(c)1985 AmigaWorld, IDG Publishing.
The Future is Here!
This was the title of the premiere issue of the American AmigaWorld Magazine.
A few days earlier, on July 23rd, 1985 at the Lincoln Center in New York, Commodore gave the invited press and guests of honour a glimpse of the future of the home computer, with great pomp and nobody less than Andy Warhol – it was the birth of the Commodore Amiga.
What the audience saw on this memorable evening in the auditorium of the Vivian Beaumont Theatre was indeed ahead of its time – a graphical user interface, high resolution graphics with up to 4096 colours and four-channel stereo sound – all of that embedded into a true multitasking operating system.
During the show, one highlight followed the other – from the presentation of all 4096 colours of the palette simultaneously on the screen to a power chord („Smoke on the Water“) up to the bouncing ball, which has become a true icon in the meantime.
As Andy Warhol and Deborah Harry showed up on the stage towards the end of the event and as Andy, using the Amiga, turned a digitized image of Deborah into one of his typical, world-famous portraits in just a few minutes – a process that would have taken him several days in his own studio – there was no stopping the audience from cheering in awe.
Standing ovations, frenetic applause and an enthusiastic response in the press that Commodore had never experienced before (and by the way would never experience again) were the reward for many years of hard work.
The New York Times mentioned that the Amiga is „unsurpassed for music and video applications“ and added that „Walt Disney would have loved it.“
BYTE Magazine, which had become one of the most important and influential trade journals for microcomputers since the mid-1980s, ennobled the Amiga with a thirteen-page cover story and described it as „the most advanced and innovative personal computer today.“ (Back then, the term „personal computer“ was not yet synonymous with an IBM/MS-DOS compatible computer.)
Not Exactly an Easy Birth
As soon as the highly acclaimed new star of the computer scene saw the light of day, his mother, who had been in a state of distress for quite some time, became seriously ill.
While Commodore was able to close the year of 1983 with unprecedented record figures and a total turnover of over one billion dollars for the first time since the company was founded – thanks in particular to the C64 – the year of 1984 began with a bang.
Jack is Gone
In January, during the Winter Consumer Electronics Show (CES) in Las Vegas, Jack Tramiel, the company’s charismatic and impulsive founder and CEO, broke up with Irving Gould, Commodore’s largest shareholder and chairman of the board. For many years it was left to speculations what exactly had happened between the two, until Leonard Tramiel, second oldest of Jack’s three sons, uncovered the secret during CommVEx v11 in 2015.
Jack not only left CES but also Commodore with immediate effect. A brutal incision for the company that Tramiel used to run with a kind of micromanagement style and who always set the course for the company with determination.
One small fun fact: It was at exactly that CES in 1984 that a small start-up company called Amiga Corporation, which publicly produced joysticks and other strange input devices, presented its secretly kept miracle weapon, code-named „Lorraine“, which was later to become the Amiga to selected industry representatives behind closed doors.
Shortly after leaving Commodore, Jack and his wife Helen went on a trip around the world, which was supposed to last a whole year. It wasn’t even a full three months – the couple had just made it to Sri Lanka – when Jack received a phonecall from Steve Ross, then CEO of Warner Communications and its parent company Atari, Inc.
Atari had lost more than half a billion dollars the year before, which caused the video game industry in the USA to collapse, and the share price had shot into the basement. When a large-scale staff cutback didn’t help to pull the ship of Atari around, Warner wanted to get rid of the sinking company today rather than tomorrow.
Steve Ross was firmly convinced that only Jack Tramiel would be able to manoeuvre Atari back into profitable waters.
Jack is Back
Discussions about the modalities of a possible takeover of Atari by Tramel Technology Limited (TTL), which was established specifically for this purpose, progressed surprisingly fast and so the acquisition was officially completed on July 1st, 1984. A few days later, Tramel Technology was renamed Atari Corporation.
By the way, „Tramel“ isn’t a typo. According to Leonard Tramiel, Jack hoped that the family name, which was mistakenly pronounced „Tra-meal“ instead of „Tra-mell“ by most people, would finally be pronounced correctly along with the new company name. However, that didn’t work out as hoped. The company just didn’t exist long enough under this name to have the desired effect.
Tramiel had a clear goal in mind – he wanted to beat Commodore with their own weapons, which he knew so well, by developing and producing a reasonably priced, mass market home computer that would mop the floor with the C64. Atari had both the production facilities and the distribution network to help him achieve his goal.
