Business Week

March 19, 1979, Industrial Edition

TI gets set to move into home computers

SECTION: ELECTRONICS; Pg. 37

LENGTH: 800 words

HIGHLIGHT: A product announcement is expected soon. An FCC waiver is possible

Texas Instruments Inc. is finally making a move to get into the personal computer 
business -- a move anxiously awaited by the giant company's two-dozen competitors 
in this budding market -- and is doing it in a way that is raising questions over 
the Federal Communications Commission's role in regulating this segment of the computer industry.
Some industry analysts expected that TI would dominate this business by the end of 
1979, just as it came to dominate the markets for digital watches and calculators. 
But TI has been moving cautiously and only now is about to announce its computer. 
It will incorporate a computer with a keyboard in a typewriter-size console, 
probably will retail for $300 to $400, and will plug into any home TV for video 
display.

That TV link has been the problem for TI. The active connector between a home 
computer and the TV set, as well as the computer itself, must be tested by the FCC 
to ensure noninterference with radio or TV broadcasting. TI submitted its connector 
-- known as an RF modulator -- with the computer late last year, and the unit failed 
the FCC laboratory's tests, not uncommon the first time around. Later, the company 
asked the FCC to examine the modulator alone, but laboratory officials said the 
rules forbid that.

FCC regulations
In February, TI asked the commission to adopt new rules allowing it to test all 
modulators, including those sold separately from computers, which would allow it to 
control the interference problem.Oddly enough, home computers sold on a purely 
stand-alone basis are not inspected by the FCC, although everyone involved knows 
that many buyers will connect them to their TV sets using modulators bought 
separately. These devices appear to violate the agency's rules.

Home computers sold with a video display as an integral part of the product are not 
examined by the FCC either. The other part of TI's proposed new rules for the agency 
attempts to tackle this probelm by giving the FCC authority to examine the 
specifications for all home computers and video games to see if they are likely to 
cause interference.

The problem is that such changes in the rules can easily take a year or longer for 
the FCC to approve. Late last month, TI made it clear that it does not want to wait. 
It asked the FCC to waive its rules so that it can market its home computer while 
the commission considers the proposed new rules. The computer would meet the new 
specifications proposed by TI.

TI already has sent its modulator to the FCC, and shortly "will be submitting data 
that demonstrates we have taken reasonable measures to prevent any interference to 
TV or radio reception," says C. Morris Chang, TI group vice-president. Chang 
believes that the company has a good chance to get its waiver, and an FCC official 
acknowledges that "if there is a good reason, they are often granted."

Moving ahead
The electronics giant seems ready to move fast. "We are hopeful that the FCC will 
act rather expeditiously," Chang says. But if the FCC denies the petition, it would 
not stop TI from moving ahead. "We could market a home computer wth a video monitor 
[a separate video display that would not require any FCC O.K.]," he says. But, he 
adds, "We do not think that the public would be best served by this approach, and 
it would mean a higher cost for initial buyers."

Using a monitor instead of the home TV would add $200 and $400 to the price of a 
home system, something that would limit the size of the market, at least initially, 
TI believes. Nearly all of the home computers now on the market have a built-in or 
an optional monitor, partly to avoid the need to get FCC approval.

The home or personal computer could easily become the most important consumer 
electronics product in the 1980s. TI, for example, has set up an entire division 
for its personal computer and is developing a host of products for it, including a 
"floppy disk" memory to store such data as family records, and a device to permit 
it to "talk" by telephone to other computers.

While some observers describe TI as the company most likely to stimulate a booming 
market that could soar beyond $3 billion annually by the early 1980s, the market is 
not waiting for TI. Last year more than 200,000 systems brought in over $500 million 
in retail sales. TI executives, however, will not admit the market is taking off 
without them.

"I'm not suprised by the growth of the home computer market," Chang says. "It's 
going pretty much as I expected a year ago." With nearly all of the current models 
going to hobbyists, businessmen, and educators, he believes that the "real home 
computer market is not yet being served." Adds Chang: "The game is barely beginning."