The Accident That Birthed Apple: Part III
a.k.a. Death of Commodore
Chuck Peddle, Chief Engineer
As 1980 drew to a close Commodore was left to wonder how on earth it went from being the second largest personal computer company in America by sales to a distant third. Twelve months earlier the Commodore brand had dominated the market for people looking to incorporate the PC into their businesses. But by year’s end, the machine’s relevance had faded as swarms of business owners adapted their accounting systems to Apple’s software.
If Commodore found itself behind the 8 ball it’s probably because they didn’t yet understand that the entire computer industry existed on the cutting edge. The only way to spend 365 days a year on the cutting edge without getting cut is to release faster, better versions of your product before customers request an update. Yet by December of 1980 Commodore still hadn’t produced a machine that could replace the model it began shipping at the dawn of the PC era way back in October of 1977. Commodore’s complacency was suicidal.
With irrelevancy on the fast approaching horizon, company president Jack Tramiel ordered chief engineer Chuck Peddle to resuscitate the motherboard, and Chuck went to town. So geeked was his team of engineers to revamp their product that they brought cots to work so that they wouldn’t have to commute in order to sleep. By June of 1981 the non-commute had helped the engineers produce, by far, the greatest machine of its time: the VIC 20.
If Commodore found itself behind the 8 ball it’s probably because they didn’t yet understand that the entire computer industry existed on the cutting edge. The only way to spend 365 days a year on the cutting edge without getting cut is to release faster, better versions of your product before customers request an update. Yet by December of 1980 Commodore still hadn’t produced a machine that could replace the model it began shipping at the dawn of the PC era way back in October of 1977. Commodore’s complacency was suicidal.
With irrelevancy on the fast approaching horizon, company president Jack Tramiel ordered chief engineer Chuck Peddle to resuscitate the motherboard, and Chuck went to town. So geeked was his team of engineers to revamp their product that they brought cots to work so that they wouldn’t have to commute in order to sleep. By June of 1981 the non-commute had helped the engineers produce, by far, the greatest machine of its time: the VIC 20.
Mike Tomczyk, Marketing
Chuck Peddle then passed the baton to Mike Tomczk in marketing, who hired William Schatner of Star Trek fame to serve as the VIC 20 pitchman. Mr. Schatner’s pitch drove so many Trekies to heed their Captain’s “Buy Commodore!” command that by Christmas of 1981 you could have been a steel mill worker who had never come within 2 miles of a computer and you still would have wanted your first machine to be a Commodore.
Fact: the guy in the middle knows computers
At the unheard of price of $299, units began leaping off the shelves and into the homes of hundreds of thousands of Americans. While after four years Apple still hadn’t sold their millionth Apple II, Commodore leveraged the VIC 20 to leapfrog its nemesis and punch its ticket to the Million Units Sold Club in less than twelve months.
The success of the VIC 20 was followed up with the release of the Commodore 64 in August of 1982. Within two weeks they had sold 12,000 units at $599 a pop; a new record at that price point. For the next four months Commodore sold their machines exclusively through a network of dealers and moved 65,000 units despite the hike. But Jack eventually ditched the dealer-distributor model so that he could hawk his wares on the shelves of retail giants like K-Mart for $399.
By mid 1983 Commodore had already moved 1,000,000 C64's. During that same year Commodore’s third quarter profit alone was $25,000,000 and the Commodore 64 was well on its way to becoming the best selling personal computer of all time. That same year the C64 caused three competing brands to pull out of the personal computing business entirely: Texas Instruments, Atari and Tandy. Not only was Commodore thriving as a business, Jack’s company was killing the competition — literally putting them under with a fierce combo of left-right-left hooks.
Commodore amplified the effect of this revenue surge by following up the Captain Kirk spots with a series of side-by-side ads that succinctly described the power and affordability of the Commodore relative to everyone else’s mediocre and overpriced product.
The success of the VIC 20 was followed up with the release of the Commodore 64 in August of 1982. Within two weeks they had sold 12,000 units at $599 a pop; a new record at that price point. For the next four months Commodore sold their machines exclusively through a network of dealers and moved 65,000 units despite the hike. But Jack eventually ditched the dealer-distributor model so that he could hawk his wares on the shelves of retail giants like K-Mart for $399.
By mid 1983 Commodore had already moved 1,000,000 C64's. During that same year Commodore’s third quarter profit alone was $25,000,000 and the Commodore 64 was well on its way to becoming the best selling personal computer of all time. That same year the C64 caused three competing brands to pull out of the personal computing business entirely: Texas Instruments, Atari and Tandy. Not only was Commodore thriving as a business, Jack’s company was killing the competition — literally putting them under with a fierce combo of left-right-left hooks.
Commodore amplified the effect of this revenue surge by following up the Captain Kirk spots with a series of side-by-side ads that succinctly described the power and affordability of the Commodore relative to everyone else’s mediocre and overpriced product.
