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Whatever Happened to the $300 Home Computer?

I've been wrapped up in computer nostalgia lately. Like many of you, I'm a member of the first generation of people that enjoyed home video games and home computers growing up. I think that experience has changed the way we view technology, compared with the views of our parents and forefathers. When I was a child, I received a Mattel Intellivision one Christmas because it was technically superior to the Atari VCS/2600 market leader and could be turned into a home computer. Subsequently, I went through a series of computers through the 1980s, including a Commodore 64, an Apple IIGS, and an Amiga 500.

I'm thinking about these computers now because of the recent publication of a book that I highly recommend: On the Edge: The Spectacular Rise and Fall of Commodore, which documents the history of a company that affected the beginning of home computing more than even Apple Computer, IBM, and Atari. For all its management problems, Commodore was graced with the best technologists and technology of the day, and it sold products to consumers at aggressively low prices. Commodore founder Jack Tramiel, surveying the budding computer scene of the late 1970s, declared that he would sell computers for "the masses, not the classes." He then ushered in the home computer era with the $299 VIC-20 in an era when Apple IIs cost $1300 and more, and comparable machines from Atari and Texas Instruments cost more than $600. And within 2 years, the VIC-20 was selling for about $100.

Commodore's story is a Greek tragedy. Tramiel was eventually ousted from the company, and Commodore went from misstep to misstep as it bungled the most impressive computer technology of the late 1980s and early 1990s: the Amiga. It's impossible to overstate how much better the world would be if the Amiga had succeeded instead of the IBM PC or even the Macintosh. On the other hand, Commodore was so poorly run that such an outcome is hard to imagine.


That Was Then, This Is Now
In any event, while reading the book On the Edge, a thought occurred to me. With Commodore gone from the market for the past decade, the prices we pay for home computers have escalated, not declined. Indeed, many Dell and HP PCs are now retailing for well over $1000, and the line between so-called home computers and those targeted toward businesses is fading. Indeed, the only real targeted PC market these days is gaming, and those guys regularly pay a premium to get the best video cards and other equipment.

Whatever happened to the sub-$300 home computer?

Really think about this for a second. Later this month, Microsoft will start selling its Xbox 360 game console, which—despite its lack of a keyboard and mouse— is indeed one of the most powerful computers on the market anywhere. This processing monster will pack a PowerPC processor with three dual-threaded processing cores, each running at 3.2GHz. That processor is more powerful than the chip inside Apple's top-of-the-line PowerMac G5 system. The PowerMac costs a whopping $3299—for just the box. The Xbox 360 costs $299—for just the box. It includes 512MB of RAM and a high-end 3D graphics chipset. It has gigabit networking built-in. And it can output multichannel surround sound.

Did I mention that it retails for just $299? And as with its predecessor and other video game competitors, its price will only decline over its lifetime. That's how it works in the video game market. It's also how it used to work in the home computer market.

The Way It Could Be
I was just pricing dual-core HP PCs, and with the way I would configure such a box, the price would be over $1200 for just the box. But Microsoft can sell an Xbox 360 for $299 and still make a profit? We're being ripped off, people. And there isn't a company such as Commodore out there that's particularly interested in selling to the masses rather than the classes. Instead, we're seeing the free market working in reverse, and only the wealthiest among us can afford decent PCs. Obviously, Microsoft isn't interested in bringing its Xbox 360 pricing to the PC market: All of its money comes from people buying high-priced PCs.

Imagine a single-core version of the Xbox 360, with a hard disk, mouse, keyboard, and basic monitor. Surely such a system could sell for less than $500. Today, low-cost PCs are barebones jokes, good for only light word processing, email, and Web browsing. But the Xbox 360 is a full-fledged multimedia marvel, outperforming all but the highest-end graphics workstations. There’s no reason we can't have the modern equivalent of a VIC-20 or Commodore 64 today—a low-end computer that kicks the hell out of the high-end competition and does so at amazingly low prices.

Well, there is one reason, of course. Greed. And that's a shame. Where are Commodore and Jack Tramiel when you need them?

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