning to panic. Wrote Popular Computing Columnist Steven Levy: "The machine has the smell of death about it."

But IBM stood firmly behind its newest and littlest computer. Said Vice President Philip Estridge in April: "Reports of its demise have been greatly exaggerated." Now it seems that Estridge was right. After a quick series of engineering and marketing changes, IBM appears to have turned its loser into a winner. At stores around the U.S., the PCjr is suddenly one of the fastest-selling computers on the shelves, often outperforming cheaper, game-oriented machines like the Atari 800 and the Commodore 64. "This may be an industry first," says Stephen Guty, editor of McGraw-Hill Computer Books. "No product has ever been successfully resurrected after being so condemned."

From the beginning, the PCjr was viewed as something more than just another machine. For some, the entry of IBM into the low-cost market promised the fulfillment of long-held dreams of getting a computer into every home and classroom. Others expected that IBM would quickly dominate the markets for home and school computers just as it had taken over the one for office machines.

But it was not to be, at least not right away. IBM, seeking perhaps to protect sales of its highly popular PC and XT business computers, deliberately limited the power of the PCjr. The company made it difficult for users to add extra memory or disk drives, and it chose a circuitry design that made the computer run slower than comparable machines. The most criticized feature was the Chiclets-style keyboard that was unsuitable for heavy-duty typing and thus reduced the appeal of the machine for word processing or extensive record keeping.

But even as the PCjr's detractors were dancing on its grave, IBM was plotting its rescue. The company's first step was to help beleaguered dealers by allowing them to delay payment until the end of August for computers ordered in January, six months longer than normal. Then, on the last day of July, IBM quietly introduced a flurry of new PCjr features and options, including a typewriter-style keyboard that was retroactively provided free to every registered owner.