In the run-up to the takeover, Jack Tramiel, driven not least by the wish for revenge on Irving Gould, began poaching in the ranks of Commodore and recruiting their key personnel. He found that many Commodore employees had no confidence in the new CEO Marshall Smith and his management style and so they were only too happy to accept his invitation.
Shiraz Shivji, head of development and senior chip designer at Commodore Business Machines (CBM) certainly represented the most painful loss of staff for Commodore. In May 1984, Shivji took three of his most important employees from Commodore with him to join Tramiel.
But also high-ranking employees from management level answered the call of their old patriarch. In addition to Sam Tramiel (well, he was obvious), Tony Tokai (Vice President Commodore Japan), Lloyd Taylor (Vice President Product Development), Bernie Witter (Vice President Finance) and Gregg Pratt (Vice President Operations) soon joined Atari.
The departures were such a blow to Commodore that Michael Tomczyk, at the time Product Marketing Manager for the VIC-20 system, even spoke of „entrepreneurial suicide“, as neither Irving Gould nor Marshall Smith made a significant effort to persuade such important employees to stay.
Aggravating for Commodore was the fact that, apart from the already established home computer C64, they had pretty much nothing ready for the rapidly developing market, with the exception of the 264 series consisting of the 8-bit models Plus/4, C16 and C116, all of which were already technically outdated at the time of their introduction. The C128, which was in development to become the first major upgrade of the C64, wasn’t to be ready for market until 1985 anyway.
Within only a few months, the shiny billion dollar company had turned into a leaking cruise liner with an inadequately staffed bridge, floating along with ageing technology and whose remaining engineers were barely familiar with the next generation of computers that lay ahead like an iceberg on the horizon.
Commodore didn’t have enough expert knowledge when it came to the 16-bit generation, which announced itself clearly at the CES in January and only shortly afterwards, in form of the Apple Macintosh, sent its first serious representative into the race – even though it was no direct competition to Commodore’s inexpensive home computers.
When one executive after another left Commodore and rumours had it at Summer CES in Chicago (June 3-6, 1984) that Jack Tramiel and Warner were in takeover talks about Atari, it was enough to finally ring the alarm bells. Commodore’s share price had fallen from $60 to $20 since the beginning of the year.
Amiga Corporation again had a booth at CES. Development of Lorraine had made significant progress in the meantime. Among other things, the three custom chips, which in January consisted of huge, manually produced perforated grid plates, were now actually available in the form of integrated circuits.
This time, Amiga allowed the press a closer look and the reception was simply enthusiastic. Compute! Magazine wrote, for example, that Amiga’s Lorraine could „signal the beginning of a completely new generation of personal computers“ and that the new computer is „potentially powerful enough to make an IBM PC look like a four-function calculator.“
Needless to say, also Commodore’s management was attracted by the hustle and bustle around the Lorraine. Amiga Corporation not only possessed exactly the technology they were lacking so badly, but also a whole bunch of bright minds and engineers who had spent the past two years dealing with nothing else but the next generation of computers.
Commodore Takes Over Amiga
Some informal contacts between the two companies had already been established at the beginning of 1984, but this was before the situation for Commodore became dire so quickly. Now the time had come to pick up the thread again. It was Commodore’s long-standing consultant Steven Greenberg who contacted Amiga’s CEO Dave Morse by telephone on June 14th.
The phonecall was followed by several meetings and open discussions at both sites of the companies involved. Amiga had run into severe financial difficulties after their former investor Intermedics got cold feet due to the 1983 crash and withdrew further support. Dave Morse opened up to his negotiating partners that Amiga Corporation had been in a contractual relationship with Atari since March 1984. Subject to this letter of intent was a $500,000 loan that Atari had granted them to finance Lorraine’s further development.
Fortunately for Commodore, Jack Tramiel only learned about this preliminary agreement a few weeks after his takeover of Atari. This should only be mentioned to avoid confusion.
According to the letter of intent, a license agreement was to be concluded by June 30th, 1984, which would have allowed Atari to use Amiga’s custom chipset initially for video game consoles and from 1986 on also for home computers.
If this license agreement wasn’t concluded and Amiga Corporation not able to repay the loan to Atari until June 30th, all rights to Amiga’s technology would be transferred to Atari accordingly.
Facing the fact that time was running out, Commodore granted Amiga Corporation a one-off payment of $750,000 to repay Atari’s loan and continue development.
