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Commodore, the company that helped launch the personal-computer revolution 15 years ago, announced its bad news after the close of the stock market on Friday, April 29. Officials at Commodore, which is incorporated in the Bahamas but keeps much of its corporate offices in West Chester, Pennsylvania, have not returned repeated phone calls to answer any of the questions raised by their terse announcement.
"You didn't really have a computer company, [Brian Jackson] said. "Commodore was a widgets company. They wanted anything we could hack together real quick from existing technology and sell a zillion of them like we did with the Commodore 64. And with that mentality, you can never really support customers.
Indeed, many Commodore observers said, the success of the Commodore 64, which came without an aggressive marketing campaign, may have spoiled Commodore's top managers into believing that such was the way of the computer business.
Ran with sidebar headlined "Cyberspace buzzing with talk of revival"
It was a wake in cyberspace. Minutes after Commodore International Ltd. said it was going out of business last month, the Commodore faithful tapped into the Internet, CompuServe, GEnie, and a host of other on-line services and computer bulletin boards.
They came from their bedrooms and dens, from offices and college dormitories, from Canada and the U.S. and Europe and and Asia, from everywhere people keep desktop computers. Software engineess, videographers, techno-artists, hackers -- they eulogized Commodore's Amiga computer as far better than those pitiful Macintoshes and IBM-compatibles.
Their Amigas can handle streams of video that would leave a Mac choking or an IBM gagging. Their Amigas can produce eye-popping graphics and dazzling sound at a lower cost than the competition.
Alas, their Amiga was so unappreciated in the personal-computer marketplace dominated by Macs and IBMs.
Why didn't Commodore try harder, they wondered.
"They really seemed to believe, said Brian Jackson, a former Commodore engineer, "that if you build a better mousetrap, the world will beat a path to your door.
Why didn't chairman Irving Gould, who routinely was paid more in a month than most people make in a year, spend more to market the Amiga? Why was their beloved computer left to whither and die?
They may never know.
Commodore, the company that helped launch the personal-computer revolution 15 years ago, announced its bad news after the close of the stock market on Friday, April 29. Officials at Commodore, which is incorporated in the Bahamas but keeps much of its corporate offices in West Chester, Pennsylvania, have not returned repeated phone calls to answer any of the questions raised by their terse announcement.
Drowning in debt from its recent losses, Commodore did say that it would voluntarily sell off its assets for the benefit of its creditors. Among the creditors is Gould, who lent the company $17 million U.S. in 1993, when the company erased its shareholders' equity with a $356.5 million U.S. loss for the year that ended June 30.
Commodore's overseas subsidiaries were not included in the announcement. What is to become of them, including operations in Europe and Asia, is not known.
The company said it will turn its assets over to an unidentified trustee who will oversee their sale under Bahamian law.
Pauo Higginbottom began tinkering with a Commodore PET computer -- PET, for Personal Electronic Transactor -- in 1978, when he was still a college student in England. Jimmy Carter was in the White House; Mac's Apple II was not yet on the market, and the IBM PC was three years away.
"I was experimenting with it, writing some programs, just a typical hobbyist kind of guy, he said. "So I showed (Commodore) one of the programs I wrote, and they thought it would be quite useful. In the summer of 1979, he went to work for Commodore.
"What I liked about going to work for Commodore was that it was a new industry, he said. "No one knew where it could really go, but the sky seemed to be the limit as far as where you could go within the company.
"It was a place where the engineers were looking into neat things. The company was innovative.
And it was a leader. As early as 1979, Commodore shipped 80,000 small computers, 14 per cent of all the PCs sold that year, according to the market-research firm, Dataquest, of San Jose, California.
Fueled by the popularity of the Commodore 64, a computer model introduced in 1982, the company hit its peak in 1984, shipping 3.4 million desktop stations and controlling nearly a quarter of the market.
Of course, 1984 was the year that Apple introduced Macintosh. And it was also about that time that computer firms from the Silicon Valley to Singapore began marketing low-price clones of the IBM PC.
Since 1979, Commodore has sold more than 20 million personal computers worldwide, according to Dataquest. Compare that, though, with the universe of IBM-compatible computers, of which nearly 30 million were sold in 1992 alone.
