Business Week

December 26, 1977, Industrial Edition

'The first entry-level home computer'

SECTION: TECHNOLOGY, Pg. 44c

LENGTH: 630 words

With the program cartridge and micro-processor pushing the video game in the 
direction of a true home computer, the next step may have been taken last week when 
little Umtech Inc., of Sunnyvale, Calif., introduced a product called VideoBrain.
Like a game, VideoBrain comes with joysticks and cartridges for playing war games, 
blackjack, pinball, and checkers. But its typewriter-like keyboard can also be used 
for sophisticated word games, math homework, and financial planning. And like a 
computer, VideoBrain has expansion sockets that allow users to plug in cassette 
tape units for more memory, telephone connections for data transmission, and even 
additional processors to handle complex problems.

'Dynamite'
Since no programming skill is required to use VideoBrain, industry consultant 
Robert F. Wickham calls it "the first entry-level home computer." He believes it is 
the simplest machine --and at $500 one of the cheapest -- that can still be called a 
computer. Adds a key West Coast department store buyer: "The positioning of the 
product is very smart. It could be dynamite if the company can support it."

Albert Yu, Umtech's 36-year-old president, has no doubt about his ability to back 
the VideoBrain with cash. The company is starting life with $2 million in cash and 
another $2 million in reserve -- all furnished by Yu's father-in-law, Hong Kong 
investor Chi-Ming Cha. "It's important to be well capitalized in this market," Yu 
says. "We can build 50,000 to 75,000 units next year with no financial problem, and 
if demand is higher than that, we can certainly supply more."

The main problem for the company, Yu concedes, will be to convince consumers that 
Video-Brain is worth its price. "It is a video-game entry in some ways," says 
marketing director Richard Melmon, "but people won't buy it just for the games, 
because we're not selling it at a game price point." Umtech is counting heavily on 
a library of preprogrammed applications that appeal to a wide >Technology/continued> 
range of interests. "There is something for everyone," Yu claims.

The competitors
But Umtech will soon have competition in this new game-computer market. Atari Inc.
has plug-in slots to handle a keyboard and cassette memories in its programmable, 
which it promises will be "more of a computer next year." Game maker Coleco 
Industries Inc. plants to introduce a "bona fide computer" in January, and Texas 
Instruments Inc. is widely reported to be studying a move in home computers.

Makers of small computers for the hobbyist also are aiming at a broader market. But 
Yu points out that these require some understanding of computer programming. "Our 
machine is the first computer that every member of the family can use," he says, 
"regardless of their computer knowledge." Furthermore, points out Umtech cofounder 
David H. Chung, VideoBrain can put 1,000 characters of text on a color TV screen. 
"Our graphics are better than arcade graphics," he claims.

Considering their backgrounds, Yu and Chung might have been expected to start a 
company making high-technology components rather than consumer products. Both are 
Shanghai-born engineers with doctoral degrees from prestigious U.S. universities. 
Yu helped develop advanced semiconductor memories at Intel Corp., while Chung, 46, 
was in charge of microprocessor work at Fairchild Camera & Instrument Corp. And 
both Intel and Fairchild stumbled in consumer products ventures.

But Umtech's founders think that they have learned from that experience. "It's a 
mistake to take a large-scale integrated circuit, put a case around it, and ship it 
like a component," says Chung. "For the home computer to succeed, the technology has 
to go into a package that the consumer can really use."