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Tracing the History of the Computer - Commodore International

 

Commodore is the commonly used name for Commodore International, a West Chester, Pennsylvania based electronics company who was a vital player in the personal computer field. Commodore developed and marketed the world's best-selling machine, the Commodore 64. The company declared bankruptcy in 1994, but there have since been several attempts to revive its Amiga systems.

Foundation and early years

The company that would become Commodore International was started in Toronto by Jack Tramiel in 1954. He had already run a small business fixing typewriters for a few years while living in New York and driving a cab, but managed to sign a deal with a Czechoslovakian company to manufacture their designs in Canada and moved to Toronto to start production. By the late 1950s a wave of Japanese machines forced most North American typewriter companies out of business, but Tramiel instead turned to adding machines.

In 1962 the company was formally incorporated as Commodore Business Machines (CBM). In the late 1960s history repeated itself again when Japanese firms started producing adding machines. The company's main investor and chairman, Irving Gould, suggested that Tramiel travel to Japan to understand how they could compete. Instead he returned with a new idea, to produce electronic calculators, which were just coming on the market.

Commodore soon had a profitable calculator line and was one of the more common brands in the early 1970s, producing both ordinary as well as scientific/programmable calculators. However in 1975 Texas Instruments, the main supplier of calculator parts, decided to enter the market directly and put out a line of machines priced at less than what it charged Commodore for the parts. Commodore had to be rescued once again by an infusion of cash from Gould, which Tramiel used beginning in 1976 to purchase several second-source chip suppliers, including MOS Technology, Inc., in order to guarantee supply. He agreed to buy MOS, who were having troubles of its own, only on the condition that its chip designer Chuck Peddle join Commodore directly as head of engineering.

Once Chuck Peddle had taken over engineering at Commodore, he convinced Jack Tramiel that calculators were already a dead end and that they should turn their attention to home computers. Peddle packaged his existing KIM-1 single-board computer design in a metal case, along with a full-travel QWERTY keyboard, monochrome monitor, and tape recorder for program and data storage, to produce the Commodore PET. From its 1977 debut, Commodore would be a computer company.

     

Commodore had been reorganized the year before into Commodore International, Ltd., moving its financial headquarters to the Bahamas and its operational headquarters to West Chester, Pennsylvania, close to the MOS Technology site. The operational headquarters, where research and development of new products were taking place, retained the name Commodore Business Machines, Inc.

The PET computer line was used primarily in schools, due to its tough all-metal construction (some models were labeled "Teacher's PET"), but did not compete well in the home setting where graphics and sound were important. This was addressed with the introduction of the VIC-20 in 1981, which was introduced at a cost of $299 and sold in retail stores. Commodore took out aggressive ads featuring William Shatner asking consumers "Why buy just a video game?" The strategy worked and the VIC-20 became the first computer to ship more than one million units. A total of 2.5 million units were sold over the machine's lifetime.

CBM introduced the Commodore 64 in 1982 as the sequel to the VIC-20. Thanks to a well-integrated series of chips designed by MOS, the C64 possessed remarkably-capable sound and graphics for its time and is often credited with starting the computer demo scene. Its $595 price was high compared to the VIC-20, but it was still much less expensive than any other 64K computer on the market. Early C64 ads boasted "You can't buy a better computer at twice the price."

In 1983 Tramiel decided to focus on market share and cut the price of the VIC-20 and C64 dramatically. TI responded by cutting prices on its TI-99/4A, which had been introduced in 1981. Soon there was an all-out price war involving Commodore, TI, Atari and practically every vendor other than Apple Computer. This price war contributed to the video game crash of 1983. By the end of this conflict, Commodore had shipped somewhere around 22 million C64s - making the C64 the best selling computer of all time - and in the process drove TI out of the home-computer market, almost destroyed Atari, bankrupted most smaller companies, and wiped out its own savings. Tramiel's motto, "Business is war," took its toll.

Tramiel quits; The Amiga vs ST battle

Commodore's board of directors was as trapped as anyone else by the price spiral and decided it wanted out. A power struggle started inside the company, and in January 1984, Tramiel quit. He founded a new company, Tramiel Technologies, and hired away a number of Commodore engineers to begin work on a next-generation computer design. Then, in July 1984 he bought the consumer side of Atari Inc. from Warner Communications, providing him with a manufacturing base and sales network to help him strike back at his rivals at Commodore.

