Media File: 1981
Sinclair in the News

Business Week
November 16, 1981

A British computer hits it big

In the consumer electronics industry, Clive Sinclair is known worldwide as a phenomenally creative inventor whose marketing fiascoes have more than once driven him to the brink of financial disaster. But one month after springing his latest product - a dirt-cheap personal computer called the ZX81 - on the U.S. market, the British entrepreneur finally appears to be reversing that syndrome. The product's success "has caught [Sinclair] and everybody else by surprise," says industry watcher Benjamin M. Rosen, president of Rosen Research Inc. "He's got a tiger by the tail."

Sinclair reports that since the $150 ZX81 was introduced in the U.S. on Oct. 7, mail-order sales rose rapidly to nearly 700 a day by month's end and now stand at close to 1,000 a day - as many as had been attained after 18 months of marketing the predecessor ZX80 computer in Britain. This demand, coupled with mounting sales in Britain, where the new unit has been available for six months, is now supporting production of 40,000 units a month. Computer industry analysts calculate that Sinclair's company, Sinclair Research Ltd., has thus become the world's leading producer of personal computers. And Sinclair says that within six months, production will steadily increase to 60,000 to 80,000 units monthly. In the current fiscal year, he is expecting revenues - almost all from the ZX81 - to exceed $40 million. No competition. The success of mail order sales encouraged Sinclair to try the retail market as well. In early September, the large British chain, W. H. Smith & Son Ltd., began offering the book-sized, 12-oz. device through 150 stores. "We're selling them as fast as we can get them," says John N. Rowland, marketing development manager. "We thought we might sell 1,000 a week. Instead, we're selling about 1,500, and we're revising our order schedule upwards every week."

Sinclair says he is also considering a U.S. retail outlet. Meanwhile, American Express Co. has agreed to test-market the unit in mailings to many of its 9.5 million cardholders. And in his latest marketing move, Sinclair has lined up Mitsui & Co. in Japan. Mitsui projects sales of 20,000 machines this year and 50,000 in 1983.

"Technically, Sinclair is marvelous," says Tadahiko Shiomura, general manager of the computer section at Mitsui. "There is really no competition at this low price range." Adds Rosen: "It's not a question of price-performance. It's only a question of price. Sinclair has found a segment of the market that nobody else has found. It seems to be a big one."

Still, hardly anyone believes that the ZX81 will unseat more powerful personal computer products, such as those marketed by Apple Computer, Atari, and Tandy Corp.'s Radio Shack Div. These products sell for prices beginning at more than twice that of the ZX81, but they are functionally superior. For instance, the ZX81 lacks the memory capacity to make it useful in business applications, and the dearth of ZX81 software means the user must do most of his own programming. Aiming at new demand. "The product is really very limited," says Jon A. Shirley, vice-president for computer merchandising at Radio Shack. "It represents a lowcost way to learn about what a computer is and what it will do." He adds that his company does not consider the ZX81 competitive with the Radio Shack line, which begins with a $399 color unit supported with an array of peripherals and software. "It is not that we don't take [Sinclair] seriously," says Shirley. "He has found a niche."

Mitsui executives agree that the ZX81's simplicity and low cost will make it particularly appealing to students who want to learn elementary programming and among adults who want to keep household records. These consumers are unlikely to spend the $303 needed to purchase the next lowest-priced computer, Mitsui reasons, but they will spend the $168 that the ZX81 will sell for in Japan. "We are aiming at new demand," says Shiomura, "to expand the market." Mitsui has another reason for selling the product. "Our other objective is to help relaxation of trade friction between Japan and Europe," says Shiomura, noting that Mitsui may augment its current Sinclair selection with other products, such as a pocket televison set that Sinclair is now developing.

Sinclair is counting on such alliances to keep his small company from being swamped by the consumer electronics giants, as it was in the early 1970s when he was among the first out with low-cost calculators and digital watches. "The mistake we made in the past was not to establish ourselves on a world scale. That won't happen again," he vows.