Egghead Software was a US retail store that sold computer software from 1984 to 2001. It declared bankruptcy 24 years ago this week, on August 18, 2001, after an attempted transition to selling online failed.
Egghead Software’s beginnings
Egghead Software started in Bellevue, Washington in 1984 and moved eastward. Its founder, Victor D. Alhadeff, had a background in oil and gas, but when his old company went out of business in 1983, he needed a new idea. That came from shopping for software. At the store he visited, the staff spoke in jargon, so his idea was to open a consumer-friendly retail software store. With $50,000 of his own money and $1 million from investors, including Microsoft co-founder Paul Allen, the stores carried as many as 1,300 titles.
Its growth was fairly rapid, because they sold software and accessories at what could sometimes be a very steep discount. For example, when Microsoft released MS-DOS version 5, it retailed for $100. Egghead sold it for $40. But a typical discount was closer to 40 percent.
Egghead Software’s IPO and rapid expansion
In 1988, Egghead held a successful IPO, raising $24 million. At its peak, Egghead had around 200 stores throughout the United States. By 1980s standards, that was a pretty large chain, but if you didn’t live in a large metro area, you may have never seen one.
My introduction to them was sometime around 1988, when I received a catalog from them out of the blue. It included, among other things, promotions on all the latest Sierra games. That catalog may have been where I found out the Sierra game Leisure Suit Larry existed. It was certainly the first time I saw a screenshot.
I still don’t know why they sent me that catalog in the mail, however. My family had a computer, but we didn’t have a PC. So even though they had a St. Louis area location that was in the same plaza as some other things we frequented, I don’t think I went in there more than once or twice. Babbage’s or Software Etc. were my stores of choice, even if they didn’t discount as heavily as Egghead did. The other chains carried Commodore and Amiga software, and Egghead didn’t. I can see why Egghead concentrated on the PC market, but I wasn’t one of those 60 million who bought a PC in the ’80s.
Egghead’s profits were uneven, especially due to its efforts to expand and saturate the market before others could. This meant occasionally closing a couple dozen stores, only to open new ones after profitability returned.
The problem for Egghead Software
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