BUDGET SOFTWARE FINDS A NEW HOME

DAN ALAIMO

LAS VEGAS -- Budget computer software is a hit in supermarkets.

This low-priced software, which includes shareware and regular commercial programs, is gaining sales and space as chains broaden their entertainment product offerings, said manufacturers and suppliers polled by SN during the Winter Consumer Electronics Show here Jan. 6 to 9. In many cases the under-$10 software is merchandised within the video department, although the products also do well in high-traffic positions up front, they said.

"We have a lot of confidence in supermarkets as a venue for budget-priced entertainment software," said Ron Obsgarten, president of Value Software Corp., Deerfield Beach, Fla. Value Software will have a major program in 520 stores in the New York metropolitan area during February and another 120 stores in March.

Among the big chains mentioned by the suppliers as now selling low-priced software or shareware were Pathmark, Giant Eagle, Finast, King Soopers, Lucky's and Ralphs.

"In 1993, most of the major supermarket chains carried shareware," said Craig Nicholson, vice president of sales for Micro Star, Carlsbad, Calif. "I believe it is going to grow because it is an impulse item."

Shareware products are sold on a trial basis that requires consumers to pay an additional fee to the program authors after the initial purchase, he said. Most shareware programs are fully featured and there is no system for enforcing the fees -- it is essentially an honor system.

In some cases, the commercial software programs are the same as those offered in shareware assortments, only at a slightly higher price to cover the license fees paid by the suppliers.

It's only a matter of time before CD-ROM (compact disc-read only memory) programs join the other software in the budget-priced assortments, said the suppliers. CD-ROM is on five-inch disks with vast amounts of computer memory. But the hardware is still expensive.

"CD-ROM is definitely in our future," said Bruce Perlstein, sales manager of UAV Corp., Fort Mill, S.C. "We are looking at it very closely. I would imagine that within a year to 18 months, we will probably be in CD-ROM with a value-priced product."

Nicholson of Micro Star sees prices of CD-ROMs dropping to under $10 within 12 to 18 months. "That's not long. As more people get into the business and the competition gets stronger, the price will come down, and we'll see them in supermarkets," he said.

Here's what Winter CES exhibitors had to say about supermarkets and low-priced computer software:

Ron Obsgarten president Value Software Corp. Deerfield Beach, Fla.

We have a lot of confidence in supermarkets as a venue for budget-priced entertainment software. In February, we will do a lane-blocker promotion with 520 supermarkets in the metropolitan New York area. We are putting in 12 titles, a quantity of each. They will be in the stores throughout February, and in another 120 stores in March.

This is an item that people use regularly in their households. Personal computers are now in 30-40% of the households in the United States. What better place for a mother or a child to buy some computer software entertainment than in the supermarket. They already buy other forms of entertainment in the supermarkets -- they buy videos, they buy coloring books, they buy reading materials. This is another form of cheap entertainment, and no more expensive than those other items I just mentioned.

On CD-ROM, I have a major

dilemma. We know we need to release in CD-ROM, but we don't know why. There aren't enough machines out there, and we think it is a little too premature to become deeply involved with CD-ROM. But if we don't go into CD-ROM, we are going to be thought of as not on the cutting edge of the market. So we are going to roll out 8-12 titles and then we'll see what happens. Where it would fit in a supermarket, I really don't know.

Bruce Perlstein sales manager UAV Corp. Fort Mill, S.C.

We've taken a very aggressive approach with the supermarkets, the mass merchandisers and drug chains across the country. We are merchandising value-priced software on free-standing displays and with promotions on endcaps. We have it available in both 3.5- and 5.25-inch disks.

So far the software has been doing very well. We currently have 38 titles on line and will bring on another 15 titles within the next two months. In that mix are the hottest games, educational and home business applications. We are now in Pathmark, Eckerd's and 7-Eleven stores. We are taking the same philosophy with budget software that we do with video and audio. Where merchants have a lot of foot traffic coming in their front door and are looking for ways to pick up more dollars, this is another area that they can segue into. It is a natural extension of our entertainment position. We will offer video, audio, software, T-shirts and so forth all in the budget area and all with quality in mind.

Meanwhile, CD-ROM is definitely in our future. I would imagine that within a year to 18 months, we will probably be in CD-ROM with a value-priced product. Everything we do at UAV is value-priced and set up for the mass market.

Eric Kaufman national sales coordinator Daisy Software Poway, Calif.

For supermarkets, we see a lot of potential in in-and-out promotions and continuity programs.

Computer software in supermarkets eventually is going to be a very significant part of the business in the spectrum of entertainment. Productivity or business software won't be as big a part of the business for supermarkets, because those customers will continue to go to a specialty store or consultant to solve their problem.

But I see a lot of potential for supermarkets in game software and edutainment, which is educational and entertainment software, providing the price points

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are well under $20, or within the $20 range.

I don't think shareware is any less salable in supermarkets than commercial software. In the past, some shareware was not that great. But now shareware companies have become very intelligent about their marketing, and the line between commercial software and shareware is getting very blurry. In fact, several shareware companies have made the jump into the commercial area and are selling some of their product in both markets.

The key is just not selling software to the supermarket, but it is putting together an entire merchandising program for them. Most supermarket buyers, although many are savvy about computers, have never merchandised software before. You need an entire program -- somebody who can come in and do everything from A to Z.

Jay Schwimer national sales manager Diamond Entertainment Anaheim, Calif.

The potential of value-priced software in supermarkets is absolutely unlimited. The public is in supermarkets every day, and these are the same people that go to electronics and computer stores. I think it will be just as sought-after in the supermarket as any other place in the world.

The world is price-conscious now. Where that value is represented, the public will seek it out, the public will find it and the public will purchase it. I believe it is a fantastic item for supermarkets.

Craig Nicholson VP, sales Micro Star Carlsbad, Calif.

In 1993, most of the major supermarket chains carried shareware. It is going to grow because it is an impulse item. There are 100 million IBM-compatible computers out there. I've talked to some of the major distributors, and they are looking to go into CD-ROM. They are looking at more budget software even at a higher price point than the shareware's. A Colorado supermarket chain, King Soopers, has kiosks in their stores with computers, and shareware and budget software surrounding it, and they are going to CD-ROM immediately.

David Cosh VP, sales Pointware Corp. Newport Beach, Calif.

About a year ago, when we started researching the software market, we thought computer stores and consumer electronics stores would be our main distribution channels. But, by the time we developed the product and got it out, we realized that the supermarket arena had caught up in the public's eye as the place for our product to be merchandised. As far as we know, ours is the first value-priced software line for Macintosh. The people who own Macs are in the supermarkets, and this is the right time for a $14.95 suggested retail product.

It's affordable.

Jeff Weaverling marketing, sales Software USA Carnegie, Pa.

The shareware idea is a good one for supermarkets. We think there is tremendous potential. One of the reasons is, it is priced low enough that it is an impulse item. Somebody who is not looking for computer software is going to walk by one of these eye-catching displays, and if they see something they like, chances are they are going to buy it because it's a $5 or $6 item. Anyplace you have a lot of traffic flow, there's the potential there for big volume.

There is a good future for CD-ROM. I don't know if it's here quite yet. They're still expensive and there are still some kinks. CD-ROM is going to be a good deal to go with, although now we're having a great time with the 3.5- and 5.25-inch floppies.