‘83-ll
`
`LAZYWRITER
`
`September 12, 1983
`
`Before we get around to an exhaustive study of templates, we can't resist mention
`of a couple of nifty products we've seen lately. One, Letterform 1000, was
`presented at Softsel's recent Softeach and the second we found through its ads,
`which used the magnificent name of Ghostwriter —- since changed to Einsteinwriter.
`There's a third, Gold~Letters, which we haven't actually seen, but which has been
`promoted in a mass mailing to publications.
`
`three are designed for the writer of limited imagination or -~ to put it more
`All
`politely -- for those noncreative tasks of requesting an advertised product,
`condoling a colleague on a loss, complaining to the purveyor of an unsatisfactory
`service or product, rejecting a job applicant, welcoming a job applicant, and so
`forth. All
`three take a simple idea ~- one already embodied in books such as
`"Director's and Officer's Complete Letter Book" from Prentice-Hall -~ and offer it
`on-line.
`In the long run,
`It's about as simple as a safety pin -- and as useful.
`these products will be judged on their style,
`inventiveness and
`of course,
`comprehensiveness, but for now their mere existence is enough.
`The enterprising
`user, of course, can extend the collection to form a company library of letters
`referring to specific company products, services, events and units.
`
`Letterform 1000 consists of 1000-plus documents -- letters and some other boiler-
`It's four standard IBM—format double-sided
`plate —- for $95.
`It's not a program:
`Though its vendor,
`disks of ASCII text files, readable by most word—processors.
`PBL of Wayzata, MN, also sells Personal Investor, resources are a bit
`limited, so
`PBL is mounting a clever promotion campaign. Thirty-odd word-processing software
`vendors have received a copy of the product with an invitation to submit
`instructions on how to use Letterform with their particular word~processor. These
`submissions will be included, one to a page,
`in Letterform's ring-binder manual.
`The binder also includes various other handy reference items such as UPS and other
`freight rate tables (updatable), a punctuation guide, a glossary of computer
`terms, salutations and closings, etc. Letterform 1000 is just now shipping into
`stores; Letterform Legal -- 500 legal
`forms and documents, with the appropriate
`disclaimers -- is due early next year.
`
`CONTENTS
`
`is a more
`Einsteinfiriter, by contrast,
`ambitious venture, a full~fledged word-
`processor, with the EinsteinLetters as
`afterthoughts.
`They come in four sets of
`between 100 and 150 letters each:' "Social
`& Civic" for $50; "Consumer & Employment“
`for $70, and "Business Operations" I and
`II for $150 each. Released September 1,
`the word—processor is nice, designed
`by human-factors experts, but not likely
`
`LAZYWRITER
`Dear Mr. X...and other letters.
`VIRTUAL INVENTORY
`V
`i
`Electronic distribution of software.
`
`The players.
`'NICE NICHESV .
`Wbrkslate, Cygnet.
`RELease 0.5:
`HALF—BAKED NEWS
`
`"
`
`Commodore,
`
`IBM,
`
`tax warning.
`
`3
`
`ll
`21
`
`22
`
`Rosen Research Ino., 200 Park Avenue, l\TewYork, NY 10166 (212) 588-3530
`
`PMC Exhibit 2080
`Apple v. PMC
`IPR2016-00753
`Page 1
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`

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`VIRTUAL INVENTORY:
`
`ELECTRONIC DISTRIBUTION OF SOFTWARE
`
`f”h
`
`Dear Juan and Alice,
`
`from the
`the last Future Computing Forum. Quite apart
`I had a lot of fun at
`ostensible topic, The Home Computer Market,
`there was an interesting subtext
`on electronic distribution of software. Paul Terrell from Romox was there,
`pr guy in tow,
`trying to draw as much attention as possible to his new
`scheme for downloading software to cartridges at retail. Meanwhile,
`the
`guys from Xante, a Tulsa outfit that wants to perform before it talks, were
`trying to look inconspicuous, which is sort of tough if there are five of
`you and you like to sit together. There was some discussion of the topic by
`the various panels,
`too, and I have never heard such a bunch of unenthusi-
`astic, backhanded andorsementsz
`"I guess we'll have to do it, but we're
`waiting for the other guys," was the tenor of the remarks.
