Commodore Up To Amiga
story of Commodore Business Machines must be divided into two
distinct parts_the Tramiel
era and the post-Tramiel
era. It was Jack Tramiel who created
Commodore and made it the leader in home computers, and it was his
exit that changed the company culture and made it into what it has
become today_a bad company with a great
understand Jack Tramiel you had to
remember where he come from and the road
he traveled to get to the start of the personal computer revolution.
A Jewish refugee who survived six years in Hitler's death camps,
Jack found his way across the
1955, Jack saw opportunities in
characteristic fervor Jack pushed Commodore toward recovery, and the
company gave him back 8% of the stock.
other chips, MOS Technology made the 6502 microprocessor, a near
clone of Motorola's M6800, but with a completely different
instruction set. In an effort to get the 6502 adopted by computer
engineers, MOS distributed them at very low prices. For this reason,
Steve Wozniak designed the Apple computer using a 6502 chip, a
decision that was to make this one of the most popular 8-byte CPU's.
Two other companies were later licensed to make the chip, to meet
the demand from Apple,
MOS Technology, Chuck Peddle, the chip's designer, built a
single-board computer called the KIM-1. The KIM contained many
advanced features and allowed many users to gain a low cost
introduction to microcomputing. However,
after acquiring MOS Technology Jack gave Peddle six months to design
and build a prototype of a real personal computer. The Commodore
team put together the first self-contained personal computer which
they called the "Personal Electronic Transactior,"
or PET. The PET was announced in 1976 and first shown at the
Consumer Electronics Show in June of 1977. It came with either
a 4K or 8K memory, and a built-in green video monitor. The
keyboard was built like a Commodore calculator instead of a
typewriter keyboard. Programs and data were saved and loaded from a
built-in cassette recorder. The price for all this started at a mere
$795, a price decision that Jack was later to regret. However, there
would be no PETs available to dealers or
the public for six months. Commodore announced that if you wanted to
order one, you had to pay the full price now and wait for delivery
some time in the future.
was even harder to become a dealer. Dealers had to have a store and
a service facility and were also required to post at least $2,500
with their applications, and there was no promise when they would
get delivery. Moreover, Commodore played favorites and channeled
product to dealers who were on the favored list. In spite of this,
the public demand for PETs was huge.
Jack realized that he had a real winner, he doubled the price and
introduced the PET into the
back in the
overseas success lead to the development of a vastly enhanced
computer called the CBM 8032. This business computer had a green
monitor, a full business keyboard, and 32K of memory. Larger disk
drives were also made available for business use.
was little advertising, almost no software development (except for
programs adopted from European versions) and even fewer dealers.
Most people in the
place that Commodore placed most of its
as a result of its overseas operations and the MOS Technology chip
business, Commodore had grown into a prosperous company and was
actually the third largest personal computer company after Apple and
1978, MOS Technology developed a chip that allowed a computer to use
a color monitor or color TV instead of the monochrome display. It
was called The Video Interface Chip, or VIC, and it could only
display 22 columns in color. The VIC chip had not sold well because
the price and availability of color monitors or TVs
. Now, two years later, Apple and Atari had color computers,
and Commodore had none. Chuck Peddle was lobbying for the
development of Color PET and CBM computers. Then, at a meeting
was an unheard-of price, but Jack justified it by saying, "The
Japanese are coming! So we will
be the Japanese! We have to compete with ourselves." Tramiel
told his people, 'We have to be
like the Japanese. We constantly have to come up with something
new, something better. We have to believe that we are the
competition. If we do this, then no one can get ahead of us."
knew that the way to beat the Japanese at their own game was to
produce a product at a price they could not compete with. The
Japanese tactic was to watch carefully while an electronic device
was introduced, first at a high price and later at a lower price as
the market grew. Once the ground was broken by others, and the
quantities being sold were sufficient to support mass production, a
Japanese company could then enter the market with an excellent
product at much lower price.
strategy was to introduce a new product at the lowest price possible
right from the start. He could then capture the market before anyone
else could get in and compete. Once the competition matched his low
price, he could cut prices even lower since he would have already
achieved large-scale mass production.
