Aminet 15/Aminet 15 - Nov 1996.iso/Aminet/docs/misc/300pr.lha/0160-cbm.txt

Text File | 1996-10-01 | 11.0 KB | 219 lines

Commodore Computer Faithful Use Cyberspace to Bid Company Farewell By Anthony
Gnoffo, Jr., Philadelphia Inquirer
Knight-Ridder/Tribune Business News

May 8--It was a wake in cyberspace. Minutes after Commodore International Ltd.,
the company that helped launch the personal-computer revolution 15 years ago,
said it was going out of business nine days ago, the Commodore faithful tapped
into the Internet,

CompuServe, GEnie, and a host of other on-line services and computer bulletin
boards.

They came from their bedrooms and dens, from offices and college dormitories,
from America and Europe and Australia and Asia, from everywhere people keep
desktop computers. Software engineers, videographers, techno- artists, hackers
- they eulogized Commodore's Amiga computer as far better than those pitiful
Macintoshes and IBM-compatibles.

Their Amigas can handle streams of video that would choke a Mac or an IBM.
Their Amigas can produce eye-popping graphics and dazzling sound at a lower
cost than the competition. Yet their Amiga was so unappreciated in the
personal-computer marketplace dominated by Macs and IBMs.

Why didn't Commodore try harder, they wondered. "They really seemed to believe,
" said Brian Jackson, a former Commodore engineer, "that if you build a better
mousetrap, the world will beat a path to your door."

Why didn't chairman Irving Gould, who routinely was paid more in a month than
most people make in a year, spend more to market the Amiga? Why was their
beloved computer left to whither and die?

They may never know. As is its habit, Commodore, which is incorporated in the
Bahamas but keeps much of its corporate offices in West Chester, announced its
bad news after the close of the stock market on a Friday. As has also been
their habit, Commodore officials have not returned repeated phone calls to
answer any of the questions raised by their terse announcement.

Drowning in debt from its recent losses, Commodore did say that it would
voluntarily sell off its assets for the benefit of its creditors. Among the
creditors is Gould, who lent the company $17 million in 1993, when the company
erased its shareholders' equity with a $356.5 million loss for the year that
ended June 30.

Commodore's overseas subsidiaries were not included in the announcement. What
is to become of them, including operations in Europe and Asia, is not known.

The company said it will turn its assets over to an unidentified trustee who
will oversee their sale under Bahamian law.

There have been assumptions and rumors among the Commodore cult that
Commodore's technology, so adored for its ability to process video images and
multimedia applications, will live on. Such theories hold that some other
company - perhaps a big Japanese consumer electronics house - will buy the
rights to Commodore's proprietary chips. But no one knows for sure, and no
companies have made any offers.

At least not in public. There is also a movement afoot among the small
companies and individuals who develop software and peripheral hardware for
Commodore products to assemble a consortium to buy the technology rights. It is
being organized on the Internet, just as a move to gain control of the
company's board of directors was pursued this year; that effort failed.

"No one knows what's going on or what will happen," said one Commodore dealer.
"There's nothing but guesses and speculation."

Paul Higginbottom began tinkering with a Commodore PET computer - PET, for
Personal Electronic Transactor - in 1978, when he was still a college student
in England. Jimmy Carter was in the White House; Mac's Apple II was not yet on
the market, and the IBM PC was three years away.

"I was experimenting with it, writing some programs, just a typical hobbyist
kind of guy," he said. "So I showed (Commodore) one of the programs I wrote,
and they thought it would be quite useful." In the summer of 1979, he went to
work for Commodore.

"What I liked about going to work for Commodore was that it was a new industry,
" he said. "No one knew where it could really go, but the sky seemed to be the
limit as far as where you could go within the company.

"It was a place where the engineers were looking into neat things. The company
was innovative."

And it was a leader. As early as 1979, Commodore shipped 80,000 small
computers, 14 percent of all the PCs sold that year, according to the market-
research firm, Dataquest, of San Jose, Calif.

Fueled by the popular Commodore 64 computer, which was introduced in 1982, the
company hit its peak in 1984, shipping 3.4 million desktop computers and
controlling nearly a quarter of the market.

Of course, 1984 was the year that Apple introduced Macintosh. And it was also
about that time that computer firms from the Silicon Valley to Singapore began
marketing inexpensive clones of the IBM PC.

Since 1979, Commodore has sold more than 20 million personal computers
worldwide, according to Dataquest. Compare that, however, with the universe of
IBM-compatible personal computers, of which nearly 30 million were sold in 1992
alone.

Instead of recognizing the pervasiveness of IBM's operating system, Commodore
continued to bet on its own system, and upon that isolated foundation, built
its Amiga computer. And just as Sony's Betamax video format failed to capture
the market, even though it was judged superior to VHS, Commodore's Amiga
operating system failed to wrest customers from IBM's MS- DOS.

