Reproduced March 31  2002 with permission from Kenny Anderson of  www.dhp.com/~kend   Pictures by www.commodore.ca  Last edited by Ian Matthews Nov 23 2018

The following article was originally published in the disk magazine, Grapevine, in 1993

jack-tramiel-atari-august-1984Most people would claim to know quite a lot about Commodore. There’s a lot of myths, a lot of bullshit, and a lot of lies. And now, as Commodore enters a new (final?) era of it’s existence, it’s probably a good time to take a good look at where the company came from.

Commodore, like so many of the modern computing giants, didn’t start out in computing at all. Commodore originally wasn’t even in the electrical retail market, like Sinclair or Amstrad, but in typewriters.

It all started when a young soldier at the USA Fort Dix showed a talent for unjamming typewriters. Whilst his piers were busy pretending to shoot each other and playing war  games, Jack Tramiel was sorting out more basic problems with the army Hermes’s.  Not a talent to build an empire on, but when Tramiel left the army, he set up his own typewriter repair  business in the Bronx. To supplement his income, he also moonlighted as a cab driver.

commodore-typewriter-1968Business went slowly but steadily, until Tramiel pulled off a deal with Czechoslovakia to assemble typewriters in Canada. The family upped it’s roots and moved to  Toronto, whilst Tramiel laid the founding stones of Commodore International.

Shortly afterward, it occurred to Tramiel that he may as well sell his own typewriters as someone else. It cut out the middle man – more profit, less effort. So he took  over a typewriter manufacturing concern in Berlin, and added to the growing empire that was Commodore. At that time, the business world of the States and  Europe was being flooded by cheap mechanical adding machines from Japan. Showing off his talent for listening to his customers, Tramiel moved into the delights of adding machines.

In 1962, the company was successful enough to go public. Entitled Commodore Business Machines, Canada, Tramiel was the president, and the chairman and banker was the president  of Atlantic Acceptance Corporation, C. Powell Morgan.

atlantic-acceptance-failure-ontraio-royal-commision-1969Three years later, C. Powell Morgan was publicly condemned by a Canadian Royal Commission for “his  defiance of all accepted business principles” and acts of “rapacious and  unprincipled manipulation”.  Whether this was justified is a matter of opinion, but the failure to meet payments on a $5 million  short-term loan didn’t help  his case. Unfortunately (or fortunately, depending on how you view the story),   Morgan died of leukemia before he could be tried in court. The Commission also  took a good long look at Commodore and Tramiel. It wasn’t entirely convinced of his innocence in the Morgan’s affairs, but decided not to indict him. The bad publicity didn’t help Commodore’s position in the market, however.  Money was  becoming tight, and the outlook was becoming bleak for Tramiel.

A lifeline came when a Canadian investor, Irving Gould, agreed to buy a substantial stake in Commodore, in return for the position of Chairman. The new team of Gould and Tramiel set to work on building commodore’s position.

The adding machine business was becoming a dead duck. The Japanese had the market almost sewn up. As a last-ditch attempt, Gould suggested that Tramiel take a trip to Japan, and get a little first-hand experience of the market. Whilst over there, Tramiel saw, for the first time, the new electronic desk-top calculator.

Recognizing the potential in the calculators, he foresaw the end of volume sales for mechanical adding machines.  As soon as he returned, commodore’s strategy was shifted away  from adding machines, and onto electronic calculators.

commodore_calcualtor_playboy_december_1973

1973 COMMODORE MINI-SLIDE RULE CALCULATOR – From a December 1973 advertisement in Playboy… um uh ummmm yaaa well, this was the what I was looking for in the magazine… I was shocked to find naked women… I suppose I will have to take one for the team and scan all the old Playboys for Commodore materials. Its a tough job but I will sacrifice myself for Commodore.

For the first time in months, fortune smiled on Commodore. It was Tramiel’s company who took the first electronic pocket calculator onto the market, using a Bowmar LED display,  and a Texas Instruments integrated chip. Only Clive Sinclair could improve on the design years later, by significantly reducing the power consumption and  miniaturizing the whole package.

