Origin of dealer networks

Question

Roughly speaking, the two main ways to sell computers are, and particularly were in the old days,

1. Three digit price tag sold to individuals => mass market, department stores and suchlike.

2. Four digit price tag sold to businesses => dealers, who are specialists in computers, provide advice, support et cetera.

Apple and Commodore both had extensive dealer networks in the late seventies. (Commodore ditched theirs when they switched to home computers, and Apple a few decades later went into retail themselves, but that's another story.) So basically starting from 1977, they acquired networks of thousands of dealers very quickly.

Where did the dealers come from? They can't already have been specialists in selling personal computers, because those didn't exist before. Were they in business selling something else previously or what?

Answer 1

You'd be surprised. There were specialist microcomputer shops in the late 1970s. I'm talking now about the UK and the shops that I used to visit.

These were either individual shops or small chains, like The Byte Shop. These would sell imported boards from US companies like NorthStar and the many British and European board makers.

Before microcomputers became popular, there had always been electronics, ham radio and hifi shops. All of these dealt with high technology, and for them it was a natural opportunity to expand and branch out - jump on the new microcomputing bandwagon. Sometimes they just expanded their range to include computing, sometimes they opened another branch to specialise in computing.

The electronics shops, like Watford Electronics or Maplin, already sold TTL chips and breadboards for people to knock up little gismos as a hobby. They just started selling CPUs, RAM and so on as an expansion.

The ham radio (and in the '70s CB radio) shops started selling little systems for talking to Compuserve, Bix, Cix etc.

Growth was organic but fast.

Answer 2

I can't speak to the origin of all dealers, but the one I work for often repeats it's origin story into new recruits. It's "public" knowledge, but may have been self censored, so please take it with a pinch of salt.

The founder apparently noticed that computer memory was decreasing by about 5% per month, and noted that he and his friends would mostly buy memory from trade magazines. He also realised that there was a one-month gap between phoning up to place an advert in the magazine and the advert appearing in press. He took a gamble, and placed an advert for memory at 4% less than current market prices.

His gamble paid off, and his advert was the cheapest (and thus most popular) advert for memory in the magazine. He had to get several credit cards to pay for the stock from the manufacturer, but it was all worth it. His customers all got their memory and he kept his profit. Rinse and repeat a few times, and he had enough to start doing this more widely.

As more people were calling he was able to offer more products, take on staff, get credit accounts with distributors and manufacturers, and eventually offer a full service to consumers and businesses.

The company is now far more business focused than consumer, but is one of the largest in the market.

Some of our competitors seem to have spun out from businesses that simply bought and used so many computers that selling a few must have made sense. The most obvious of these is BT Business Direct (an offshoot of our former state-run (monopoly) telephone provider). As I say though, I'm mostly assuming how they started out selling computers.

Answer 3

It's pretty simple, actually. Go where the money is. During that time frame, retail outlets like Sears were pitched with just about anything that can be sold legally. Just look at an old Sears Wish Book to get an idea of what they sold.

So computers companies would logically target large retailers like Sears.

Another scenario was Radio Shack (Tandy). They had thousands of retail stores across the US so it made sense to them to not only sell a computer in their established stores, but to also create a computer branded as a Tandy.

Finally, even back in the early days of computers, there were many shops that targeted business/commercial accounts. Even in a small town like where I'm from, I remember companies like Northshore Computers that sold to both the consumer and businesses.