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                        Early Commodore: A History
  Kenny Anderson                                             kend@dhp.com
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The following article was originally published in the disk magazine,
Grapevine, in 1993.  However, after reading several questions about
Commodore's early days, and reading even more erroneous answers, I've
decided to release to a wider audience.  All the facts and dates below are
as accurate as I can make them.  I'm sorry it finishes a little abruptly,
but it was originally part of a series.

Kenny Anderson aka Ken D/LSD (kend@dhp.com) 4/11/95

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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.

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.