Background

As early as 1965, some experimental projects, such as Jim Sutherland's ECHO IV, explored the possible utility of a computer in the home. In 1969, the Honeywell Kitchen Computer was marketed as a luxury gift item, and would have inaugurated the era of home computing, but none was sold.

Computers became affordable for the general public in the 1970s due to the mass production of the microprocessor starting in 1971. Early microcomputers such as the Altair 8800 had front-mounted switches and diagnostic lights (nicknamed "blinkenlights") to control and indicate internal system status, and were often sold in kit form to hobbyists. These kits would contain an empty printed circuit board which the buyer would fill with the integrated circuits, other individual electronic components, wires and connectors, and then hand-solder all the connections.

While two early home computers (Sinclair ZX80 and Acorn Atom) could be bought either in kit form or assembled, most home computers were only sold pre-assembled. They were enclosed in plastic or metal cases similar in appearance to typewriter or hi-fi equipment enclosures, which were more familiar and attractive to consumers than the industrial metal card-cage enclosures used by the Altair and similar computers. The keyboard - a feature lacking on the Altair - was usually built into the same case as the motherboard. Ports for plug-in peripheral devices such as a video display, cassette tape recorders, joysticks, and (later) disk drives were either built-in or available on expansion cards. Although the Apple II series had internal expansion slots, most other home computer models' expansion arrangements were through externally accessible 'expansion ports' that also served as a place to plug in cartridge-based games. Usually the manufacturer would sell peripheral devices designed to be compatible with their computers as extra cost accessories. Peripherals and software were not often interchangeable between different brands of home computer, or even between successive models of the same brand.

To save the cost of a dedicated monitor, the home computer would often connect through an RF modulator to the family TV set, which served as both video display and sound system.

By 1982, an estimated 621,000 home computers were in American households, at an average sales price of US$530 (equivalent to $1,404 in 2019). After the success of the Radio Shack TRS-80, the Commodore PET and the Apple II in 1977, almost every manufacturer of consumer electronics rushed to introduce a home computer. Large numbers of new machines of all types began to appear during the late 1970s and early 1980s. Mattel, Coleco, Texas Instruments and Timex, none of which had any prior connection to the computer industry, all had short-lived home computer lines in the early 1980s. Some home computers were more successful – the BBC Micro, Sinclair ZX Spectrum, Atari 800XL and Commodore 64 sold many units over several years and attracted third-party software development.

Almost universally, home computers had a BASIC interpreter combined with a line editor in permanent read-only memory which one could use to type in BASIC programs and execute them immediately or save them to tape or disk. In direct mode, the BASIC interpreter was also used as the user interface, and given tasks such as loading, saving, managing, and running files. One exception was the Jupiter Ace, which had a Forth interpreter instead of BASIC. A built-in programming language was seen as a requirement for any computer of the era, and was the main feature setting home computers apart from video game consoles.

Still, home computers competed in the same market as the consoles. A home computer was often seen as simply as a higher end purchase than a console, adding abilities and productivity potential to what would still be mainly a gaming device. A common marketing tactic was to show a computer system and console playing games side by side, then emphasizing the computer's greater ability by showing it running user-created programs, education software, word processing, spreadsheet and other applications while the game console showed a blank screen or continued playing the same repetitive game. Another capability home computers had that game consoles of the time lacked was the ability to access remote services over telephone lines by adding a serial port interface, a modem, and communication software. Though it could be costly, it permitted the computer user to access services like Compuserve and private or corporate bulletin board systems to post or read messages, or to download or upload software. Some enthusiasts with computers equipped with large storage capacity and a dedicated phone line operated bulletin boards of their own. This capability anticipated the internet by nearly twenty years.

Some game consoles offered "programming packs" consisting of a version of BASIC in a ROM cartridge. Atari's BASIC Programming for the Atari 2600 was one of these. For the ColecoVision console, Coleco even announced an expansion module which would convert it into a full-fledged computer system. The Magnavox Odyssey² game console had a built-in keyboard to support its C7420 Home Computer Module.