Instead of recognizing the pervasiveness of IBM's operating system, Commodore continued to bet on its own system, and upon that isolated foundation, built its Amiga computer. And just as Sony's Betamax video format failed to capture the market, though it was judged superior to VHS, Commodore's Amiga operating system failed to wrest customers from IBM's MS-DOS.
"I can still remember the introduction of the Amiga in 1985, said Andy Bose, an analyst at Link Resources Inc., a New York market-research firm. "It was a real media event. It was at Lincoln Center. Andy Warhol was there, Deborah Harry from (pop group) Blondie. It was truly a rich computer, perhaps it was ahead of its time.
Its lavish introduction aside, Commodore's marketing efforts on behalf of Amiga were spotty. Ad campaigns were launched, then dropped before they could be effective, analysts said.
Eventually, Commodore made an effort to sell IBM-compatible systems in Europe. But the effort, said Dataquest analyst Philippe de Marcillac, was too little too late.
"If they had just been more wholehearted about things, de Marcillac said, "a lot would have been different.
Many analysts, company insiders, shareholders and other Commodore stakeholders lay the blame squarely at the feet of Gould and his lieutenant, Mehdi R. Ali, the president of the company.
In 1993, while the company lost $356.5 million U.S., Gould drew a salary and benefits of $708,333; Ali's salary and benefits amounted to $1,038,098. Neither was awarded bonuses that year, according to the company's proxy statement. And for the current fiscal year, Ali had his base salary reduced from $1 million to $750,000, and Gould's was reduced from $750,000 to $250,000.
"There is only one answer for what happened to Commodore, and that's Irving Gould, said Tim Bajarin, president of Creative Strategies International, a San Jose computer-marketing firm.
"He lived by quarterly numbers, Bajarin said of the Commodore chairman. "I don't think he ever understood the computer revolution and what it took to take part in the infrastructure of the computer revolution.
What it took was an operating system common to many computers, Bajarin said. "But he kept moving in proprietary directions.
For the computer-oriented middle managers at Commodore's offices in West Chester, where employment fell from more than 400 in 1984 to about 20 or so when the liquidation was announced, the result was a harried and unpredictable working environment, former employees said.
"Commodore was just so nuts, said Jackson, the engineer who was laid off in June 1993, when the company seemed to give up any hope for the future by letting go more than half of its engineers.
"You didn't really have a computer company, Jackson said. "Commodore was a widgets company. They wanted anything we could hack together real quick from existing technology and sell a zillion of them like we did with the Commodore 64. And with that mentality, you can never really support customers.
Indeed, many Commodore observers said, the success of the Commodore 64, which came without an aggressive marketing campaign, may have spoiled Commodore's top managers into believing that such was the way of the computer business.
"So that's what they were always looking for, the next big hit, Jackson said.
When the Amiga didn't provide the big hit, the focus, in 1992, became CDTV, for Commodore Dynamic Television. That product was intended to bring the computer into the homes of people who were afraid of computers. A Trojan horse, the CDTV had a computer on the inside, but no keyboard. It played games and multimedia reference works on the family TV set, controlled by the couch-potato's favorite tool, the hand-held remote control.
But it, too, suffered from a lack of marketing. Analysts said that by the time Commodore brought CDTV and its enhanced successor, CD32, to market, the company's financial situation was too precarious. Credit markets would not provide the funds needed to pay for a major advertising push. The product languished even though some reviewers of CD32 have said it is better than the well-hyped products by Sega and 3DO.
With files from Citizen staff
Black & White Photo; Chart or Graph; PAUL LATOUR, CITIZEN; VEHICLE OF CHOICE: OTTAWA SOFTWARE WRITER DENIS DESJARDINS HAS TWO COMPUTERS ON HIS DESK - AN AMIGA 4000, LEFT, AND A 386 IBM-COMPATIBLE. FOR DEMANDING TASKS - THOSE THAT REQUIRE GRAPHICS AND MULTI-TASKING - HE'LL TURN TO HIS TRUSTY AMIGA EVERY TIME ROGER HASLER, PHILADELPHIA INQUIRER, KNIGHT-RIDDER; COMMODORE'S FORTUNES, MISFORTUNES
Credit: KNIGHT-RIDDER
(Copyright The Ottawa Citizen)