`They are doing
`it partly because they hope, partly because they're afraid,
`that it will
`work.
`
`the only questions are
`Electronic distribution of software seems inevitable now;
`how and when. Electronic distribution makes enormous sense: Why ship bottles of
`Coke if you can send syrup instead and leave the bulky packaging to local
`Why ship specific boxes, cartridges, disks if you can do most of the
`Abottlers?
`work over telephone lines or radio waves? Why carry inventories if you can
`manufacture them on demand, on site? Clearly, electronic distribution is
`sensible, feasible, convenient, cost—effective.
`
`
`
`in the software
`is another man's revenue. Each participant
`But...one man's cost
`distribution process has a different interest in the procedure, and there are many»
`different approaches. We'll consider some of the issues in the next
`few pages;
`profiles of individual ventures start on page 11.
`
`soon NEWS, mm mans
`
`Good News
`
`Bad News
`
`*from middleman's point of View
`
`Reduction of inventory costs
`Elimination of returns
`
`Easy updates, fixes, etc.
`Easier targeting of market
`Easier tailoring of product
`Reuse of media
`
`Higher unit sales
`Elimination of middlemen
`
`Loss of "touchy-feely" sell
`Insufficient documentation
`
`Security problems
`Questionable reliability
`Lengthy transmission times
`Elimination of middlemen*
`
`How??
`
`The basic technology is
`Electronic distribution of software is easy enough.
`already in place, with phone lines covering the country. Other possible media
`include the vertical blanking interval
`in television broadcasts, radio channels,
`and cable television, which can broadcast digital information for capture by
`appropriately programmed receivers. Thousands of remote time-sharing vendors and
`"information utilities" around the country are already practicing a modified,
`
`
`
`RELease 1.0, September 12, 1983
`
`PMC Exhibit 2080
`PMC Exhibit 2080
`Apple v. PMC
`Apmev.PMC
`|PR2016-00753
`IPR2016-00753
`Page 2
`Page2
`
`

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`‘customized form of software distribution. Modems are getting faster and cheaper,
`and security systems are getting more effective (as are security-breakers).
`The
`sticking points for mass distribution are transmission time, reliability,
`security, and billing procedures -— to say nothing of supplier, reseller, and
`customer resistance. Each entrant has its own ways of addressing these problems,
`some so complicated that
`they may doom the whole effort; others simple and almost
`foolproof.
`To address the transmission time problem for retailers, for example,
`the software is usually stored on-site in encrypted form in a point-of-sale kiosk
`and copied to the buyer's disk or cartridge on demand; programs are downloaded
`from a central site on a weekly or other schedule.
`In the home-delivery schemes,
`software is generally downloaded in real, slow time -- but
`the programs are
`usually smaller.
`
`To whom?? Through whom??
`
`Electronic distribution as a means of reaching the retailer and solving some of
`his inventory problems is a different matter -— especially to the retailer -- from
`electronic distribution directly to consumers. Both make intuitive sense, but
`consumers don't seem to be ready yet.
`The base of sophisticated users who
`feel comfortable with modems,
`telephone dial-up and the like is probably smaller
`and more saturated than we suspect (despite the well-publicized adventures of some
`hundreds or thousands of roaming computer hackers who find invading a mainframe
`computer site more challenging than Space Invaders or Pac—Man could ever be).
`There are a lot of people out
`there who still have the phone company hook up their
`telephones.
`(Just ask THE SOURCE, which still has only 40,000 subscribers for its
`data and communications services after four years of trying.)
`
`Consumer reluctance will change over time, but we think it will be slower than
`Control Video, for one, anticipates; Control Video requires the user to purchase a
`special volatile-memory modem that‘s usable only for CVC transmissions.
