Tuesday, March 20, 2007

Commodore 64 computer beats IBM PC

Many people think that Radio Shack, IBM or even Apple started the personal computer business, but Commodore had a big part in it.

Commodore, the commonly used name for Commodore International, was an American electronics company which was a vital player in the personal computer field in the 1980s. Commodore developed and marketed the Commodore 64, an extremely popular desktop computer, in 1982. The model number refers to its 64K (not meg or gig) of RAM, double the 32K then supplied in the much more expensive IBM PC.

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, and Tramiel turned to adding machines.

In 1962 the company was formally incorporated as Commodore Business Machines. In the late 1960s history repeated itself when Japanese firms started producing and exporting adding machines. The company's main investor and chairman, Irving Gould, suggested that Tramiel travel to Japan to understand how to compete. Instead, he returned with the 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 popular brands in the early 1970s, producing both consumer as well as scientific calculators. However in 1975 Texas Instruments, the main supplier of calculator parts, entered the market directly and put out a line of machines priced at less than Commodore's cost of 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 assure his supply.

He agreed to buy MOS, which was having troubles of its own, only on the condition that its chip designer Chuck Peddle join Commodore as head of engineering. Once Chuck Peddle had taken over engineering at Commodore, he convinced 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.

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 successor to the VIC-20. The C64 possessed remarkably-capable sound and graphics for its time. 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. This price war likely 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," had taken its toll.

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's computer systems, especially the C64 and Amiga series, retain a cult-following among their users years after the company's demise. (info from Wikipedia)

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