The Micro Store, Computer Retailing

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by PORTIAfSAACSON
The first Micro Store opened
5100,000but we did manageto
June [9, 1976after six monthsof
avoidborrowing.Althoughwe had
planning. The primary cooa number of peopleinterestedin
tributors to the plan were David
investing,we felt that being acwas a
Wilsonand Portialsaacson.
David
countableonly to ourselves
situation.
holds a M.S. degreein computer
verydesirable
with emphasis
science,
in computer
After incorporatingas Binary'
design.He had beenan electronic SystemsIncorporatedthe nextslep
wasto placeordersrvithour major
kit-buildersinceearly childhood,
and owned one of the earliest
chosensuppliers:IMSAI, SWTP,
Altairs and one of the earliest
Lear Siegler, Vector, various
Thgn,
publishers,
and IC suppliers.
SphereCornputers.Portia holds a
Ph.D. in computer sciencewith
bf course,startedthe long wait for
in operatingsystems
emphasis
and
delivery.
While waiting we startedlookcomputer architecture;has eight
yearsindustrialexperience
ing for a location. The primary
in computer system engineerinB,
choiceswerebetweenan industrial
marketing,and management;
and
districtwhich doesn'thavea retail
four yearsexperience
in computer
look at all and the other extreme,
In
scienceeducationand research.
which was a shoppingcenterthat
wantedfrom 3Voto 6Vaof our gross
addition, Myer Wilson provided
years
exthe benefitof his thirty
salesas rent with a minimum, of
periencein smallbusiness
manage- ' course.We felt that eventuallybe'
ment and financialplanningas ining in a retailareawould be imPor:
put to the plan for the Micro Store.
tant with the rise in poPularitYof
The plan becamea thirty page
the homecomputer.However,that
documentwhich includeda list of
percentage
of grosssalesis just uoproductsthat the store would inacceptablebecausewe did not
itially handle,a descriptionof the
think we would benefitsufficientlv
variousarrangements
that couldbe
from the walk-bytrafficin a shopmade with suppliers,a three-level ping center.We had almostsigned
plan of financial operation ina leaseon somespacein an office
cludinga worst-case
w'hen
financialloss
areaon a major expressway
after six months of operation
we found it - the perfectlocation.
, a
one-yearbarely making it plan,
in a
It wason the sameexpressway
plan.The main conand a success
littleretailareathat didn't demand
clusion from the plan was that
of grosssales.It rvas
a percentage
about S100,000was needed to
in theheartof the Dallascompurer
operatean independent
computer
industry.The other shopsin the
store at the level of operation
area includeda dive shop and a
needed
to makeit worthyour time.
motorcycleshop.Nbt so retailthat
The plan was discussedwith
rvouldbeburdened
our salespeople
severalfriendswho had significant with answeringa lot of questions
knowledgein small buisness.
who rvould
We
from casualpassersby
becameconvincedthat therewasa
but sufficientl;'
neverbecustomers;
good chance of achievingthe
retailthat three)'earslaterit would
success
levelof operation.[n addibe suitablefor sellinghomecomtion, the risk for the first six
puters.
monthsof operationappearedto
The next problemwe facedwas
be quitesmall- aboutS10,000.
We
horv to announcethe sioreop3:^decidedto go about the first.of
ing. \['e decidedagainst public
April.
we reaily
beause
mediaadvertising
The first stepwas to emptyour
publicand.
didn'twantthegeneral
pockets,break the piggy banks,
moreimportantly,it costsa lot of
etc. to raise the requiredcapital.
money.What we did was very efWe didn't quite make the needed fective.The most significantthing
wasto preparea bulletinboardanwhichwe mailedto all
nouncement
friendsand professional
associates'
of David and Portia. In nearly
everymajor computercompanyin
were
Dallas theseannouncements
placedon the bulletin boardsby
friends.We alsotook smalladvertisements
in the
or announcements
localnewsletters
of ACM, DPMA,
IEEE, and the hobby newsletter.
In addition,we did a newsrelease
TV stations,and
to newspapers,
radio stations in and around
Dallas, emphasizingthe exciting
newly emergingusesof the computer in the home.As a resultthe
did a halfmajor Dallasnewspaper
page story with pictures in the
businesssectionof our store. A
story like that, especiallyin the
section,is probablymuch
business
more effectivethan paid advertising - besides
it's free.