little color computer evolved in secret at MOS Technology,
color computer also could display the PET graphics set and even a
reverse set of graphics characters. The video screen was only 22
characters wide, but the characters were nice and large. Naturally,
there was no CRT with the little computer, but by then most users
had a color set at home, and a video switch was supplied to connect
into the antenna terminals. The code name of the small computer was
Vixen, but there was much discussion on a final name before settling
in January 1981, at the Winter Consumer Electronics Show (CES) in
VIC-20 introduced thousands of people to computers, because it was
inexpensive and was sold in the mass market stores. It also had a
full line of peripherals. Many of the on-line services such as GEnie
and Compuserve owe their growth to the
low-cost VIC-Modem. This unity allowed large numbers of people to
get on line who might have never tried telecommunications. The price
and capability of the VIC-20 was a factor that destroyed the market
for video games such as the Atari 2600.
other very important thing about the VIC-20 was that its expansion
gave birth to the most popular computer ever built_the
Commodore 64 had 16 colors in place of the eight on the VIC-20. It
had a 40-column screen rather than 22. It had a music synthesizer
chip (SID chip) and easy-to-use graphics called Sprites, and it
could use all the VIC-20 peripherals. Most of all, it had 64K of RAM
at a time when Apple had a maximum of 48K. It went on sale to
computer store dealers for $595, and a few months later was
moved to K-mart for $400.
home computer price war really started between Texas Instruments and
Commodore in the summer of 1982, with Texas Instruments issuing a
$100 rebate on the TI 99/4A, bringing the price down to $200.
Commodore dropped the VIC-20 price to dealers by $40, and let them
sell it for any price they wanted. In September 1982, the Commodore
64 hit the computer stores at $595, and then Atari joined the fray
with a $55 rebate on the Atari 400 and dropped the price on the
Atari 800 to under $500. Commodore moved the C-64 from the computer
stores to mass merchants such as K-mart for $400.
dealers roared with pain at seeing one of their most profitable
incomes going out the door. To a computer store, the sale of a C-64
was only the start on a much more expensive computer system. They
made more money on the peripherals and software than on the
computer. The VIC-20 price was dropped to less than $130, and
merchants started selling them below cost whenever a complete system
February 1983, Texas Instruments again cut the dealer's price of a
TI 99/4A by $48 making the retail price $150. Commodore responded by
cutting the prices on all peripherals and reducing the price of the
VIC-20 to below $100!
Commodore came up with a massive "trade-in" offer. They
would give a $100 trade-in on any video game, or computer, against
the purchase of a C-64! Out came all the old Atari 2600s, Intellivisions,
VIC-20s, Sinclairs, and Timexes.
People bought Timex Computers on sale for $50 and turned them in on
C-64's for $100! The retail price with a "trade-in" was
had just introduced its new 1200XL and found they had to rebate $100
right from the start. However, at the Spring CES Commodore really
lowered the boom. They slashed the C-64 dealer's price to between
$200 and $250 and cut the price of all their software, including new
releases, by 50%.
blood was flowing all over the home computer industry, but at Texas
Instruments it was the worst. Commodore's costs were so low that
even at the depressed prices they actually made money on their
computers. However, Texas Instruments was losing $100 million in a
quarter, and things were not getting better. Texas Instruments'
president resigned, and the company quit the home computer business
after taking enormous losses.
were other fallouts of the price wars, and Atari represented one of
the worst to its parent company, Warner Communications. This would
have an unforeseen effect on Commodore.
the summer of 1983, Commodore announced that it had become the first
personal computer company to hit one billion dollars in sales. Then,
upon this announcement came the totally unexpected resignation of
Jack Tramiel. The industry was shocked;
there had been little indication that Jack was that unhappy with
conditions at Commodore.
computer press was full of rumors about the cause. It was said that
Jack wanted his sons to come into the business in top executive
positions, and that Irving Gould objected. It was claimed that Gould
wanted to make Marshal Smith President and that Smith declined as
long as Jack was in the company. The actual reasons have never been
revealed, but Jack and his wife left for a tour around the world,
and upon his return he formed a company with his sons. Shortly
thereafter, they bought Atari from Warner Communications.
has had a succession of CEOs and executives and is said to have a
revolving door in its executive suite. The C-64, in various versions
and the upgraded C-128, have lasted for
more than ten years. Their numbers alone make them the most popular
computer ever built. Commodore went on to feature the Amiga, a
16-bit machine developed by the Lorrane