History of Software City: 1980-2000

1977 and the emergence of the "Trinity" plus one

By 1976 there were several firms racing to introduce the first truly successful commercial personal computers. Three machines, the Apple II, PET 2001 and TRS-80 were all released in 1977, eventually selling millions of machines. Byte magazine later referred to their launch as the "1977 Trinity."

Commodore

Chuck Peddle designed the Commodore PET (short for Personal Electronic Transactor) around his MOS 6502 processor. It was essentially a single-board computer with a new display chip (the MOS 6545) driving a small built-in monochrome monitor with 40×25 character graphics. The processor card, keyboard, monitor and cassette drive were all mounted in a single metal case. In 1982, Byte referred to the PET design as "the world's first personal computer".

The PET shipped in two models; the 2001-4 with 4 kB of RAM, or the 2001-8 with 8 kB. The machine also included a built-in Datassette for data storage located on the front of the case, which left little room for the keyboard. The 2001 was announced in June 1977 and the first 100 units were shipped in mid October 1977.  However they remained back-ordered for months, and to ease deliveries, they eventually canceled the 4 kB version early the next year.

Although the machine was fairly successful, there were frequent complaints about the tiny calculator-like keyboard, often referred to as a "Chiclet keyboard" due to the keys' resemblance to the popular gum candy. This was addressed in the upgraded versions of the 2001, which put the cassette outside the case, and included a much larger keyboard with a full stroke non-click motion. Internally a newer and simpler motherboard was used, along with an upgrade in memory to 8, 16, or 32 kB.

The PET was the least successful of the 1977 Trinity machines, with under 1 million sales.

Apple

Steve Wozniak (known as "Woz"), a regular visitor to Homebrew Computer Club meetings, designed the single-board Apple I computer and first demonstrated it there. With specifications in hand and an order for 100 machines at $500.00 US Dollars each from the Byte Shop, Woz and his friend Steve Jobs founded Apple Computer.

About 200 of the machines sold before the company announced the Apple II as a complete computer. It had color graphics, a full QWERTY keyboard, and internal slots for expansion, which were mounted in a high quality streamlined plastic case. The monitor and I/O devices were sold separately. The original Apple II operating system was only the built-in BASIC interpreter contained in ROM. Apple DOS was added to support the diskette drive; the last version was "Apple DOS 3.3".

Its higher price and lack of floating point BASIC, along with a lack of retail distribution sites, caused it to lag in sales behind the other Trinity machines until 1979, when it surpassed the PET. It was again pushed into 4th place when Atari introduced its popular Atari 8-bit systems.

In spite of slow sales, the Apple II's lifetime was much greater than other machines, and it ended up being the best seller among them. More than 4 million Apple IIs were shipped by the end of its production in 1993.

^Tandy

Tandy Corporation introduced the TRS-80, retroactively known as the Model 1 as improved models were introduced. The Model 1 combined the motherboard and keyboard into one unit with a separate monitor and power supply. Although the PET and the Apple II offered certain features that were greatly advanced in comparison, Tandy's 3000+ Radio Shack storefronts ensured that it would have widespread distribution that neither Apple nor Commodore could touch.

The Model 1 used a Zilog Z80 processor clocked at 1.77 MHz (the later models were shipped with a Z80A processor). The basic model originally shipped with 4 kB of RAM, and later 16 kB. Its other strong features were its full stroke QWERTY keyboard, small size, well written Floating BASIC and inclusion of a monitor and tape deck all for $599 US Dollars, a savings of $600 over the Apple II. Its major drawback was the massive RF interference it caused in surrounding electronics, which caused it to run afoul of newer FCC regulations - a problem solved only by the Model I's retirement in favor of the TRS-80 Model III.

About 1.5 million of the TRS-80 line were sold before their cancellation in 1985.                                                    

Atari

Atari was a well-known brand in the late 1970s, both due to their hit arcade games like PONG, as well as the hugely successful Atari VCS game console. Realizing that the VCS would have a limited lifetime in the market before a technically advanced competitor came along, Atari decided they would be that competitor, and started work on a new console design that was much more advanced.

While these designs were being developed, the Trinity machines hit the market with considerable fanfare. Atari's management decided to change their work to a home computer system instead. Their knowledge of the home market through the VCS resulted in machines that were almost indestructible and just as easy to use as a games machine - simply plug in a cartridge and go. The new machines were first introduced as the 400 and 800 in 1978, but production problems meant widespread sales did not start until the next year.

At the time, the machines offered what was then much higher performance than contemporary designs and a number of graphics and sound features that no other microcomputer could match. They became very popular as a result, quickly eclipsing the Trinity machines in sales. In spite of a promising start with about 600,000 sold by 1981, the looming price war left Atari in a bad position. They were unable to compete effectively with Commodore, and only about 2 million machines were produced by the end of their production run.

Realizing that the PET could not easily compete with color machines like the Apple II and Atari, Commodore introduced the VIC-20 to address the home market. Limitations due to tiny 4 kB memory and its relatively limited display in comparison to those machines was offset by a low and ever falling price. Millions of VIC-20s were sold.

Establishment of America's #1 Software Dealer

Near the end of 1979, New Jersey attorney Ray Jacobs bought an Atari 800 computer to become familiar with the technology because many of his clients were starting to add computer systems to their businesses. After  he went to a few computer shows in the area, he realized that computer owners were eager to find software programs that were available for their machines. The several computer store chains then existing, such as Computerland, kept their limited software in glass showcases and the salespeople seemed to enjoy intimidating their novice customers. 

Jacobs decided to open a retail store to sell software in a friendly environment that would make new computer owners feel comfortable. He enlisted his brother, Mitch, who enthusiastically embraced the concept, and they formed a corporation to open the store. The corporation, fortuitously named "America's #1 Software Dealer," filed a trade name certificate to operate as Software City. The trademark "Software City" was later registered in the United States Patent and Trademark office and in several other countries.