Eventuallywe finishedsomeof
our remodeling,some of our orders came in, and opening day
arrived.Hundredsof peoplecame
and marveledthat Dallas hnallv
had a computerstore.
Sinceopeningday a few things
have changed.Our product lines
now include:iCOM, Micropolis,
IMSAI, DEC, Lear Siegler,Alpha
Microsystems, Polymorphic
Systems, ProcessorTechnology,
Percom, Intel, SWTP, Industrial
Micro Systems,Vector Graphic,
lnc., Solid State Music, Vector,
a s s o r t e dm a g a z i n ea n d b o o k
publishers,
and IC suppliers.We
now havenineemployees
and two
Dallas area stores.We are doing
most (about 807o)of our business
with business,industrial, and
educationalinstitutions.The restis
with hobbyists.We have some
successmarketing nationally a
software product called Basic
ETC. We are doing software,especiallythat which we think will
have a larse market as a package
including hardware, software,
We are
trainingand maintenance.
doing custom engineering
primarily wherevolume salesare
involved.We havejust acquired
some additional space near our
mainstoreto usefor offices,repair,
storage,and classes.Our new 35
page store catalog has just been
mailedto our customerlist. Later
this Fall we are startine several
classes
in computing.
plicabilityof computingresources'
We saw that the new low-cost'
ter thesenew marketsfior the new
low+ost computingproductswas
the quality of our staff. Unlike
many computerstoreswe do not
think thesemarketscan be cracked
to any major extent with technicians or college students as
salespeople.
Eventhoughthe computingproductswe hadto sellwere
lower in cost than thosewe rvere
trying to replace,the marketing
and systemsdesignjob is still the
same- or harder.The quality of
our staff has beenof utmost importance.Among our staffwehave
two E.E.s,two M.S. in computer
science,a Ph.D. in computer
science, and considerable
educational,
industrial,maiketing,
and businessexperience.
In order
to attract and hold suchtalentwe
pay salarieswhich are very competitivewith other computerindustrysalaries.Thereis a ncgative
side to our position. The Micro
Stores have the reputation in
Dallasof doing very well with difficult problemsand questionsbut
at doing not so well and being
somewhat
impatientwith a beginning hobbyist. We are not
necessarilypleased about this
situation;however,we realizethat
with our expensivehigh-powered
salespeoplewe can't afford to
spend much time with someone
who
at most - is going ro.
purchasea low-end hobby computer. However,we are planning
to try to meetthe needsof thesein-
t g 7 7i T
loptpurc il REinrLtNG,'ocroBER
hssortment of books and
by
offerthis
market
and
dividuals
magazinesfor several reasons'
that w'ill
for beginners
ing classes
fiiit, they give peoPlea reasonfor
beveryinexpensive.
dropping-bYthe storeoften- to see
Another bit of philosophythat
what new books
hasbeenimportantto the develoPthe 40Vomargin
mentof The Micro Storehasbeen
average.Last, ma
our inventory.We keep stock in
neediome readinl
the storeand we let peopleknow
ready to buy a
it's there. On a typical day You
books includea
Lear
ten
Siegler.term.inals
see
hobby electronics
Fay
rn onecornerstackedto theceiling,
*unr'ifacturersdata books, and a
and twentycomputersstuckunder
wide range of comPuter sciencE
tables and stackedin boxes.
books. The computer sclence
like to know that when
Customers
books do very well sincethereare
somethng,
get
buy
to
ready
they
severaluniversitycomputerSclence
haveone in stock.
you'll-probabty
departmentsnear bY as well as
Having inventoryis so important
t.i.tul large compuiercompanies
Our
a
that we believethat, if necessary,
hiringFoisands of engineers'
storeshouldlimit its productlines
magazlnesinclude all- the hobbY
into the extentthat a reasonable
computer ma1azines.We try to
ventor! can be maintainedfor the
ttoct asmanybackissuesaspossi'
choscnlines.The Micro Storcswill
ble.
takeordersfor productsthat we do
The other tYP(
not have in stock; however,we
handleincludeir
nevertake moneywith the orders.
prototyPingeqg!
