Calculated Warfare

Since they were first introduced 14 months ago as a kind of executive toy, pocket calculators have amazed their own inventors by appealing to a wide range of consumers, including many whose most pressing known mathematical need is the totaling of bridge scores. Originally marketed mostly by office-equipment firms, the electronic gadgets are now found in countless department stores, photo marts, gift shops and other mass retail outlets. No fewer than 50 U.S. firms have started making mini-calculators, which perform the four standard mathematical functions instantaneously, yet are small enough to fit inside a man's suitcoat pocket. But lately manufacturers and retailers trying to cash in on the calculator craze have found themselves drawn into a price war that may leave some of the industry's pioneers in the minus column.

The calculators are yet another consumer hand-me-down from the aerospace programs of the 1960s. The machine's brain is a tiny silicone chip coated with layers of metal oxide, and was originally developed for use in the guidance systems of missiles and spacecraft. The chip crams the calculating power of several thousand transistors into an amazingly tiny package, with the readout of problems appearing on a digital lighting panel. Prices range from $60 to $425, depending on the number of digits a model can handle and its extra features. By far the most important of these is the presence of a "floating" decimal point that automatically appears in an answer at the proper location. Machines that carry such a device usually cost $90 and up.

The portable, battery-operated calculators have endless and obvious applications on the job. A Miami fruit grower carries his around to estimate the yields ripening in his apple and orange groves; a Maryland cartographer bought one to compute distance ratios on his maps; a Florida-based jet pilot keeps his in the cockpit to reckon flight times. But the calculators became a sales sizzler only when general consumers, once again proving their fascination with small electronic gadgetry, decided that they would also make handy checkbook balancers, income tax figurers and math-course timesavers. About half a million mini-calculators have been sold in the past year, and the total is expected to grow to 3,000,000 units in 1973.

Thin Profits. In a rush to tap the vast consumer market, manufacturers and retailers have slashed prices by as much as $100 per unit. Further price cuts are expected after the Christmas shopping season; some retailers estimate that by next summer the cheaper models will sell for as little as $35 to $40. A price cut of that size could clobber the small companies that brought out the first pocket calculators, since most are mere assemblers and must buy parts from a major supplier.

Two such big suppliers, Texas Instruments and North American Rockwell, recently introduced their own mini-calculator models. Other giants already in the field include Litton Industries and Hewlett-Packard. As a result of such gathering competition, the stock prices of some of the smaller pioneers, notably Bowmar Instrument and Eldorado Electrodata Corp., have dropped, even though their current profits are actually climbing.

Additional competition is coming from Japan. More than two dozen Japanese firms, including Canon, Sony, Hitachi and Panasonic, have started producing and exporting the small calculators. Following the strategy that they used so successfully with transistor radios, the Japanese are trying to corner the market by lowering prices and accepting razor-thin profits on high volume. But for once, American producers seem able to stand on their own feet. U.S.-produced calculators are made on almost totally automated assembly lines, thus eliminating Japan's advantage of cheaper labor.

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