Early Commodore History
Reproduced March 31
2002 with permission from Kenny Anderson of www.dhp.com/~kend
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 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.
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 convince 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.
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
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
"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
This didn't discourage
Tramiel. Working by his own idiom, "they [the public] don't yet know what they
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
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
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
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.