On June 29th, one day before the deadline expired, Dave Morse and his financial advisor Bill Hart appeared at Atari, paid back the $500,000 plus interest in the form of a cheque and quickly disappeared again – at least that’s how the legend goes.
Meanwhile, negotiations between Commodore and Amiga continued. If Commodore initially wanted to acquire – just like Atari – only the rights to Amiga’s chipset in order to build its own computer of the next generation, the executive board became increasingly convinced that it would make sense to take over the entire company.
Otherwise, Commodore’s engineers would have had to familiarize themselves with the new technology, which could have lengthened the process of completing a new computer – at least as far as the decision-makers were concerned. Among other brilliant hardware- and software engineers, Amiga Corporation had Jay Miner, who was such an experienced and successful development manager that Commodore wanted to have him and his team in their own ranks.
On August 15th, 1984, the deal was finally sealed. Commodore paid $4.25 per share for Amiga Corporation, which was equivalent to a purchase price of almost exactly $24 million.
Some other sources mention a price of $27 million, but in his book „Commodore: The Amiga Years“, Brian Bagnall states very precisely and conclusively that the purchase price was based on a total of 5,647,059 shares. In addition, Robert „Bob“ Russell also confirms the price of $24 million in Bagnall’s book.
The procedure described here about the poker game around Amiga necessarily is a shortened version of the real events. All this ultimately led to a mutual dispute between Atari and Commodore, which was not to be settled until three years later.
Be that as it may, Commodore now possessed the hottest technology in the home computer industry as well as a highly motivated team that had taken a major step closer to achieving its goal of bringing the best computer of its time to market.
However, the initial euphoria of the two newly married partners should not last long.
The Race is On
Around that time the Amiga was still a long way from being a finished product. There was no case design yet and therefore no final layout for the mainboard of the computer. In addition, the chipset which had been presented at Summer CES still had some bugs and the team was working feverishly on a final revision.
Even more work was still to be done on the software side – there was no finalized DOS, no graphical user interface and no BASIC, not to mention any application software or games for the planned launch in the summer of 1985.
After all, the Amiga team, which had moved into a new, much more spacious office building in Los Gatos, was able to provide important software houses such as Autodesk, Borland, Electronic Arts and the Lotus Development Corporation with Amiga prototypes at an early stage and subsequently also with ROM updates.
January 1985 was traditionally marked by Winter CES in Las Vegas and for Commodore, this show must have felt like two punches right in the face.
As mentioned before, the Amiga and its operating system were not yet developed far enough to publicly present it at the show and so Commodore couldn’t help but to helplessly watch how Jack Tramiel and Atari stole the show from all of them.
Within a mere five months, Shiraz Shivji and his team had managed to complete major parts of their 16-bit computer named Atari ST and to publicly present it at CES – complete with housing, motherboard, finished chips, operating system (TOS = Tramiel Operating System) and the graphical user interface GEM.
But that wasn’t all, Atari said they were planning to deliver the two models 130ST and 520ST in the foreseeable future. An even greater shock effect was triggered by the targeted sales prices of the two models – around $400 and $600, respectively.
No wonder a smile of satisfaction was written across Jack Tramiel’s face, while Commodore left the show with at least one black eye – this was also how the press saw it.
All in all, Atari’s appearance at CES was more than just a challenge to Tramiel’s old company and the race to be first to launch the next-generation computer to the market sure was on now.
Commodore’s Big Dive
Though they couldn’t announce anything new about the Amiga during CES, at least the figures for 1984 communicated by Commodore sounded impressive. The turnover of the 1983 fiscal year ($680 million) had almost been doubled to just under $1.3 billion (with a profit of $144 million) and in the Forbes 500 ranking, Commodore clinched the 380th place for the first time in history.
But in truth, Irving Gould and Marshall Smith already knew that this was probably the last good news about Commodore’s financial situation for a long time to come.
The Plus/4, which hit market in June 1984, fell way short of Commodore’s expectations and was soon after sold out at a fraction of its original retail price. The Commodore 64 only sold in large numbers in Europe during the Christmas season, the US market had long since been served and satisfied – the consequence of which was an ever-increasing stockpile and a 94% drop in profits in the last quarter compared to the same period of the previous year.
It got much worse very quickly. Commodore closed the first quarter of 1985 with a loss of $21 million and Commodore’s share price fell to only $10 after announcing the losses in April. Irving Gould’s shareholdings lost $300 million in value over a period of less than two years. A situation in which every CEO knows that the air is getting extremely thin.