`For
`the
`moment,
`the ideal channel
`to homes is probably through cable television companies
`-- organizations that sell a service, not a product, and that make a habit of
`installing equipment. Other candidates are the newly venturesome local phone
`companies. And of course there's AT&T itself, which has just announced a joint
`effort with Coleco.
`
`In the long run, home distribution will surely succeed in a big way (see page 8),
`but
`the tough question now -- one that also faces THE SOURCE -- is how to get
`the
`customer to buy and then sign on with his equipment
`in the first place. Retailers
`legitimately claim that they don't just make product available;
`they sell it. To-
`home services can advertise, of course, but many software publishers aren't
`completely comfortable with leaving too much of the advertising to such
`distributors -- or with the risk of annoying their traditional distributors.
`
`in
`term -~ except
`Going through retailers makes a lot more sense in the short
`terms of pure efficiency. Retailers have fewer emotional hang~ups about equipment
`and hookups, and more concern for economics,
`than consumers. Retailers are easier
`to reach and control
`than thousands or ultimately millions of pesky, transient,
`even larcenous consumers.
`Indeed, distribution through a retailer makes solving
`most of the sticking points noted above relatively easy.
`
`RELease 1.0, September 12, 1983
`
`PMC Exhibit 2080
`PMC Exhibit 2080
`Apple v. PMC
`Apmev.PMC
`|PR2016-00753
`IPR2016-00753
`Page 3
`Page3
`
`

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`gyirtual inventory
`
`Moreover, electronic distribution, especially of low~end software, could not have
`arrived at a more appropriate time.
`iBoth publishers and retailers have recently.
`discovered the problem with inventory:
`It's either too little, in the case of a7
`hit, or too much,
`in the case of a fading hit or a non-hit.
`(The recent popu-
`larity, among retailers at least, of "rack-jobbing" relates not
`to the physical ’
`service of putting software in racks, but
`the ancillary commitment of the
`distributor to take back product
`that doesn't sell. no questions asked.) Carrying)
`costs, markdowns, shipping costs are huge.
`ROM production leadtimes can easily
`extend beyond the end of a selling season. Only 20 of each 100 titles provide 80
`percent of the business, but which 20? Most of the electronic distribution
`systems enable the retailer to carry a wide inventory with no inventory costs
`beyond the leasing of a machine from the distributor. Prices overall are a little
`lower, but retail margins are good (especially considering they won't later be
`reduced by markdowns) -- up to 35%.
`(Royalties to publishers, as with traditional
`distribution, are negotiable.)
`it
`
`’
`
`Tangibles
`
`If'
`What worries retailers and publishers is the loss of the touchy~fee1y sell.
`the retailer uses a Super Software Box just
`like the one in the store down the
`street, what's to distinguish him? And what's to sell one piece of software over
`another without distinguishing boxes?) So far most of the electronic distributors
`intend to use their own packaging ~- fancy Romox rainbow boxes or Renaissance
`dwarfs and wizards or Xante stripes —- but we expect
`that fairly soon they may
`discover that kids, or at least gift-giving parents, want
`to take the thing home'
`in the appropriate box.
`(Remember
`the Christmas-time practice -- in the good old
`days -- of filling a Simon box with a raincheck?
`The box does matter.) There are
`certainly answers to some of these problems for the retailer. There's no reason
`there can't still be software demos —— and an "inventory" of empty boxes or
`display cards which display the back and front panels of the missing boxes.
`Indeed, Renaissance's offering includes a stand-alone pillar that encourages the
`user to demo the software before making up his mind.
`(An "inventory" of boxes
`that runs out is no problem because the item in question is clearly a hit anyway
`and doesn't need to be sold.)
`'
`
`The whole point of buying a
`the issue is documentation.