"I can still remember the introduction of the Amiga" in 1985, said Andy Bose,
an analyst at Link Resources Inc., a technology market-research firm in New
York. "It was a real media event. It was at Lincoln Center. Andy Warhol was
there, Deborah Harry from (the pop group) Blondie. It was truly a rich
computer, perhaps it was ahead of its time."

Its lavish introduction aside, Commodore's marketing efforts on behalf of Amiga
were spotty. Ad campaigns were launched, then dropped before they could be
effective, analysts said.

Eventually, Commodore made an effort to sell IBM-compatible systems in Europe.
But the effort, said Dataquest analyst Philippe de Marcillac, was too little
and too late.

"If they had just been more wholehearted about things," de Marcillac said, "a
lot would have been different."

Many analysts, company insiders, shareholders and other Commodore stakeholders
lay the blame squarely at the feet of Gould and his lieutenant, Mehdi R. Ali,
the president of the company.

In 1993, when the company lost $356.5 million, Gould drew a salary and benefits
of $708,333; Ali's salary and benefits amounted to $1,038,098. Neither was
awarded bonuses that year, according to the company's proxy statement. And for
the current fiscal year, Ali had his base salary reduced from $1 million to
$750,000, and Gould's was reduced from $750,000 to $250,000.

"There is only one answer for what happened to Commodore, and that's Irving
Gould," said Tim Bajarin, president Creative Strategies International, a
computer-marketing consulting firm in San Jose.

"He lived by quarterly numbers," Bajarin said of the Commodore chairman. "I
don't think he ever understood the computer revolution and what it took to take
part in the infrastructure of the computer revolution."

What it took was an operating system common to many computers, Bajarin said.
"But he kept moving in proprietary directions."

Like Gould, Ali knew how to read a balance sheet, Commodore employees said.
What he didn't understand was the computer business.

"He was very sharp at finance," said Higginbottom, who left the company in
1991. "He never understood that if you are going to have a proprietary
operating system, you have to go to great lengths to support the people who are
writing software for your system. Apple understood that. Mehdi Ali did not.

"He just didn't know the computer industry; he didn't understand technology."

For the computer-oriented middle managers at Commodore's offices in West
Chester, where employment fell from more than 400 in 1984 to about 20 or so
when the liquidation was announced, the result was a harried and unpredictable
working environment, former employees said.

"Commodore was just so nuts," said Jackson, the engineer who was laid off in
June 1993, when the company seemed to give up any hope for the future by
letting go more than half of its engineers. "If it appeared nuts from the
outside, it really appeared nuts from the inside.

"You didn't really have a computer company," Jackson said. "Commodore was a
widgets company. They wanted anything we could hack together real quick from
existing technology and sell a zillion of them like we did with the Commodore
64. And with that mentality, you can never really support customers."

Indeed, many Commodore observers said, the success of the Commodore 64, which
came without an aggressive marketing campaign, may have spoiled Commodore's top
managers into believing that such was the way of the computer business.

"So that's what they were always looking for, the next big hit," Jackson said.

When the Amiga didn't provide the big hit, the focus, in 1992, became CDTV, for
Commodore Dynamic Television. That product was intended to bring the computer
into the homes of people who were afraid of computers. A Trojan horse, the CDTV
had a computer on the inside, but no keyboard. It played games and multimedia
reference works on the family TV set, controlled by the couch-potato's favorite
tool, the hand-held remote control.

But it, too, suffered from a lack of marketing. Analysts said that by the time
Commodore brought CDTV and its enhanced successor, CD32, to market, the
company's financial situation was too precarious. Credit markets would not
provide the funds needed to pay for a major advertising push. The product
languished even though some reviewers of CD32 have said it is better than the
well-hyped products by Sega and 3DO.

The epilogue to Commodore's sad story is anybody's guess. "There is so much
speculation; people are mentioning Hewlett-Packard and Philips and Sony as
possible buyers of the technology," said Michael Levin,

a former Commodore employee who heads the Commodore Shareholders Movement, the
Internet-linked group that tried to oust the company's management.

"The dream would be a consortium of Amiga developers," he said, acknowledging
that such a scenario is, for now at least, fairly far-fetched.

"The dice are being rolled, and anything could happen with the Amiga
technology," he said.

Indeed, all that can be said for certain about the future of Commodore and its
Amiga technology is that the lawyers are likely to have a field day
interpreting Bahamian corporate law.

In the meantime, computer junkies across the globe will be watching events
unfold. One young Commodore customer posted this message on the Internet last
weekend:

"I am a very shy teenager who grew up with few friends. What did I care? I had
my Commodore computers! THEY were my friends. They didn't care about the way
you looked, they way you spoke, the way you did ANYTHING! Just press RETURN
after every line; that's all they wanted. In a way, I have lost a friend. I
cannot say that I didn't give birth to a small tear when I heard the news of
(Commodore's) liquidation."

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