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Early Commodore History

Reproduced March 31  2002 with permission from Kenny Anderson of  www.dhp.com/~kend
PET Picture by www.commodore.ca  Last edited by Ian Matthews Dec 20, 2015

The following article was originally published in the disk magazine, Grapevine, in 1993.
Most 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 commodore-pet_rightnew (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.

Business 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.

Three 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 leukaemia 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.

Recognising 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.

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  miniaturising 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”.

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 worldy 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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