`the higher end,
`At
`software package is to get away from those dreadful Xeroxed“, stapled reference
`materials, isn't it? And the whole point of the last two years of bringing in
`soap merchants is to move from messy typescript
`to neatly typeset manuals with
`colors, pictures of screens and other "friendly" innovations.
`'One solution is to
`print out
`the documentation —- with a laser printer, maybe, if you're the kind of
`store that sells Lisas, or a plain old dot matrix if you're a little less high~
`rent. Of course, there's always UPS or Federal Express Standard Air to send the
`documentation on demand —- while the retailer stocks just a few of the
`Even
`increasingly popular QuickGuides, Easystarts and other reference materials.
`games need some documentation, which can be provided either byla printout
`(games
`players aren't so picky) or from a supply of prepared leaflets.
`Indeed,
`electronic distribution may be an important
`impetus to the trend towards better,
`briefer or alternatively, on-line documentation and tutorials.
`
`
`
`
`
`
`
`RELease 1.0, September 12, 1983
`
`PMC Exhibit 2080
`PMC Exhibit 2080
`Apple v. PMC
`Apmev.PMC
`|PR2016-00753
`IPR2016-00753
`Page 4
`Page4
`
`

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`Which products?? which customers??
`
`the need for sales support with high—end
`Given the problems with documentation,
`programs, and the longer life cycle of business software, most of the early
`experiments with electronic distribution to retailers -- with the notable
`exceptions of Softyme and Xante ~- will handle primarily ROM—based game software.
`Another reason is that
`the inventory problem is worst with ROM cartridgeszl Disks
`have shorter leadtimes and at
`least can be reused, although financing or marking
`down an inventory of disk software is no less painful
`than financing or clearing
`out'cartridges.
`
`gww
`0
`
`Most of the publishers signing on to one or more of these services are doing so
`only reluctantly, more for protection than with enthusiasm. Most seem to regard
`it as a fine way to make some incremental revenues off old,
`tired software:
`If
`someone wants to resell Hula Hoop Invaders,
`long out of production, and remit
`royalties for it, Well, why not?
`The dogs are selling at discounted prices around
`$10 anyway,
`so what's to lose? The publisher gets royalties with no outlay.
`
`the feeling is, We'd rather sell it in the old, expensive form (even
`But for hits,
`though that sometimes means out~of-stocks and lost sales in the first throes of
`popularity); Accordingly, Romox's initial list of items includes a lot of second-
`tier suppliers and third-tier products. Their publishers see Romox as a good way
`to achieve "shelf" (or kiosk) space they wouldn't otherwise merit. Announced
`suppliers include the likes of Creative, Navarone, Mattel (with some of its older
`items only), 20th Century-Fox, Epyx.
`iNo Atari, no Activision, no Imagic.
`(Imagine the allure of H30 with only the kind of movies you can see on American
`Airlines.) As usual,
`the weaker ones are those who will deal, while the stronger
`ones like things the way they are.
`
`Pricing
`
`Electronic distribution will accelerate (or at least provide an excuse for) the
`to
`trend to lower prices. First of all, electronic distribution makes it apparent
`the user exactly how small
`the marginal cost of his product is, especially if the
`documentation is as makeshift as many of the distributors seem to think will
`suffice. That's on the demand side.
`On the supply side, electronic distribution
`will indeed make software cheaper, eliminating some costs of cartridge production,
`shipment, stocking, returns, shrinkage and possibly printed documentation.
`(More
`expensive, reusable EPROMS and E ROMS will replace ROMS in cartridges, but
`in
`to
`smaller numbers.)
`For a $200 piece of disk software,
`the savings could amount
`$20 to $30.
`For a $40 piece of ROM software, it could be anywhere from $10 for a
`hit to more than $40 for a product
`that doesn't sell and that generates heavy
`returns.
`
`What happens to those eliminated costs? Given competitive pressures, it's
`unlikely they'll improve anyone's margins much.
`Instead, they'll show up as
`reduced prices.
