Commodore began in 1954 as a Toronto typewriter assembly company, and it began that way for a specific reason: to get around a trade embargo.
Jack Tramiel had been selling Czechoslovak typewriters in North America from an office in the Bronx. The United States then banned imports from Warsaw Pact countries, and Czechoslovakia was one. His answer was the Commodore Portable Typewriter Company, set up in Toronto to import the machines in parts and assemble them in Canada, so that what crossed into the United States was Canadian. The Story of the Commodore 64 in Pixels calls it “a sort of typewriter laundering business”.
Thirty years later the same company announced sales of more than a billion dollars in a single year. It made the Commodore 64, which Guinness World Records lists as the best-selling desktop computer model, and the Amiga. Ten years after that it was in liquidation, and for months afterwards it would not even return the press’s phone calls.
Fast facts
- Founded: 1954 in Toronto, by Jack Tramiel, an Auschwitz survivor who had learned to repair typewriters in the US Army.
- Business machines: typewriters, then adding machines under the name Commodore Business Machines, then electronic calculators. The company went public in 1962.
- Irving Gould: Canadian financier, chairman from the mid-1960s until the end and the company’s largest shareholder.
- MOS Technology (1976): Commodore bought the maker of the 6502 microprocessor. Its engineers went on to design the chips in the VIC-20 and C64.
- Computers: PET (1977), VIC-20 (1980 in Japan, 1981 in the US), Commodore 64 (1982), Amiga (from 1985).
- Tramiel’s exit: resigned on 13 January 1984; bought Atari’s home computer business that July.
- Amiga: Commodore bought the Amiga company in 1984.
- The end: liquidation announced on 29 April 1994. The German company Escom bought Commodore’s core assets at auction in April 1995.
Typewriters, adding machines and calculators
When Japanese typewriters made the Czech machines unprofitable, Tramiel moved into adding machines and renamed the business Commodore Business Machines. He later bought the Berlin factory that made them. “The idea – to have a good product at a low price – you have to cut out the middlemen, because it’s the only way you can control it,” he said in one of his last interviews.
Commodore went public in 1962, and four years later it was in trouble. Its main backer, the Atlantic Acceptance Corporation, collapsed amid a fraud investigation, and its bankers tried to take control of the companies Atlantic had money in. Tramiel raised cash by selling 17 per cent of Commodore to the Canadian financier Irving Gould for a reputed $400,000. Gould, who had been one of the original investors, took the chairman’s seat and Tramiel stayed as president. It was a partnership that would last until 1984, and Gould would still be chairman at the very end.
Electronic calculators came next. Tramiel represented Casio in North America under the Commodore name, and had a Japanese company make a chip for calculators he assembled in California. By the 1970s Commodore’s most important chip supplier was Texas Instruments. In 1975 Texas Instruments began selling cheap calculators of its own, and by Tramiel’s account Commodore lost about $5 million on sales of $50 million. “That just added to my thought that you have to be vertically integrated,” he said.
He had an unusually clear view of where prices went. Antic interviewed him in February 1985, after he had moved to Atari, and described him as “short, heavy, fast-moving, smokes big cigars, talks rapidly in a loud, booming voice, laughs heartily and often”. The magazine recorded a prediction he had made in 1968, “when calculators sold for $1,495”: that the price “would drop to $9.95 within 10 years”. “If anything, I was too conservative then,” he told Antic. “You get a good, basic calculator for even less than $9.95 and 70 million calculators were sold last year.”
Chips and the PET
In 1976 Commodore bought MOS Technology, the Pennsylvania company that had launched the 6502 microprocessor the year before. By Tramiel’s account MOS was losing $600,000 a month, and once again Gould helped, this time with a $3 million loan guarantee. The purchase gave Commodore its own chip factory and brought in Chuck Peddle, who persuaded Tramiel to build a computer. Tramiel gave him six months, and the Commodore PET appeared at the Consumer Electronics Show in 1977.
Owning MOS made Commodore unusual. When it wanted a cheap colour computer in 1980, the chip it needed already existed at MOS, and the engineers who had designed it, including Al Charpentier and Bob Yannes, went on to design the VIC-II and SID chips for the Commodore 64. Ahoy! said in 1984 that Commodore’s vertical integration “allowed it to earn record profits in the midst of a price war which has left competitors reeling from huge losses”.