Books of type-in program listings like BASIC Computer Games were available dedicated for the BASICs of most models of computer with titles along the lines of 64 Amazing BASIC Games for the Commodore 64. While most of the programs in these books were short and simple games or demos, some titles such as Compute!'s SpeedScript series, contained productivity software that rivaled commercial packages. To avoid the tedious process of typing in a program listing from a book, these books would sometimes include a mail-in offer from the author to obtain the programs on disk or cassette for a few dollars. Before the Internet, and before most computer owners had a modem, books were a popular and low-cost means of software distribution—one that had the advantage of incorporating its own documentation. These books also served a role in familiarizing new computer owners with the concepts of programming; some titles added suggested modifications to the program listings for the user to carry out. Applying a patch to modify software to be compatible with one's system or writing a utility program to fit one's needs was a skill every advanced computer owner was expected to have.

During the peak years of the home computer market, scores of models were produced, usually as individual design projects with little or no thought given to compatibility between different manufacturers or even within product lines of the same manufacturer. Except for the Japanese MSX standard, the concept of a computer platform was still forming, with most companies considering rudimentary BASIC language and disk format compatibility sufficient to claim a model as "compatible". Things were different in the business world, where cost-conscious small business owners had been using CP/M running on Z80 based computers from Osborne, Kaypro, Morrow Designs and a host of other manufacturers. For many of these businesses, the development of the microcomputer made computing and business software affordable where they had not been before.

Introduced in August 1981, the IBM Personal Computer would eventually supplant CP/M as the standard platform used in business. This was largely due to the IBM name and the system's 16 bit open architecture, which expanded maximum memory tenfold, and also encouraged production of third-party clones. In the late 1970s, the 6502-based Apple II series had carved out a niche for itself in business, thanks to the industry's first killer app, VisiCalc, released in 1979. However the Apple II would quickly be displaced for office use by IBM PC compatibles running Lotus 1-2-3. Apple Computer's 1980 Apple III was underwhelming, and although the 1984 release of the Apple Macintosh introduced the modern GUI to the market, it wasn't common until IBM-compatible computers adopted it. Throughout the 1980s, businesses large and small adopted the PC platform, leading, by the end of the decade, to sub-US$1000 IBM PC XT-class white box machines, usually built in Asia and sold by US companies like PCs Limited.

In 1980 Wayne Green, the publisher of Kilobaud Microcomputing, recommended that companies avoid the term "home computer" in their advertising as "I feel is self-limiting for sales ... I prefer the term "microcomputers" since it doesn't limit the uses of the equipment in the imagination of the prospective customers". With the exception of Tandy, most computer companies – even those with a majority of sales to home users – agreed, avoiding the term "home computer" because of its association with the image of, as Compute! wrote, "a low-powered, low-end machine primarily suited for playing games". Apple consistently avoided stating that it was a home-computer company, and described the IIc as "a serious computer for the serious home user" despite competing against IBM's PCjr home computer. John Sculley denied that his company sold home computers; rather, he said, Apple sold "computers for use in the home". In 1990 the company reportedly refused to support joysticks on its low-cost Macintosh LC and IIsi computers to prevent customers from considering them as "game machines".

Although the Apple II and Atari computers are functionally similar, Atari's home-oriented marketing resulted in a game-heavy library with much less business software. By the late 1980s, many mass merchants sold video game consoles like the Nintendo Entertainment System, but no longer sold home computers.

Toward the end of the 1980s, clones also became popular with non-corporate customers. Inexpensive, highly compatible clones succeeded where the PCjr had failed. Replacing the hobbyists who had made up the majority of the home computer market were, as Compute! described them, "people who want to take work home from the office now and then, play a game now and then, learn more about computers, and help educate their children". By 1986 industry experts predicted an "MS-DOS Christmas", and the magazine stated that clones threatened Commodore, Atari, and Apple's domination of the home-computer market.

The declining cost of IBM compatibles on the one hand, and the greatly increased graphics, sound, and storage abilities of fourth generation video game consoles such as the Sega Genesis and Super Nintendo Entertainment System on the other, combined to cause the market segment for home computers to vanish by the early 1990s in the US. In Europe, the home computer remained a distinct presence for a few years more, with the low-end models of the 16-bit Amiga and Atari ST families being the dominant players, but by the mid-1990s even the European market had dwindled. The Dutch government even ran a program that allowed businesses to sell computers tax-free to its employees, often accompanied by home training programs. Naturally, these businesses chose to equip their employees with the same systems they themselves were using. Today a computer bought for home use anywhere will be very similar to those used in offices – made by the same manufacturers, with compatible peripherals, operating systems, and application software.