Now it was up to the remaining Commodore management to salvage the company and plan for the future. It did so by buying a small company called Amiga Corporation. The company was better known for its forays into the video game market, designing controllers for game consoles as well as making games for the Atari 2600. But as it turned out, its video game business was more of a smoke screen to fund the company's true purpose, designing a groundbreaking new computer. Commodore brought this new 16-bit computer design (known initially as the Lorraine, later dubbed the Amiga 1000) to market in the fall of 1985 for US $1295.

But Tramiel had beaten Commodore to the punch. He had already released the Atari ST earlier in 1985 for about $800. However, this was not the design Atari had intended to launch at the time. Prior to Tramiel's purchase of the company, Atari had signed a licensing deal with Amiga that granted them use of the Lorraine's custom chips, the very chips that made Amiga's computer so powerful. Tramiel wanted to use these chips in his forthcoming ST computer, but true to form he wanted those chips at a bargain-basement price. Knowing Amiga was strapped for cash as a result of the crash of the video game market, he held back a scheduled payment Atari was due to pay Amiga in an effort to force it to renegotiate the contract with terms more favorable to Atari. This strategy backfired when Commodore bought Amiga and canceled the contract, citing Atari's late payment as the reason. In the end, Atari was forced to use off-the-shelf components to complete the ST's design. (A lawsuit over the Amiga license dragged on for years, only to be abruptly settled. Terms were not disclosed, but many speculate the settlement involved Atari obtaining Amiga development systems for use with the Lynx handheld game system.)

Throughout the life of the ST and Amiga platforms, a ferocious Atari-Commodore rivalry raged. While this rivalry was in many ways a holdover from the days when the Commodore 64 had first challenged the Atari 800 (among others) in a series of scathing television commercials, the events leading to the launch of the ST and Amiga only served to further alienate fans of each computer, who fought vitriolic holy wars on the question of which platform was superior. This was reflected in roughly-similar sales numbers for the two platforms until the release of the Amiga 500 in 1987, which took over the market from the ST. Ultimately, the Amiga outsold the ST about 1.5 to 1 in spite of being later to market. Neither platform, however, captured a significant share of the world computer market.

The beginning of the end

In the 1970s and early 80s, the computer press had often come to Commodore--one of the industry's leading players--and its colorful management for information. The VIC-20 and C64, although aggressively marketed, arguably were successful more because of their price than because of their marketing. After Tramiel's departure, Commodore executives shied away from mass advertising and other marketing ploys, fearful of repeating past mistakes. Commodore also retreated from its earlier strategy of selling its computers at discount houses and toy stores, and now favored authorized dealers.

However, by the late 1980s, the personal computer market had become dominated by the IBM PC and Apple Macintosh platforms. By comparison, Commodore's marketing efforts for the Amiga proved ineffective and even seemed half-hearted (one common joke was "If CBM got the contract to advertise Kentucky Fried Chicken, they'd call it 'Warm Dead Bird'"). The company also concentrated on consumer products that would not see demand for another couple of years - including a digital TV system called CDTV, and later a 32-bit CD-ROM-based game console: the CD32.

Once the clear technology leader, the Amiga rapidly lost ground as the personal computer market became increasingly dominated by the IBM PC. When introduced in 1985, the Amiga was competing favorably against 286-based systems with EGA graphics and rudimentary sound capabilities that frequently cost 2-3 times as much. But well into the early 1990s, CBM continued selling Amigas with 7-14 MHz 68000-family CPUs, when PCs with 33-100 MHz 486's, high-color graphics cards and SoundBlaster (or compatible) sound cards offered comparable, and eventually higher, performance at very competitive prices. Software developers by and large became focused primarily, if not exclusively, on the PC market.

The Amiga hardware did not begin to reach feature parity with PCs until the release of the A4000 and A1200 computers in late 1992, which featured an improved graphics chipset, the AGA. By this point, both the IBM PC and Apple Macintosh had several times the market share of the Amiga platform. As software developers shifted to these platforms, the Amiga lost value for mainstream consumers. The custom-designed and custom-built AGA chipset also cost Commodore considerably more than the commodity chips used in IBM PCs, reducing Commodore's profit margins. Although welcomed by Amiga enthusiasts, the machines did little to improve Commodore's fortunes.