`In to-home distribution, distributors and retailers will handle
`only the occasional pieces of related hardware or media,
`losing software revenues
`altogether. Margins may be the same, but there will be less revenue to divide up.
`In part,
`lower prices will be made up by higher sales of games.
`In the business
`market,
`the pricing impact will be smaller and the forgone revenues will more
`likely disappear without compensating unit sales increases,
`leading the software
`publisher or retailer to make them up by charging for support (see our July 14
`issue) or simply swallowing the loss. An alternative is Softyme's fee-paid-
`
`,, V,‘ M2
`
`RELease 1.0, September 12, 1983
`
`PMC Exhibit 2080
`PMC Exhibit 2080
`Apple v. PMC
`Apmev.PMC
`|PR2016-00753
`IPR2016-00753
`Page 5
`Page5
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`wsupport approach -- with much of the support revenue accruing to Softyme rather
`than to the publisher or retailer.
`
`the use of electronic distribution/copying
`From the consumer's point of view,
`enables him to pay only for the software, reusing the media.
`For example, a child
`may (persuade his parents to) buy a hot new game for $40, use it for a week or
`two, and then abandon it in the toy chest. Now,
`the child can recover at least
`the cost of the cartridge and reprogram it, generally for less than $10.
`In the
`to-home systems, games cost only pennies per play or are covered by a monthly fee
`of $10 to $20. While the publisher's and retailer's risks for a new game are
`reduced by millions and thousands of dollars,
`the consumer's risk is also
`proportionally reduced, making him more willing to pay.
`‘a
`
`The nonrelectronic distributor's perspective
`
`The traditional (two years, yet!) distributors are putting a brave face on things.
`For one, there's still a need for physical
`items ~- terminals, disks, cartridges,
`documentation, packaging, and the like -- that the distributors can distribute.
`SKU is handling blank cartridges for Romox.
`Pickwick, which provides rack-jobbing
`services for Softsel and its customers, also happens to be the largest rack~jobber
`of blank audio and video cassettes.
`So why not blank cartridges?
`“l
`
`
`
`However, traditional distributors may lose the opportunity to provide much of the.
`value-added that provides their margins:
`product selection (now that the
`retailer/dealer deals directly with the publisher and lets the customer select the
`product),
`inventory financing, stock balancing (a polite term for accepting
`returns), and timely delivery.
`A distributor can go either of two ways: He can
`become a purely physical distribution provider, making sure the retailer has
`enough blanks and earning a low margin for his pains. Alternatively,
`the
`distributor can go the high-service route, as Softsel is doing, with an emphasis
`on training and eventually relations with corporate end-users.
`(Of course,
`the
`distributors could get into electronic distribution themselves:
`They have the
`appropriate contacts with both suppliers and customers. They'll just have to
`forgo those forklifts they're so proud of!
`
`Meanwhile, electronic distributors will usurp more and more of the traditional
`publishers‘ and distributors’ role, providing advertising, point-of-sale displays
`and devices, packaging, and even,
`in some cases,
`the software itself.
`
`The suppliers
`
`to have someone go to all that
`Fom the publisher's point of view, it's wonderful
`trouble to sell your software, but
`the rules of economics dictate that
`they, not
`you, will get
`the margin points and profits resulting from their investment on
`your (?) behalf. Rather than selling their product on cartridge or disk,
`the
`publishers will now be licensing it, with the reduction in revenues that implies.
`At
`the very least,
`the electronic distributors will distance the retailers from
`the software vendors (as do regular distributors); at the worst,
`the electronic
`distributors will be competing with their suppliers, although none of Romox's
`efforts to date could qualify as a hit.
`
`
`
`The great offsetting benefit of these systems to publishers is inventory
`management:
`If you have a hit, all the retail stores served by this channel will
`
`
`
`RELease 1.0, September 12, 1983
`
`PMC Exhibit 2080
`PMC Exhibit 2080
`Apple v. PMC
`Apmev.PMC
`|PR2016-00753
`IPR2016-00753
`Page 6
`Page6
`
`

`
`If your hit is a dog, you need not worry about
`be your manufacturing sites.