They also ran this print ad, which has nothing to do with the story I’m telling but is fascinating on so many levels.
Then on January 1, 1985 Commodore released the Commodore 128, which would have been a massive hit if not for the fact that the Commodore 64 was, even at that late date, an even more massive hit. By January of 1985 the programming industry was so focused on designing software for the C64 that they seemed bugged that some usurper had showed up on the scene (Despite the lukewarm reception, the C128 would go on to sell a respectable 4,000,000 units over the next 4 years.)
So what do you do when for the last eight years everything you’ve built has sold and you appear to be positioned to wipe out the last remaining PC manufacturers? You release another mind-blowing product of course; and you make sure that next machine is unfathomably powerful, which is exactly what Commodore did.
Hot off of the heels of the C128 rollout, during the summer of 1985 Commodore began production of the Amiga 1000, which was not just some souped-up C128. It was by far the most powerful PC ever built and came complete with every upgrade imaginable: crazy sound and graphics capabilities along with first of its kind multi-task operating system and video editing tools. All for under $2,000.
Having built the greatest computer on earth you would think that the company would then go to great lengths to make sure everyone knew about it. You would think that the same marketing department that designed the Captain Kirk campaign and the brilliantly simple comparison ads would come up with an equally clever way to entice tech nerds the world over to leverage the unimaginable computing power of the Amiga to enter Nerdvana.
Had the marketing department simply duplicated its recent successes there wouldn’t have been a sane human left in our solar system who would have bought anything other than a Commodore. People without much money could have picked up a C64 on the cheap, but if they wanted a little more muscle they could have upgraded to the C128. And if they felt really ambitious they could have bought the Amiga 1000 and done things that other users only dreamed about. A healthy dose of quality Amiga PR was the only piece of the puzzle missing in order for Commodore to establish itself as the dominant player in every single segment of the PC business: games, word processing, business applications and video editing. Just one measly coherent ad campaign that illustrated how Commodore had once again delivered an amazing product at a price that no one could touch would have done the trick.
Was that really too much to ask?
Warning: The answer is Yes and the following description of the Amiga 1000 marketing campaign will not make any sense.
Despite releasing a revolutionary product, for some reason Commodore seemed not very interested in telling anyone about it. Months after the computer’s debut they finally initiated a full-scale media blitz, which initially seemed to have two ridiculous motifs: the incomprehensible and the prehistoric. In the incomprehensible category you had people in a zombie-like daze walking towards a pedestal upon which was perched some sort of bright light… … … and scene! That’s it. That was the commercial. I’m not joking. Said engineer R.J. Mical of the zombie commercials, “Whatever it was, it did not advertise the machine.” Then there was the classic spot of the old man walking up a flight of stairs towards a crying, alien fetus (see for yourself.)
So what do you do when for the last eight years everything you’ve built has sold and you appear to be positioned to wipe out the last remaining PC manufacturers? You release another mind-blowing product of course; and you make sure that next machine is unfathomably powerful, which is exactly what Commodore did.
Hot off of the heels of the C128 rollout, during the summer of 1985 Commodore began production of the Amiga 1000, which was not just some souped-up C128. It was by far the most powerful PC ever built and came complete with every upgrade imaginable: crazy sound and graphics capabilities along with first of its kind multi-task operating system and video editing tools. All for under $2,000.
Having built the greatest computer on earth you would think that the company would then go to great lengths to make sure everyone knew about it. You would think that the same marketing department that designed the Captain Kirk campaign and the brilliantly simple comparison ads would come up with an equally clever way to entice tech nerds the world over to leverage the unimaginable computing power of the Amiga to enter Nerdvana.
Had the marketing department simply duplicated its recent successes there wouldn’t have been a sane human left in our solar system who would have bought anything other than a Commodore. People without much money could have picked up a C64 on the cheap, but if they wanted a little more muscle they could have upgraded to the C128. And if they felt really ambitious they could have bought the Amiga 1000 and done things that other users only dreamed about. A healthy dose of quality Amiga PR was the only piece of the puzzle missing in order for Commodore to establish itself as the dominant player in every single segment of the PC business: games, word processing, business applications and video editing. Just one measly coherent ad campaign that illustrated how Commodore had once again delivered an amazing product at a price that no one could touch would have done the trick.
Was that really too much to ask?
Warning: The answer is Yes and the following description of the Amiga 1000 marketing campaign will not make any sense.
Despite releasing a revolutionary product, for some reason Commodore seemed not very interested in telling anyone about it. Months after the computer’s debut they finally initiated a full-scale media blitz, which initially seemed to have two ridiculous motifs: the incomprehensible and the prehistoric. In the incomprehensible category you had people in a zombie-like daze walking towards a pedestal upon which was perched some sort of bright light… … … and scene! That’s it. That was the commercial. I’m not joking. Said engineer R.J. Mical of the zombie commercials, “Whatever it was, it did not advertise the machine.” Then there was the classic spot of the old man walking up a flight of stairs towards a crying, alien fetus (see for yourself.)