Problems Pile Up to Crisis
Along with the share price, the company’s management and its chairman also took a dive, at least to the outside world, and so speculations about Commodore’s future shot up. In May 1985, New York Magazine blatantly wrote about a possible bankruptcy and described the Amiga as possibly the last hope for the ailing company.
In June, just a few weeks before the big Amiga gala in New York, Commodore’s financial situation worsened dramatically. Write-offs on accumulated inventories alone amounted to $63 million. The second quarter ended with a record loss of $124 million and the company was no longer able to meet its obligations under various loan agreements and to service repayment installments due on time.
Irving Gould, Marshall Smith and Thomas Rattigan, who was installed by Gould in April as Head of Commodore North America, persuaded the banks to extend the loans until the end of January 1986. They argued that Commodore would thus be able to generate sales in the coming Christmas business with the C64, the recently completed C128, the IBM PC compatible PC-10 and PC-20 and of course the new Amiga, on which expectations now were ever growing.
At the same time, Commodore pledged to lenders to take urgently needed measures to drastically reduce spending during the same period. It was agreed to reassemble in February 1986 in order to re-evaluate the situation and then decide whether to grant further loans for the continuation of business operations or to initiate insolvency proceedings against Commodore.
Even though both sides tried – in mutual interest – not to let Commodore’s financial problems become public, all kinds of rumours soon spread and the share price fell to a historical low of $4.75.
The Race Enters its Final Lap
Right into the midst of Commodore’s financial crisis fell Summer CES (June 2-5, 1985) in Chicago. During the traditional press conference, Marshall Smith was confronted with unpleasant questions about the fallen share price and rumours of Commodore’s imbalance, to which he reacted with visible irritation.
While Atari proudly announced the official delivery of the 520ST in the USA starting July 8th, the Amiga once again was absent from the show – much to the amazement of the trade press and especially the competition.
Visitors were hardly able to find out anything at all about the Amiga at the show, instead Commodore put the spotlight on the market launch of the C128 and referred all inquiries regarding the Amiga to the press event in New York the following month.
Compute! Magazine speculated in their issue #63 (August 1985) that the Amiga had already been finished and that Commodore would only hold it back until the launch event in July and to not steal any attention for the C128 launch at CES. In reality, however, they were not quite right.
The software developers in Los Gatos were working around the clock like mad on Intuition (the graphical user interface) and Amiga DOS throughout June. After the work on the C128 was completed, Commodore had ordered some of their best software engineers to California at the request of the Amiga team. The strengthened group worked hard day and night to get the system software as stable as possible in time for the big day on July 23rd. On July 15th, they decided that the code was in a presentable condition – preparations for the festive performance at the Lincoln Center could finally commence.
A week earlier, Atari had started to deliver the 520ST (the 130ST had been discarded in the meantime) at a stunningly low price of $800 including monochrome monitor and $1000 including color monitor. The accompanying advertising campaign focused – typically for Jack Tramiel – on the unbeatable price compared to the competition.
Atari had won the qualifying – the race for pole position in the 16-bit market. The outcome of the main race of course was still open, but one thing was certain – Commodore would have to roll up the field from behind.
Honey, I Shrunk the Company
More than anyone else, it was Thomas Rattigan who did not lose time after the meeting with the banks and immediately set about saving costs wherever possible. One of the first and most famous victims was Commodore’s own BAe 125-700 aircraft, lovingly dubbed the „Pet Jet“, after Commodore’s first computer model, the Personal Electronic Transactor.
Shortly afterwards, several production facilities around the globe were closed and some 700 workers released.
Technicians and engineers were also affected by the cost-cutting measures that had become necessary. Each manager was required to release 33% of his staff to relieve the payroll, thus providing Commodore with sufficient liquidity to maintain operations.
The decision to part with the Optoelectronics unit for a price of just under $10 million was particularly painful, but in the end it was unavoidable. Commodore Optoelectronics was a proprietary division that was involved in the development of active matrix liquid crystal displays (LCDs). These were soon to play an important role in the manufacturing of laptops and handhelds – and with the sale of their own division, Commodore deprived itself of the opportunity to scare the competition in this field with a decisive cost advantage.
In the wake of this disposition, Commodore also discontinued the further development of the Commodore LCD laptop, which had already been presented as a prototype at CES in January 1985.
There’s a funny story going on that Tandy’s management is said to have convinced Marshall Smith during some talks at CES that there’s no money to be made in the LCD business. As a result, Smith is said to have made the decision not to pursue Commodore’s LCD project any further, while Tandy earned millions with their portable LCD computers.