`handling returns; you just won't get any revenues.
`
`
`
`Billing and record-keeping
`
`Billing issues -- the trustworthiness of the electronic distributors‘ records andi
`the accuracy of their royalty figures -- concern software suppliers more than they
`like to admit
`in polite company. Each electronic distributor touts a fool-proof,
`thief-proof record—keeping system that ensures accurate count of software copied
`and resold; most people know that all such schemes can be broken, but that there
`are ways to detect
`tampering or unusual purchase patterns.
`In the end, it boils
`down to the credibility of the participants (you don't need an electronic
`distribution system to copy software if you've a mind to). Xante, which makes a
`point of using a Big Eight auditor,
`is perhaps most convincing on this score;
`ventures such as The Games Network, which pay fees based on numbers of service
`users rather than numbers of transactions, sidestep the problem and avoid a lot of
`cumbersome recordrkeeping to boot.
`
`sThe good news for publishers is that they can get a wealth of information (which
`varies depending on the system used):
`How long a particular game stays on
`cartridges before it is erased and replaced; how frequently a particular game is
`played; customer names and addresses; other customer information such as machines
`owned, buying plans, etc.; and even,
`from systems such as Softyme and P.C.
`Telemart,
`the most frequently asked support questions.
`
`Piracy
`
`‘
`
`/T*”E
`
`Technically, of course, it's no easier to copy software delivered electronically
`than any other way. But piracy has never been a technical problem so much as a
`moral and social one. Accordingly, electronic distribution is somehow likely to
`encourage piracy if only by 1) showing the possibility of copying, 2) making then
`product
`less tangible, 3)
`in some cases taking away the retailer, who constitutes
`a person, rather than a machine at the other end of a phone line or airwave,
`that
`is being ripped off.
`
`05 the other hand, software copied by an electronic distributor onto disks or
`E ROMs can be uniquely customized (i.e.
`identified) by the vendor.
`Software
`downloaded directly into a user's computer via a modem with a unique encoded
`serial number, for example, can be programmed to work only when that particular
`modem is present.
`
`New channels
`
`is not just distribution into the same old
`The lure offered by Romox, for one,
`outlets, but
`the opportunity to get into new places formerly inaccessible.
`Romox
`has a letter of intent from Southland, franchisor of some 7300 7-Eleven outlets,
`to endorse the system if a seven-unit test currently in progress goes smoothly.
`Ultimately, electronic distribution may be the only entree into a given chain,
`which is one reason publishers and distributors are so reluctant to encourage the
`practice and hand over too much power
`to these middlemen. Xante, for example,
`is
`trying to set itself up as the exclusive distributor, electronic or otherwise,
`to
`all outlets of chains such as Sears.
`
`
`
`RELease 1.0, September 12, 1983
`
`PMC Exhibit 2080
`PMC Exhibit 2080
`Apple v. PMC
`Apmev.PMC
`|PR2016-00753
`IPR2016-00753
`Page 7
`Page7
`
`

`
`They have
`the balance of power currently rests with the retailers:
`Nonetheless,
`the consumers.
`The retailer wants no muss, no fuss,
`true, but he doesn't want
`to
`consign his product selection to a single supplier.
`
`the retailer may not
`that just like the distributor,
`too,
`Retailers are aware,
`always be necessary. Romox's Paul Terrell, for instance, displays an unseemly
`fondness for video cartridge vending machines that he'd do better to disguise, at
`least
`in front of his retailer customers.
`
`Direct into the home
`
`some people are already dealing directly with the ultimate consumer,
`As noted,
`most notably William Von Meister's Control Video Corp., which offers GameLine, a
`pay~per—play home system, and Playcable, which downloads games to cable customers.
`As noted,
`the difficulties of reaching these folks may be greater than they
`7
`appear.