The home computer years
The VIC-20, launched in Japan in 1980 and in America in 1981 at $299.95, was sold in discount stores and advertised on television by William Shatner. Commodore and the press of the day called it the first computer to sell a million. The Commodore 64 followed in 1982 at $595, and in 1983 Commodore cut its price until rivals who had to buy their chips could not follow. Texas Instruments left the home computer business.
At the Consumer Electronics Show in January 1984, Michael Tomczyk recorded, Gould and Tramiel announced “that, during 1983, Commodore had become the first personal computer company to hit one billion dollars in sales”, and that it had sold more than three million computers that year. On Commodore’s stand, two pedestals held the “Two Millionth VIC” and the “One Millionth Commodore 64”.
Tramiel leaves
Before the week was out, Tramiel had resigned. He walked out of a board meeting in New York on Friday 13 January 1984. Tomczyk, who had worked beside him for four years, reported the explanation Gould gave: that Tramiel “brought the company to the billion dollar level, but now it was time for professional management to come in and take the company to the ten billion dollar level.” Gould’s choice to run it was Marshall Smith, a manufacturing and finance executive from the steel industry. Years later Tramiel gave his own version: Gould’s philosophy “was to milk the company as much as possible and my philosophy was to build the company as big as possible.”
Tramiel did not go to Atari straight away. He set up a new company with his sons, and in July 1984 bought Atari’s home computer and video game business from Warner Communications. The two companies spent the rest of the decade as rivals.
The Amiga
In 1984 Commodore also bought the Amiga company, a small Silicon Valley firm with a set of custom chips designed by Jay Miner and no money left. According to the account the Amiga team gave Amiga Computing in 1988, Tramiel’s Atari had lent Amiga half a million dollars while negotiating to buy it; Commodore offered $4 a share, and when Amiga’s Dave Morse turned it down, $4.25, and he signed. Commodore raised the base machine from 64K of memory to 256K.
The Amiga 1000 was unveiled at New York’s Lincoln Center on 23 July 1985 and sold for $1,295. The cheaper Amiga 500 of 1987, which AmigaWorld later called “the most popular Amiga model”, made the Amiga a common home computer, especially in Britain and Europe. The Amiga entry tells that story.
The chairman and his presidents
After Tramiel, Commodore’s presidents changed and its chairman did not. Amazing Computing reported Thomas Rattigan as the “still-fresh Commodore president” in June 1986, promising a return to profit; by June 1987 it was calling him the “former Commodore president”. In April 1989 its gossip column reported that the vacancy had been filled by Mehdi Ali, a former managing director of the investment bank Dillon, Read. Through all of it Irving Gould stayed. Amazing Computing described him in 1988 as “Chairman of the Board and majority stockholder” of Commodore, and in 1989 put the chain of command in one line: Ali “reports to Irving, and Irving reports to himself, if anybody”.
How it ended
The Amiga press recorded the collapse as it happened.
| Date | Event |
|---|---|
| Friday 25 March 1994 | Commodore announces a net loss of $8.2 million on sales of $70.1 million for the quarter to December 1993. AC’s TECH noted that it “waited until after the New York Stock Exchange closed” to do so |
| 28 March 1994 | The New York Stock Exchange halts trading in Commodore’s shares |
| 29 April 1994 | Commodore announces the liquidation of its major assets |
The announcement of 29 April read, in full: “Commodore International Limited (NYSE:CBU) announced today that its Board of Directors has authorized the transfer of its assets to trustees for the benefit of its creditors and has placed its major subsidiary, Commodore Electronics Limited, into voluntary liquidation. This is the initial phase of an orderly liquidation of both companies, which are incorporated in the Bahamas, by the Bahamas Supreme Court.”
Being a Bahamian company mattered. Amazing Computing‘s rumour columnist, The Bandito, had already explained that Commodore International could not seek protection from its creditors under the United States’ Chapter 11 rules: “Under Bahamian law, if a company gets into too much fiscal trouble, it just declares insolvency (or is forced into it involuntarily) and the creditors get to squabble over the pieces.”
Then Commodore stopped talking. AC’s TECH reported in August 1994:
Commodore has made no further official or unofficial comments concerning the liquidation. Their official spokesperson apparently is not accepting or returning phone calls. The Bahamas organization who is handling the matter has no further word to offer.
