February 22, 2009
The Marketplace Failure of the IBM PCjr
By Christopher Marron, Ricky Payne, Emily Richter, Cristina Rosario and Joseph Techlet
In the early 1980’s, International Business Machines (IBM) was the dominating force in mainframe and business computing. In November of 1983, they announced their first entry into the home computing market with the introduction of the IBM PCjr.1 The new computer was designed to compete against the likes of the Apple IIe and Commodore 64 while being partially compatible with the IBM PC,1 which had revolutionized the business microcomputing market earlier in the decade.
The PCjr had two models. The entry model started at $669, which came with 64 KB of memory and a wireless infrared (IR) keyboard.2 The extended model was priced at $1269 and included 128 KB of memory, a 366 KB 5 1/4 inch floppy drive, and the same IR keyboard.2 Both models came with the same Intel 8088 processor used in the original IBM PC and neither model included a display or any other peripherals.2
There were problems right from the start for the PCjr. When the first units were received by publications for review in December of 1983, they were met with skepticism. The innovative, fully programmable, wireless IR keyboard was railed against due to the “chiclet” look and feel of its keypad, its poor ergonomics, and its intermittent connectivity issues.3 Additionally, the compatibility of the PCjr with software written for the PC was not complete due to the programming of the PCjr’s Basic Input/Output System (BIOS).2 While many PC applications would load on the PCjr they would often crash when they eventually required a feature not present in the PCjr BIOS.3
Technological and design issues aside, IBM’s business model for the PCjr was coming into question as well. IBM chose to offer their PCjr and its peripherals for sale exclusively through their own network of dealers rather than through department and toy stores like many of their competitors.1 They did this with the intention of defining the PCjr as a home computer that could double as a business machine rather than just a glorified gaming system.1 This actually worked against IBM because it limited the exposure of the PCjr to the business/enthusiast market. This allowed hearsay and press coverage to set the tone for the reputation of the machine,4 rather than allowing consumers to decide for themselves.
IBM was further plagued by production delays causing the PCjr to miss the 1983 holiday sales season.4 These delays also ate away at the PCjr’s pricing and technological advantages over its competition. By April 1984 Apple Computer had released the technologically superior Apple IIc at a price of $1295, only $30 more than the Extended PCjr.4 They had also slashed the price of their comparable Apple IIe to under $1000, undercutting the PCjr.4 On the other end of the market, the Commodore 64 was selling for around $200 and aimed squarely at the home market for games and simple applications.1
The increased competition in the home computing market drove IBM to make some hardware changes to the PCjr. They replaced the Wireless IR keyboard with a more standard corded model.5 They also increased the maximum memory supported by the PCjr to 512 KB through the use of hardware expansion modules.5 Even with these updates, they still had to cut the price of the Extended PCjr to $900 and include a monitor to achieve increased sales in Q4 of 1984.6 Unfortunately it was too little, too late. Marron, Payne, Richter, Rosario and Techlet 2
By March of 1985, the home computer market as a whole was in disarray.6 IBM was forced to raise the price of the PCjr back to $1400 for the extended model, complete with monitor, because they were not able to make enough profit at the $900 price point.6 Consequently, dealer sales nosedived back to pre-Christmas levels.7 Finally, on March 19, 1985, IBM announced that they were ceasing production of the PCjr citing, “inventories sufficient to meet future demand,” as the reason.8
Where had IBM gone wrong? After having had such success with the original PC they overestimated the capabilities required by home users of the era and the price they were willing to pay for them. Technological problems and production delays stymied their market advantage, and public opinion turned against the product.
William Bowman, then chairman of Spinnaker Software, sums up the marketplace failure of the PCjr best. “It was just a marketing debacle – the wrong price, the wrong product and no software.”6
1 Andrew Pollack, “The Debut of IBM’s Junior,” The New York Times Web site, published November 2, 1983, accessed January 22, 2009, http://query.nytimes.com/gst/fullpage.html?res=9F0DE0DD1739F931A35752C1A965948260&sec=&spon=&&scp= 13&sq=pcjr&st=cse#.
2 Michael B Brutman, “PCjr History,” Mike’s PCjr Page Web site, published October 2000, last updated June 20, 2008, accessed February 22, 2009, http://www.brutman.com/PCjr/pcjr_history.html.
3 Erik Sandberg-Diment, “Personal Computers; The little IBM Finally Arrives for a Test,” The New York Times Web site, published December 27, 1983, accessed January 22, 2009, http://query.nytimes.com/gst/fullpage.html?res=9406E7D81538F934A15751C1A965948260&sec=&spon=&&scp= 14&sq=pcjr&st=cse#.
4 David E Sanger, IBM’s Problems with Junior,” The New York Times Web site, published May 17, 1984, accessed January 22, 2009, http://query.nytimes.com/gst/fullpage.html?res=9B04E6D71F38F934A25756C0A962948260&sec=&spon=&&scp= 11&sq=pcjr&st=cse#.
5 Erik Sandberg-Diment, “Personal Computers: Awkward Junior has Growing Pains,” The New York Times Web site, published August 28, 1984, accessed January 22, 2009, http://query.nytimes.com/gst/fullpage.html?res=9D01E7DD1038F93BA1575BC0A962948260&sec=&spon=&pagew anted=2#.
6 Andrew Pollack, “A Market of Just a Mirage?,” The New York Times Web site, published March 21, 1985, accessed January 22, 2009, http://query.nytimes.com/gst/fullpage.html?res=9A01EED71638F932A15750C0A963948260&sec=&spon=&&scp= 17&sq=pcjr&st=cse#.
7 David E Sanger, “Demise of the PCjr: View from IBM,” The New York Times Web site, published April 2, 1985, accessed January 22, 2009, http://query.nytimes.com/gst/fullpage.html?res=9A0CE1D91538F931A35757C0A963948260&sec=&spon=&pagew anted=1#.
8 Andrew Pollack, “IBM Drops PCjr Production,” The New York Times Web site, published March 20, 1985, accessed January 22, 2009, http://query.nytimes.com/gst/fullpage.html?res=9A03EEDA1638F933A15750C0A963948260&sec=&spon=&pagew anted=1#.