`So too the intricacies of billing. Publishers aren't too comfortable
`with the concept, because it relegates them to the role of mere product suppliers
`rather than marketers.
`(To retailers, of course,
`the idea is heresy.) None of
`these mass~market services as yet downloads the software for keeps (in theory, at
`least); services which work as a sampling mechanism rather than a selling system
`are much more comfortable for these publishers to consider. Moreover, this is
`akin to renting software (the genuine way), and probably generates more revenues
`over the long term than would outright sales.
`
`Services such as CompuServe and various "home—brew" outfits are also distributing
`software over phone lines, but without
`the controls that would reassure most
`commercial publishers of software.
`
`Into the hotels
`
`There's also a contingent of vendors looking to catch the upscale person (the
`traveler) when he's vulnerable, all alone in a hotel room.
`One of these,
`Travelflost, has recently dropped out of the running but
`the effort is being taken
`up by its Dallasebased terminal supplier, Quazon;
`two others, VIDEOTEL and
`SuiteTalk, are taking dramatically different approaches.
`SuiteTalk is after the
`high-revenue, computer-sophisticated guest, and charges the hotel for offering the
`service; VIDEOTEL is going after the larger mass market that still feels more
`comfortable wiggling a joystick than (good grief!) typing.
`VIDEOTEL stresses its
`"hotel-friendliness" and offers the service at no charge to hoteliers, while
`HotelTech charges hotels substantial fees, citing the service's ability to
`distinguish a hotel with high-rent, full~service computer facilities in each room.
`
`New horizons
`
`Although it's a little premature right now, with most systems barely operational,,
`what we're seeing are the first few steps towards widespread in-home banking,
`shopping, and information and communications services as well as games. Sears,
`through Allstate Venture Capital, owns part of Control Video Corp., which might be
`considered a conflict given that Sears is a retailer and GameLine goes direct to
`homes, but Sears is also a huge catalogue merchandiser, a purveyor of financial
`services (through Dean Witter and Allstate), and a big advertiser. Citicorp,
`primarily a bank, has been working on a home-banking project for more than three
`
`RELease 1.0, September 12, 1983
`
`PMC Exhibit 2080
`PMC Exhibit 2080
`Apple v. PMC
`Apmev.PMC
`|PR2016-00753
`IPR2016-00753
`Page 8
`Page8
`
`

`
`10
`
`years now., American Express, MCI...the list of interested parties is long, and
`many of them are far larger than the current participants.
`a
`T
`
`.
`
`,,a
`
`is to abandon the
`One thing these new participants will have to learn, however,
`time-sharing mentality, with its dumb terminals and heavy transmission costs,
`for
`brief communications between two intelligent devices.f Early efforts at home
`banking, for example, used the time~sharing model, with a customer logging on and
`conversing with a mainframe until his various transactions were accomplished.
`Imagine the load that could put on a mainframe and a telephone system if the
`service got popular.
`Even the current networks -- THE SOURCE, CompuServe, etc. --
`suffer from the same problem, and cost $20 or more per hour in prime time.
`
`The new model is local software, resident on one of the country's increasingly
`ubiquitous pcs.s The user works with a local program until his checking trans~
`actions, for example, are entered, consolidated, and prepared for entry into the
`mainframe. Only then does he contact
`the central site with a brief message
`listing the transactions in a form tailored to the receiving mainframe's
`specifications.
`fHence the interest the banks are currently showing in home-
`accounting software, which might provide an ideal front-end to their home—banking
`services. Another example is Softyme, where the customer doesn't imediately call
`up Tymshare with a question;
`instead he deals with local
`trouble-report software,
`which uploads his question in the proper format at the conclusion of the session.
`
`*'k'k*'k*
`
`It's clear that electronic distribution of software is on the way, creating more
`upheaval
`in the scarcely settled world of software distribution.
`Few of the
`services described in the next
`few pages are in full operation; many more are too
`preliminary or too shy to mention.