Becausethere is a big problemin
in the caseof I(
this industry with manufiacturers
thesefor rePaira
who announceproductslong in
aswellsellthem.
advanceof delivery,the computer
for having these
store is many times placedin the
store,however,
awkwardsituationof havingto excomingbackto the store.Rememplain why it does not have a
ber thE typicalhobbYistYho UuYl
product that has been advertised
Gt. prdductsis an engineerand
for severalmonths.Taking money
not ohty Fay he be a Potential
with a customer's
orderonly comcustomerfor a comPuterbut also
problem.
pounds
this
his company may be a Potential
Demonstrationsystemsare also
customer.
- -We
very important.In our main store
tefiectoftenon the futureof
its retail aspect,and
demonstration
industrv,
we have seven
this
systems,one for eachof our comthe future .if our businessin Parputer lines.Theseare mostlydiskticular. We believe that the inbasedsystemsand two of themare
dustry will change very- raPit'-!1In our newstorewe
rack-mounted.
over itre next few years.The $ lm
systems.
four
demonstration
have
bus,whichmadethe Personalcom'
Needlessto say, theserepresenta
putingindustryasit is todaypo.ssi'
verysignificantinvestment.
ble, witt survive for some time
When a customer choosesto
the largenumberof cornbecause
for
he
kit
buys
a
himself
assemble
paniesmanufactutiqgproducts
-selection
of
from the The Micro Store, we
it guaranteesa wide
guaranteethat we will make it
opiions, the latestin technology,
work. In fact, after the customer
airOthe lowestin Prices.BY eariY
the kit, we will do
1978there will ba severalhome
has assembled
to
necessary
debugging
all the
computerson the market of the
makethekit operationalat no cost
Commodore-RadioShack class.
to the customerexceptfor compoWhen the aPPlicationsoftware
nentshe hasdamaged.Oncethe kit
becomesavailable,millions of
in,
is operationaland burned
thesecomputersrvill be sold.Not
should it need repair, we charge
only will' consumerelectronics
Sl0 per hour for repairinganything
companiesbe enteringthe market
we iell. Much of what we sell is
but alsotraditionalcomputercomassembled.We do most of the
panies,especialll'mini computer
Usuallywe can
ourselves.
as.sembly
sell an assembledproduct at less
petitiveproducts.
than*the manufacturer'slist price
and still make a verv reasonable
profit.
The retail comPuter store will
have severalpoteritialroles.First'
as compuler.Power becomesless
expensiveit doesn'tmake senseto
mirket and servicecomPutersusing the traditional techniqu: of
le .or. field
J."nding salespeoP
engineeisto catt on individual
customers.The retail comPuter
store is a new way of marketing
and servicing comPuters-The
traditional comPuter comPanies
will soon rcalue-this. Next, there
will be an enormousmarket for
home computersand aPPlications
software.A comPuterstorein this
businesswill find itself competing
, with consumerelectronicsoutlets
, and departmentstores'.Computer
storesmay havesomedifficultf in
maintaining comPetitiveiJlv€otoriesand piices.Theyshouldiook
carefullyal the serviceand educa'
tion aspectsof the homecomPuter
petitive.Last,therewiil continueto
be a solidhobbycomputermarket
althoughthismarketdoesnot have
the potential of the businessor
homemarkets.Therewill be room,
however,for a few storesspeciaiiz'
ing in hobbycomputing
We seethe future emphasisat
The Micro Storesin the busin s.
industrial,and educationrnarke6.
We are trying to developthe tlpe
of customer base that makes
repeatedandlor volume bu1's.
Theseareprimarilylargeindustriai
that areusing5-100bus
companies
computersfor processcontrol aPplications. Occasionally we do
sorne custom design for these
Anothermarketwe are
customers.
trying to develop is the srnall
packagethat can be sold
business
with hardware,software,training,
and serviceto many small corn'
panieshaving the same.requirements. Stores could help each
otherby sharingsuchpackages.
In generalthe future looks verl'
unpredictable.
bright if somew'hat
to keepail our
We'lljust remember
money in cash, accounts
receivable,and inventory. The
computer
-last store,as it is toda)'.ma)'
but wd'll certainll look
not
ci
backon it asthe mostenjol'abie
pastimes.
At leastit gaveus the incredibleopportunityto be present
and involvedwhenthe greatcomI \\'e
puter revolutiontook Place
*'e
that
grandchildren
ian tell our
were therewhen comPuterPo\r'er
first reachedthe peopleI
!L nl
l n e q l