Media File: 1981
Sinclair in the News

Business Week
June 15, 1981

A big success for small Sinclair

Can a tiny British company sell an inferior product and still beat the pants off the U. S. personal computer makers? Sinclair Research Ltd. appears to be doing just that. Only 18 months after entering the market, the company has built sales to the point where it is now shipping 20,000 of its small, 13-oz. computers a month - more, it figures, than Apple Computer, Tandy's Radio Shack, or Commodore.

The key reason for its success, according to Sinclair, is that the computer fills a market hole between the emerging, handheld models, which are even more limited, and the standard models of the Big Three producers. While the three U. S. companies push fancy graphics, bells and whistles, and customer service, Sinclair is cashing in on mail order sales of a functionally limited, but full-fledged, personal computer with a price tag of just $220. "Our strategy is to move into the vacuum being left by the big names as they gravitate toward the office and commercial applications. We are going for the individual," says Clive Sinclair, the Cambridge (England) company's founder and owner. Most of his company's sales, so far, have come from Britain and Europe, but Sinclair is counting on the new ZX81 to propel his company into the U. S. market lead. By adding more memory to the initial model, he says that the ZX81 packs as much power as the Apple II and other popular personal computers, at one-fourth the price.

But the Sinclair computer cannot generate the sophisticated charts and graphs that its more powerful competitors can, nor can it handle such functions as word processing that are major reasons why the U. S. machines are quickly moving onto professionals' desks.

In contrast to comparably priced handheld computers, however, Sinclair points out that the ZX81 will display a full page of text on the screen of a standard Tv set, draw some limited graphs, and store more information. "Sinclair will precipitate quite hefty price falls among other equipment makers," says Christopher J. Curry, founding director of Acorn Computers Ltd., a British competitor. "It's like Freddie Laker with transatlantic air fares."

This is not the first time that Sinclair has tried to win U. S. sales by offering a consumer electronics product at a lower price than any other comparable product on the market. In the early 1970s, the company was a pioneer in calculators and digital watches, but failed to turn either of them into profitable businesses. Then, last year, Sinclair introduced its personal computer, the ZX80, which did not catch on in the U. S. because of its limited capabilities. For example, it was difficult to install and program. Competitors figure that the same thing could happen again. "People will soon see the limitations of this machine," predicts Hans Bublath, European marketing director for home computers at Texas Instruments Inc. Mail order. To keep his marketing costs as low as possible to match the low price tag, Sinclair is depending on a Spartan plan - direct mail sales backed by newspaper and magazine advertisements. The problem with this plan, according to Grant S. Bushee, an industry analyst at Dataquest Inc., a Cupertino (Calif.) market research firm, is that mail-order marketing limits the appeal of the machine to true hobbyists, who want to do everything themselves, from installation to programming. "It's very attractive for the price," he says, "but certainly not a threat [to Apple, Atari, or Commodore] while they continue using mail-order distribution."

If Sinclair is more successful this time around, his company may add more sales channels. He hints at a possible marketing hookup with Timex Corp., the giant U. S. mass-market watch maker. Timex already is manufacturing the ZX81 in its Dundee (Scotland) plant, as a subcontractor to Sinclair.

The goals that Sinclair has set for his company are nothing if not ambitious. By 1983 he predicts that sales will be more than $100 million, up from anticipated revenues of $18 million in 1981. Sinclair admits that he could have trouble managing this type of growth, but he still is confident that he can pull it off. More than one industry analyst agrees that Sinclair is on to a good thing, at least for now. "Other companies have been writing off the hobbyist and the entry-level people who want to learn something about computers," says Benjamin M. Rosen, president of Rosen Research lnc., "but Sinclair has clearly demonstrated that there is a vast market for personal computers that are cheap enough."