First store

The Jacobs brothers found a small former motorcycle store in River Edge, NJ that they cleaned up with wood paneling on the walls and carpeting over the pitted floor, and furnished with used greeting card racks to hold the software.  They operated on weekends during November and December 1980 until January, 1981, when their newly hired store manager became available for work.  The display of software in open racks was unique at the time; customers could actually handle the packages instead of looking at them in locked glass showcases.  The store personnel came from retail sales backgrounds rather than with a high level of technical knowledge, relating well with customers who were still trying to discover what microcomputers were all about.

In the beginning, the programs sold by Software City were all on cassette tapes and available for the TRS-80, Commodore PET, Apple and Atari, with each type of computer software displayed on its own racks.  Many of the programs were developed by hobbyists, some of whom could only conduct business when they got home from school.  There were no wholesale distributors, so purchases were made direct from the "manufacturers."  Most of the packaging was primitive, with small plastic bags being the preferred design.

In addition to the open display of software, another feature unique at the time was the sale of computer programs at a discount.  Discounts ranged from 5% to 20%, depending on the total amount of the purchases made at one time.

The store quickly became a Saturday clubhouse for new computer owners who gathered there to compare notes and dispense advise to even newer owners.  Salespeople frequently referred customers' questions to other customers who were hanging around.

On August 12, 1981 the IBM-PC was released, using the then brand new Intel 8088 processor, which allowed up to 1 megabyte of RAM while still maintaining an 8-bit-wide data bus to memory and peripherals. This allowed easy use of the large family of 8-bit-compatible support chips. The reputation of IBM for business computing, and the large number of compatible computers and third-party plug-compatible peripherals, allowed the PC and IBM PC compatibles to make substantial sales in business applications. 

Software City promptly added IBM software to its inventory of programs displayed in the store.

Company expansion

In view of the success of the first store, in 1982, a second store was opened in Pine Brook, New Jersey, and a third in Armonk, New York.  These additional stores also experienced active customer interest and sales similar to the original store.  As a result, the Jacobs brothers realized that their formula could be replicated through franchising.

Shep Altshuler, a franchising consultant, was hired to develop a franchising program. At about the same time, several other software retail stores were starting franchise programs that required large investments and the establishment of high end retail space.  In contrast, The Software City franchise fee was only $5,000 and franchisees were encouraged to start with used greeting card racks in low overhead locations.

The first franchised location opened in Montvale, New Jersey in 1983.  Other locations followed quickly.  When a national magazine wrote about the new franchised software store opportunities, it referred to Software City as "America's #1 Software Dealer."  In 1984, 34 new locations opened.  Software City stores opened in Canada, England and Puerto Rico.  By the end of the 1980s, Software City had 99 franchised locations.  The three company stores (the original River Edge store had relocated to Teaneck, New Jersey)  were sold to franchisees and the franchise support operations were run from corporate headquarters in Teaneck, New Jersey.

Many home computers initially used the then-ubiquitous compact audio cassettes as a storage mechanism. Most cassette implementations were notoriously slow and unreliable, but floppy disk drives as found on more costly business-oriented microcomputers were expensive and used disks eight inches wide at the beginning of the home computer era. Costs declined toward the end of the 1980s as sales of microcomputers increased and mass production of 5.25" drive mechanisms enabled economy of scale. The 5.25" floppy disk drives would remain the standard throughout the 8-bit era. Though external 3.5" drives were made available for most systems toward the latter part of the decade, most software for 8-bit home computers remained sold on 5.25" disks; 3.5" drives were used for data storage

As more business software became available, the Software City stores started to cater to that market.  Some franchisees aggressively solicited large companies and governmental agencies with the lure of volume discounts, resulting in narrower profit margins.  It became evident that the original arrangement of five (5%) percent royalty payments by franchisees was no longer sustainable.  The company introduced a sliding scale of reduced royalty percentages due from franchisees as their sales volumes increased.

Software City collected funds from the franchisees for advertising.  Using these funds, radio and TV commercials were produced, advertising materials were made available for local advertising, and ads were placed in national media.  However, many franchisees felt they could do their own local advertising more effectively. As a result, near the end of the 1980s, the national advertising fund was discontinued.

Atari and Commodore were the only two major players left in the home computer market by 1984, and both were on shaky financial ground. Moreover, the systems' buyers found the actual usefulness of computers in homes to be somewhat limited. Aside from playing games, there were few uses that could support a market.

Company contraction

In the 1990s, the marketplace for software began to change.  While most of its competitors in the franchised software-only retail business had long since gone out of business for various reasons, the Software City model of low overhead operations appeared destined for continued success.  However, the stores could not survive as software retail outlets in light of changes that developed in the marketing and distribution of computer programs. 

Once a computer owner had a word processing program or spreadsheet, another one from a different company was not needed.  Manufacturers recognized this and came out with periodic improvements in their programs, taking advantage of registration card information to solicit Software City's customers in order to sell them upgrades of the programs they had purchased.  As the Internet developed, that became another convenient vehicle for Software City's customers to purchase their programs.

Many of the stores expanded their businesses to include computer sales, networking installations and repairs.  But these additional services were not enough to enable many stores to continue in business, and, one by one, they started to close.  With the loss of royalty revenues, Software City discontinued its support services and licensed its name to the surviving stores.  Eventually, the company made the decision to close its corporate office and sold the rights to the name to the few surviving stores for use in their market areas.  The trademark rights for Canada were sold to a Canadian online reseller.

Today, Software City continues as an online seller of computer products and services, primarily through links to other companies whose advertisements appear on the website.