`It's a chicken—and—egg situation:
`To get
`the
`customers, you need the software;
`to get
`the software, you need the customers.
`But it will happen:
`The economics make sense. This medium creates a lot of
`opportunities for old and new players: Tandy, which owns its own stores,
`is an
`inevitable participant in to-retail distribution.
`So is ComputerLand, which is
`just now making the make or buy decision concerning an electronic distribution
`system to supply its franchisees.
`IBM,
`increasingly aggressive in the software
`business, already has a network linking it to all its PC dealers, which might be
`ideal for downloading software to retailers. American Express, which is just about
`to launch a software catalogue,
`is taking more interest in this market every day
`and is ideally positioned to sell direct
`to consumers. Atari is investigating.
`The telephone operating companies, which own the channels used by many of the
`participants, have been freed by deregulation to look for new sources of revenue.
`The newspapers want
`to go electronic, and sell more than just news and
`classifieds.
`
`Distribution to retailers may catch on faster, changing life for software
`distributors. But
`in the long run,
`those who sell software at retail, whether
`electronically or otherwise, will face the same competition from direct-to-
`consumer services as the software distributors now face from to-retail services,
`and they will similarly be forced to transform the nature of their business.
`
`
`
`
`
`
`
`
`
`RELease 1.0, September 12, 1983
`
`PMc;EXmb“2080
`PMC Exhibit 2080
`Apple v. PMC
`Apmev.PMC
`|PR2016-00753
`IPR2016-00753
`Page 9
`Page9
`
`
`
`
`
`

`
`THE PLAYERS
`
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`AT&T/Coleco
`Control Video/GameLine .
`HotelTech/SuiteTalk
`.
`.
`INC Telecommunications .
`
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`.
`P.C. Telemart
`.
`.
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`.
`Playcable
`.
`Renaissance/Reflections
`Romox
`.
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`Servnet/NABU .
`.
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`Softyme
`.
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`The Games Network
`.
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`VIDEOTEL .
`.
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`Xante
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`
`ll
`
`11
`ll
`12
`13
`
`[Illustrations by Lisa.]
`
`
`
`song“,
`13
`*
`14
`14 f "”°""°
`15
`——-—-5
`p.,,,,Mf°, somm
`16
`17
`18
`19
`19
`
`AT&T/Coleco
`
`Just
`
`last week AT&T and Coleco made a
`
`they would
`that
`joint announcement
`,
`develop "an interactive game and
`entertainment service for consumers"
`
`
`
`-~ and then refused to answer any
`V
`questions. Exactly how this service
`will work is unclear, and probably Coleco and AT&T aren't really sure yet either.
`The part of AT&T making the announcement, AT&T Consumer Products,
`is a manu-
`facturing division; it doesn't even own the Phone Center stores that cover the
`country, and to whom (along with Sears and J.C. Penney) it would presumably sell
`some of the products (probably modems)
`that would be its major initial contribu-
`tion to the joint venture.
`(AT&T has also apparently made some significant
`breakthroughs in the sort of synchronization needed for remote interactive game-
`playing.) But at
`least
`the Phone Stores are owned by AT&T;
`the telephone lines,
`which would presumably get good usage from this service, are now owned by the
`divested operating companies. However, such a game service might be a good way of
`getting AT&T's modems
`into consumers’ hands, providing a nice base into which the
`company could also sell the videotex and other such services it is developing.
`
`Coleco, for its part, would probably be in charge of providing game software and
`computers, although the pres release implies that
`the service could be used with
`most varieties of video games or home computers -- a wise decision.
`
`We will watch the progress of this effort with interest.
`
`Control Video Corp./GameLine
`
`Founded by William Von Meister
`and funded by an assortment of
`venture capitalists including
`Kleiner, Perkins, and All-
`state, Control Video plans to
`start by distributing games on
`a pay-per~play basis and then
`move on to other in-the-home
`
`_offerings such as BankLine,
`
`
`
`Retailer