By September The Bandito was writing that “Commodore as a press-releasing entity doesn’t exist any more”, and that Commodore US and Commodore International were “hollow shells, with a bare handful of employees left to be able to hand off the files to whoever buys them”.
Even the next Amiga chipset became a matter of dispute. Commodore’s head of engineering, Lew Eggebrecht, had told Amazing Computing in February 1994 that the first AAA chips were “in testing” and over 95 per cent functional. AC’s TECH reported in August that AAA had been “only one silicon test away from completion” and that Commodore had “removed almost all of the development staff”. The Bandito called AAA “a pipe dream” whose work “was halted over a year ago”, and the magazine’s editors printed a reply beneath his column saying he was wrong. No AAA machine was ever sold.
The liquidators auctioned Commodore’s core assets in New York on 20 April 1995. Amiga Format reported that Escom, a German PC maker, won with a bid of US$10 million, confirmed by a court the next day after Dell had tried to put in a higher offer. Escom’s Amiga Technologies restarted production of the A1200 in 1995, and in 1996 Escom itself filed for bankruptcy.
Sources
- Roger Kean, The Story of the Commodore 64 in Pixels (Fusion Retro Books), built on transcripts of one of Tramiel’s last interviews: the embargo and the Toronto company (p. 12); adding machines, the Berlin factory, the 1962 flotation, Atlantic Acceptance and Gould’s 17 per cent (pp. 15-16); Casio, the calculator chip, Texas Instruments and the $5 million loss, the purchase of MOS with Gould’s loan guarantee, the PET at the 1977 CES (pp. 16-20); Gould’s control of the company “since the mid-1960s” and Tramiel’s account of their quarrel (pp. 29-30).
- Antic, February 1985, pp. 72-73: interview with Tramiel, his description and the calculator prediction.
- Michael S. Tomczyk, The Home Computer Wars: An Insider’s Account of Commodore and Jack Tramiel (Compute! Publications, 1984): Gould as “the company’s largest shareholder” (p. 285); the January 1984 CES, $1 billion of sales and three million computers in 1983, the two-millionth VIC (pp. 283-284); Marshall Smith, the resignation on 13 January 1984 and Gould’s explanation (pp. 284-285).
- Ahoy! issue 5, May 1984, p. 44: vertical integration and “record profits in the midst of a price war”. Ahoy! issue 4, April 1984, p. 6: Tramiel’s resignation date.
- Amiga Computing, December 1988, pp. 24-26: Atari’s loan, Commodore’s $4 and $4.25 offers, the 256K base machine.
- BYTE, August 1985, p. 6: the Amiga at $1,295. AmigaWorld, January 1995, pp. 13-15: the Lincoln Center launch on 23 July 1985; the A500 of 1987 as “the most popular Amiga model”.
- Amazing Computing, vol. 1 no. 5, June 1986, pp. 37-38: Rattigan as president. Vol. 2 no. 6, June 1987: “former Commodore president Thomas Rattigan”. Vol. 3 no. 2, February 1988, pp. 71-72: photo caption naming Gould as chairman and majority stockholder. Vol. 4 no. 4, April 1989, p. 68: Mehdi Ali as president. Vol. 4 no. 7, July 1989: “reports to Irving”.
- Amazing Computing, vol. 9 no. 2, February 1994: Eggebrecht on the AAA chips. Vol. 9 no. 7, July 1994: The Bandito’s “Roomers” column on the March 1994 results and Bahamian law (pp. 49-53); the three dates and the text of the 29 April statement (p. 55). Vol. 9 no. 9, September 1994: The Bandito, “press-releasing entity” and “hollow shells” (p. 67), and on AAA, with the editors’ reply (p. 69).
- AC’s TECH for the Commodore Amiga, vol. 4 no. 3, August 1994, pp. 3-4: editorial on the liquidation, the 25 March announcement, the 29 April statement, Commodore’s silence and the state of the AAA chips.
- Amiga Format, issue 72, June 1995, pp. 12-13: the Escom auction of 20-21 April 1995.
- Amiga Computing, issue 93, December 1995: the first new A1200 off the line at Bordeaux on 11 September 1995. Issue 104, October 1996: Escom files for bankruptcy.
- Guinness World Records, “Best-selling desktop computer” (web, secondary): the Commodore 64’s title, as set out in the Commodore 64 entry.