While in the prehistoric category you had black and white images of kids swimming and teenagers doing the twist while the narrator says “When you were growing up, you learned you were facing a world full of competition.” And once again, that’s it. That’s all he says.
In print ads run in the National Geographic the advertising team tried to win over educators with more black and whites of school children and a caption that read “You’ve always had a lot of competition. Now you can have an unfair advantage.”
Because what elementary school teacher isn’t enticed by unfair advantages?
But for me, none of those advertisements quite compare with the print ads run in sepia tones. Sepia tones: the color you see when you look at a picture of Billy the Kid. Sepia tones basically sponsored the Civil War. Now had there been a segment of the population that had fought under General Grant and wanted a machine that could edit the film they had accumulated during battle, these ads would have certainly helped move a lot of product. But since that niche was buried at Arlington, the ads didn’t make any sense, which is why Commodore lost $184,000,000 during the fourth quarter. Considering how the company had begun 1985, positioned to destroy its few remaining competitors, that’s a lot zeros.
Now if I wanted to, I could go on and give you an in-depth description of Commodore’s slow-moving, nine-year demise; starting with how it went from flaming success to budding flame-out in 12 short months. How the cumulative effect of a long succession of poor decisions pushed them almost seamlessly from unstoppable to unintelligible, during one calendar year.
In print ads run in the National Geographic the advertising team tried to win over educators with more black and whites of school children and a caption that read “You’ve always had a lot of competition. Now you can have an unfair advantage.”
Because what elementary school teacher isn’t enticed by unfair advantages?
But for me, none of those advertisements quite compare with the print ads run in sepia tones. Sepia tones: the color you see when you look at a picture of Billy the Kid. Sepia tones basically sponsored the Civil War. Now had there been a segment of the population that had fought under General Grant and wanted a machine that could edit the film they had accumulated during battle, these ads would have certainly helped move a lot of product. But since that niche was buried at Arlington, the ads didn’t make any sense, which is why Commodore lost $184,000,000 during the fourth quarter. Considering how the company had begun 1985, positioned to destroy its few remaining competitors, that’s a lot zeros.
Now if I wanted to, I could go on and give you an in-depth description of Commodore’s slow-moving, nine-year demise; starting with how it went from flaming success to budding flame-out in 12 short months. How the cumulative effect of a long succession of poor decisions pushed them almost seamlessly from unstoppable to unintelligible, during one calendar year.
Jack Tramiel
I know the lame reason Jack Tramiel, company president, gave for firing Chuck Peddle, Chief Engineer. I also know the juvenile motives that led activist investor Irving Gould to oust Jack Tramiel, a decision that gutted Commodore of thirty of its brightest engineers.
Irving Gould
I could easily walk you through each of the events that obligated the company to declare bankruptcy on April 29, 1994. I could give you the details, but the data bores me. It’s redundant, like Mr. Gould’s 30 millionth share of Commodore stock on April 30, 1994.
As far as I’m concerned, if you want to know why Commodore folded, you only need to understand one fact. The fact’s meaning is easy to decipher, self-explanatory even; like the dial on a rotary phone or the On function on your Grandma’s first television set. Fortunately for mankind, the universe’s fundamentals never change. In the end, despite technology’s leaps, despite ever-growing, increasingly complex systems, we always inhabit a manual world.
The reader looking to understand why he or she isn’t reading this story on a Commodore machine need only know that sometime after the Amiga launch, the engineers began asking the company to install showers in the bathrooms so that they wouldn’t have to leave headquarters to bathe. They loved their jobs. They adored their products and they wanted to go on serious, mind-bending programming benders. They wanted to cloister themselves among 0's and 1's the way monks cloister themselves among Ecclesiastes and Revelations. They had their cots already, so sleeping wasn’t an issue. They just got tired of bathing in the bathroom sink. All they asked was for the ability to take a shower in the monastery.
But management ignored their requests.
As far as I’m concerned, if you want to know why Commodore folded, you only need to understand one fact. The fact’s meaning is easy to decipher, self-explanatory even; like the dial on a rotary phone or the On function on your Grandma’s first television set. Fortunately for mankind, the universe’s fundamentals never change. In the end, despite technology’s leaps, despite ever-growing, increasingly complex systems, we always inhabit a manual world.
The reader looking to understand why he or she isn’t reading this story on a Commodore machine need only know that sometime after the Amiga launch, the engineers began asking the company to install showers in the bathrooms so that they wouldn’t have to leave headquarters to bathe. They loved their jobs. They adored their products and they wanted to go on serious, mind-bending programming benders. They wanted to cloister themselves among 0's and 1's the way monks cloister themselves among Ecclesiastes and Revelations. They had their cots already, so sleeping wasn’t an issue. They just got tired of bathing in the bathroom sink. All they asked was for the ability to take a shower in the monastery.
But management ignored their requests.
