Small Office/Home Office: not just another buzzword

by Alan Zisman (c) 1994. First published in Our Computer Player, March 18, 1994

When I was growing up, SOHO was a neighborhood in London. Then,
somehow, it the 70's, it became the name for a neighborhood in New
York (SOuth of HOuston, get it?), known for artists in cheap-rent
lofts.

But you can't keep a good acronym down. Now, in the 90s, the same
name reappears, this time, as ComputerSpeak standing for Small
Office/Home Office.
 

FROM BOOM TO BUST, AND BACK AGAIN

Maybe a little history is in order... when the IBM PC first
appeared, in 1981, IBM marketed it as a business computer. And while
they certainly didn't go out of their way to discourage individual
purchasers, it was clear that they targeted their traditional
corporate market.

But they didn't quite ignore the home market... after all, lots of
Apple IIs had been sold outside of big businesses. So IBM tried to
market the PC-Junior, code-named 'Peanut'.

Only hardly anyone wanted to buy it.

At about the same time, the early-80s boom in underpowered
personal computers for the home went bust, taking down some
heavily advertised players like the 8-bit Ataris, Texas
Instruments, and Coleco... all models that fetch about $10 at swap-
meets today. Even Apple almost went belly up.

It wasn't that there was no home market, but home users weren't
sold on the idea of getting a computer "to balance the chequebook
and store recipes" as we were told at the time.

After that low, most major companies avoided marketting directly
to the home market. Sure, there was educational software, and
games. And a few notable small business successes, such as
Quicken, aiming at personal finance.
 

HOME IMPROVEMENTS

Suddenly, in the past few years, major hardware and software
markets have again taken notice of the home and small business
market. There are a few reasons for this...

-- The corporate market for hardware is saturated. Corporations
are upgrading older equipment, but pretty much every desktop that
can hold a personal computer already has one. Companies see that
there's still untapped potential in the so-called SOHO market.

-- As clones drive prices down, and as graphic interfaces like the
Mac, Windows, and OS/2 make computers less intimidating, users are
more likely to feel that a computer at home is affordable and
usable.

With the recession slowing down business purchases, many users
find themselves with newer, more powerful computers at home than
at work... the opposite of the traditional assumption that home
users only need wimpy versions of real office powerhouses.

-- There are probably more articles about 'telecommuting' than
people actually living the life-style, all expectations are that
more and more people will be able to hold down a job where they
get to do their work from home, using a computer and a modem. Can
we say "Information Superhighway", boys and girls?

-- Finally, for quite a while, the bulk of new jobs have been
created by the small business sector. This is where the economy is
growing, and smart companies will include this in their planning.

So more and more people have more and more powerful computers up
and running at home and in their small businesses. As a result, we
see signs like:

-- IBMs PS1 series grow from an underpowered unit, to a range of
real computers at almost clone prices.

-- Both Microsoft and Word Perfect announce major divisions to
produce 'Home' software, to compete in a wide range of game,
educational, and business markets.

As we've seen, the computer industry has targetted this market
before, unsuccessfully. Instead, the home/small business market
has grown in spite of rather than as a result of industry planning.
 

TELLING IT LIKE IT IS

For the current marketing to be successful, it will have to
recognize a number of characteristics of the home/small office
market.

-- Users have powerful computers, and don't want 'watered-
down' hardware or software. Even though most people use only a
fraction of the power of a full-scale word processor or
spreadsheet, hardly anyone seems to buy the products with the
limited feature set. Do you know anyone who's bought Lotus Write,
the mini-version of Ami Pro? I thought not.

-- Corporations will pay $495 list for a word processor, and
pass the cost on to the consumer. Individuals and small offices
can't afford this, and tend to be unwilling to pay $1500 for
software for their $2000 computer. Rather than buy a less
expensive product with a smaller feature set, they've tended to
pirate the better known name-brand. The best way for software
companies to combat software piracy is to lower prices. This is
happening, though still under the guise of 'limited time specials'
and 'competitive upgrades'.

-- A huge expansion of individual users is causing a breakdown on
the traditional free phone support for software. Users in a
corporate setting often have a built-in support network at work;
home and small business users tend to be alone. As a result, few
companies can afford the level of phone support that used to be
taken for granted, especially as prices drop. And can users expect
the same level of support when they buy Quattro Pro for $49 (US)
list, as when they pay $495 for 1-2-3?

Look for more and more software being designed with better built-
in help, while companies try to move users off the phones and onto
on-line services like CompuServe. On the other hand, we'll see
phone support turned into a pay-per-call option, that's expected
to turn a profit for the software companies.

All indications are that the SOHO market will continue to grow.
And it looks like both hardware and software companies are taking
it seriously, and this time around, may be getting it right.