I have to admit this is a nice story, but it’s probably not true. At least, however, it’s incomplete. Contrary to the Commodore LCD, the C128 had already been finished and the Amiga was on the brink of completion. In view of the empty coffers, management at Commodore had no other choice but to allocate the scarce resources (liquid funds and personnel) to these two products. Last but not least, it was absolutely necessary to be able to rely on sales that could be realized at short notice.
By December 1985, Commodore had reduced operating expenses by 37% and Thomas Rattigan had been appointed Chief Operating Officer.
However, the measures implemented could not prevent another loss ($39.2 million) for the third consecutive quarter of the year. At least the trend was pointing in a positive direction. For the fourth quarter of 1985 and the first quarter of 1986, Commodore’s management promised their stakeholders to finally return to the black again, placing their bets on the Christmas business with the C128 and the Amiga.
Only Fifteen Minutes of Fame?!
„The questions about the Amiga’s future have almost nothing to do with the machine itself […] They relate more to marketing, advertising and the corporate credibility of Commodore.“
It should turn out that Richard Shaffer’s assessment in the Chicago Tribune of July 24th, 1985 was not too far off target.
The festive presentation at Lincoln Center may have been a complete success for Commodore and the Amiga, but at best the event could only be the starting signal. With its end-user price of $1,795 including color monitor, the new computer would by no means be able to sell itself, despite its impressive capabilities and all the praise it deserved.
So a lot of work was waiting for the management of Commodore.
Why 4096 Colors When You Can Have Sepia Tones?!
Despite the worrying financial situation, Commodore’s banks blessed the launch of the Amiga in allowing Commodore a budget of $40 million for marketing and advertising.
Thomas Rattigan, who worked at PepsiCo for over fourteen years before joining Commodore, had recruited Robert Trukenbrod as Vice President of Marketing. Trukenbrod also came from the food industry and had worked at Nabisco for many years.
Trukenbrod’s first major project at Commodore was the advertising campaign to launch the Amiga. For that purpose, he hired no other advertising agency than Ted Bates Advertising from New York. The founders, Ted Bates and Rosser Reeves, are regarded by many as role models for the television series „Mad Men“.
The agency worked on a one-minute TV commercial, which was to be broadcast for the first time on the evening of September 23rd, 1985. Ted Bates Advertising booked several slots for the best airtime, among others during Miami Vice and The Tonight Show with Johnny Carson.
Over at Los Gatos, the whole Amiga team was eagerly awaiting the premiere of the spot. Most of them had spent the past two or even three years foregoing much of their private lives in order to make their common dream of creating the most colorful, sonorous and innovative computer in the world come true. In a few moments, they would finally be able to share their dream with millions of American TV viewers.
And then they got to see this …
In view of the colorless and gloomy mood of the spot, minutes after the broadcast, stunned silence still prevailed among the Amiga engineers. Robert J. Mical remembers the reactions within the team: „Whatever this TV commercial was meant to do, it certainly didn’t advertise our computer.“
Two things strike me here watching the TV spot. On the one hand, I have the impression that the creative minds at Ted Bates Advertising wanted (or had been asked) to position the Amiga as a competitor to the Apple Macintosh and therefore took Apple’s TV commercial „1984“ as a model.
On the other hand – assuming my impression isn’t too far off – I have to say that I’m, just like the Amiga team, not very impressed with the result. I find it absurd to market the Amiga, in light of its distinctive features in the audio-visual field, by trying to copy a competitor’s commercial according to its style.
While Mical and his colleagues had still hoped that the print advertising campaign launched in parallel would be able to wipe this disgrace, they quickly saw themselves mistaken.
The use of the claim „Amiga – Gives You a Creative Edge“ as the bottom line of these ads at least shows a good sense of irony, to put it mildly. Whoever at Ted Bates came up with the idea for the catchy slogan had in my opinion already been on the right track: To appeal to the creative minds of people and to show them how they could use the Amiga for their hobbies such as photography, filming, drawing, painting, making music and playing games.
But instead, the focus of their advertising was on using nostalgic motifs in sepia tones to illustrate the fears of parents that their kids couldn’t keep up in school without the help of a new computer.
The Amiga itself, which to me is still one of the most beautiful desktop computers of all time and whose design also appealed to creative people with a sense of aesthetics, had been squeezed into one corner of the ad layout only the size of a stamp.