Suddenly, everyone went  calculator crazy. Machines, equivalent in power to those that are now given away free with gallons of petrol and insurance quotes, were sold for $100+, then a perfectly reasonable price. Commodore, by now used to running into problems,  ran into a big one. Texas Instruments, Commodore’s chief supplier of the main chips in the calculators, took a leaf out of Tramiel’s book. “Cutting out the middle man”, they launched their own range of calculators. Of course, they used their own chips at a fraction of the cost, and this had a disastrous effect on  Commodore.

Chips prices dropped  from $12 to a buck each. Commodore had warehouses full of calculators built   containing chips at the old price. After years of steadily increasing profits, 1975 showed Commodore making a $5 million loss on sales of nearly $50 million. It taught Tramiel and Gould a lesson: relying on outside suppliers for key components was risky. Tramiel commented later: “From there on,  I felt the only way to continue in the electronics business was to control our own destiny.”

Easier said than done, at those times; the calculator and semi-conductor markets were risky and unpredictable. Gould, once again, came to Commodore’s rescue by personally  guaranteeing a $3 million loan, giving Commodore enough buying power to take over MOS Technology in November 1976.

MOS, a struggling manufacturer of calculator and other semiconductors, was only one of a series of acquisitions: Frontier, a Los Angeles manufacturer of CMOS chips, and MDSA, a LCD maker, were snapped up as well. This give Commodore more experience in key technologies than firms many times Commodore’s size. But the important acquisition was MOS Technology, which became known as MosTek. With the company came an unknown engineer, Chuck Peddle.

A year before being taken over, the MosTek team had worked out an improvement to Motorola’s 6800.  They called it the 6502.

Legend has it that Tramiel was accosted in the corridor, one day, by Chuck Peddle. Peddle told Jack  to,  basically, forget about hand-held calculators. What about a desktop  computer?

“Build it,” said Tramiel, and the PET was born, using MosTek’s 6502.

The announcement that Commodore were working on a computer was greeted by a resounding silence.  At that time, early 1976, the US (micro)computer market was made up of hobbyists;  small-time engineers, working on the kitchen table with soldering irons and  home-made displays.

This didn’t discourage Tramiel. Working by his own idiom, “they [the public] don’t yet know what they  need”.

commodore_pet_ad_british_1

PET The Microcomputer that’s top of its class

It’s worth pointing out, at this point, that Tramiel could have easily called the new machine the Personal Electronic Transactor. But, by naming it the PET, it tamed a device which was sure to bring out the technophobes in even the most worldly of America’s hobbyists.

The 8K PET was first  shown at the Chicago Consumer Electronics Show in 1977. It met an enthusiastic reception, but not without a behind-the-scenes rush to get the PET ready for the  show.

Chuck Peddle, responsible for building the prototype, was under huge pressure to get the machine ready and working in time for the show. This is a classic  instance of the marketing boys driving the R&D unit.  Peddle crated up the still-unfinished PET and transported it to the show. After working for 3 solid  days, without sleep, he managed to get the prototype working well enough to display.

However well the machine itself worked, the word was out. Within a few months, Commodore was receiving 50 calls a day from dealers, all wanting to sell the PET. This demand for the machine allowed Commodore to dictate terms to dealers. Rather than allowing just anyone to sell the machine, dealers had to demonstrate an excellent credit history, pay a cash deposit on orders, and show they had a  service engineer and a retail outlet. Tramiel also concentrated on selling the PET to the US and Europe educational market. Demand continued to grow, and Tramiel remembered his marketing maxim about the middle man. “Why bother with  dealers?” he asked himself.

Tramiel approached the big retails chain stores, and within a few weeks, the right to sell Commodore  products, which the dealers had fought so hard to obtain, was practically meaningless. The dealers were in direct competition with the household names.

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