The sun sets on Commodore

With market share eroding, Commodore embarked on a series of decisions that were heavily questioned by shareholders and the press, who sometimes accused management of only being interested in removing as much value from the company as possible before it finally disappeared. By 1994, only its operations in Germany and the United Kingdom were still profitable.

Commodore declared bankruptcy on April 29, 1994, and its assets were liquidated. The former site of Commodore's operational headquarters in West Chester, Pennsylvania, now houses the headquarters and broadcast studios of leading cable retailer QVC, Inc. (On November 26, 2004, QVC became the first retailer to sell the DTV, a "C64 in a joystick" designed by Jeri Ellsworth.)

The company's computer systems, especially the C64, and Amiga series, retained a cult following among their users for years after its demise.

Post-Commodore International, Ltd.

Following its liquidation, Commodore's former assets went their separate ways, with none of Commodore's successors repeating Commodore's early success.

Commodore UK was the only subsidiary to survive the bankruptcy and even placed a bid to buy out the rest of the operation, or at least the former parent company. For a time it was considered the front runner in the bid, and numerous reports, all false, surfaced during the 1994-1995 time frame that Commodore UK had made the purchase. Commodore UK stayed in business by selling old inventory and making computer speakers and some other types of computer peripherals. However, Commodore UK lost its financial backing after several larger companies, including Gateway Computers and Dell Inc., became interested, primarily for Commodore's 47 patents relating to the Amiga. Ultimately, the successful bidder was German PC conglomerate Escom, and Commodore UK was absorbed into Escom in mid-1995.

Escom paid US$14 million for Commodore International, primarily for the Commodore brand name. It separated the Commodore and Amiga operations into separate divisions and quickly started using the brand name on a line of PCs sold in Europe. However, it quickly started losing money, went bankrupt on July 15, 1996, and was liquidated.

In September 1997, the Commodore brand name was acquired by Dutch computer maker Tulip Computers NV. Tulip's ownership was little more than the answer to a trivia question until July 11, 2003, when Tulip announced it would re-launch the Commodore name, including new Commodore 64-related products, and threatened legal action against commercial Web sites that used the computer's name without a license. On 18 June 2004, Tulip introduced the website CommodoreWorld.com (see external links, below), run by its new daughter company Commodore International BV.

The Commodore brand name resurfaced in late 2003 on an inexpensive portable MP3 player made in China by Tai Guen Enterprise, sold mostly in Europe. However, the device's connection to Tulip, the legal owners of the name, is unclear.

In July of 2004, Tulip announced a new series of products using the Commodore name: fPET, a flash memory-based USB Key drive; mPET, a flash-based MP3 Player and digital recorder; eVIC, a 20 GB music player; and the C64 DTV.

In late 2004 Tulip sold the Commodore name to Yeahronimo Media Ventures for 22 million euros. The sale was completed in March 2005 after months of negotiations.

The Commodore Semiconductor Group (formerly MOS Technology, Inc.) was bought by its former management and in 1995, resumed operations under the name GMT Microelectronics, utilizing a troubled facility in Norristown, Pennsylvania that Commodore had closed in 1992. By 1999 it had $21 million in revenues and 183 employees. However, in 2001 the Environmental Protection Agency shut the plant down. GMT ceased operations and was liquidated.

Ownership of the Amiga line passed through several owners, from Escom of Germany in 1995, and then to U.S. PC clone maker Gateway in 1997, before being licensed to Amiga, Inc., a company founded by former Gateway employees Bill McEwen and Fleecy Moss in 2000. (Update 2012) Gateway Computer Corporation has since been acquired by Acer, Inc. (2007) and no longer exists as a brand as of December 2011. The "Gateway" brand will cease on all server and storage peripherals and accessories and will be replaced by Acer. Any calls to their answering service will be routed to an Acer call center & representative.

Resources

Commodore 64

Jack Tramiel

MOS Technology

Chuck Peddle

6502 Microprocessor

This article is derived from http://en.wikipedia.org/wiki/Commodore_International

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