Jay Miner expressed his anger about the completely messed up advertising campaign in an interview with Amiga User International: „I can’t tell you how angry it makes me feel to see how the Amiga was handled. The advertisements they did have were absolutely awful. Old men changing into babies and kids competing in race cars. It was ghastly.“
The Difficult Legacy of Jack Tramiel
Commodore had grown strong under Jack Tramiel by selling home computers at very aggressive prices. Tramiel’s business methods („Business is war!“) were no less aggressive and so Commodore had not exactly made friends everywhere under his leadership. This turned out to be a huge burden for his successor, now that the Amiga had to be sold.
The Amiga, unlike the Commodore 64 or 128, which both sold for around $300, couldn’t be distributed through surface stores like Walmart, Kmart or Toys „R“ Us. Any company wanting to sell computers in the price range of $1,000 and above depended on specialist retailers.
However, Commodore had seriously spoiled the specialist trade in the years under Jack Tramiel by first selling them literally truckloads of Commodore 64 computers, just to break a promise shortly afterwards, when they began selling their computers with huge discounts through the mass markets, who in turn began to fight a brutal war on prices. Specialist retailers were left with their piles of C64 computers with nothing to do but to sell the remaining inventory below costs.
In order to regain their trust, a true feat of strength was needed. Commodore started a promotion tour through 45 cities across the USA. During the tour, they repeatedly emphasized that a new management team was now at the helm and that the methods of Jack Tramiel were a thing of the past. In addition to that, they focused on the brand name Amiga, pushing name and logo of Commodore into the background.
Despite all the assurances, most traders remained suspicious towards Commodore and the continuing speculation about a possible insolvency didn’t help to make the job any easier.
Not surprisingly, the result was sobering. By the end of September 1985, only 12% of all traders had agreed to list the Amiga in their assortment. Specialized chains such as ComputerLand, which had hundreds of outlets, had increasingly committed themselves to the IBM PC during 1985 and did not see how the Amiga would fit into their product range. For the sake of completeness it should be mentioned that Apple’s Macintosh faced no exception here.
In the end, Commodore had to deliver the Amiga to a large number of individual shops with different owners, which meant more effort for smaller quantities.
After all, there was one ray of hope: The first 35,000 Amiga systems that Commodore was finally able to deliver from mid-October were sold out completely within a few days. They were literally torn out off the dealer’s shelves. Apparently, there were enough enthusiasts willing to spend $1,800 on a computer whose future was more than uncertain at the time.
With a Little Help from My Friends
Apart from the problems already described, the Amiga had to cope with another handicap during the first weeks – there was hardly any software ready and available for it at launch, for several reasons.
- The Atari ST had a leading edge of about three months in the market, so many developers had shifted their resources towards this computer.
- The continuing bad news and rumours about Commodore’s financial condition made it doubtful whether the Amiga had a future as a platform at all.
- AmigaOS 1.0 was still plagued by a lot of bugs, so some developers were waiting for version 1.1, which wasn’t available until December 1985.
In addition, Commodore withdrew existing agreements with various software companies that had been concluded by the Amiga team in Los Gatos as part of their development program. Thus, Amiga versions of AutoCAD and Lotus 1-2-3 – to name but two – which could have given the system a considerable boost, moved far into the distance.
But on the other hand there also were third parties that recognized the enormous potential of the Amiga early in its development phase and who, despite the bad news about Commodore, firmly believed that the outstanding qualities of the computer would prevail in the end.
Among these companies was Electronic Arts, today one of the largest manufacturers and publishers of computer- and videogames. Founded by Trip Hawkins in 1985, the company was just three years old and had made a name for itself with high-quality games for the 8-bit computers of Commodore, Apple and Atari.
It was as early as at CES in 1984 that Hawkins recognized the Amiga could be able to shake up the young industry for entertainment software and to turn it upside down. In his opinion, the Amiga would advance the relatively young medium on all fronts. Electronic Arts even went so far as to promote their commitment in a double-sided ad, which they placed in selected magazines accompanying the premiere of the Amiga in July.
EA’s first titles for the Amiga, which were released in September 1985 – even before the computer itself was available – were conversions of successful 8-bit games like „Archon“ or „One-on-One“. Of course, they looked better on the Amiga than the original versions, but the underlying principles didn’t change.
A year later, EA published Marble Madness for the new computer and that game really demonstrated what the Amiga was technically capable of doing. Its programmer, Larry Reed, succeeded in doing what no one else had ever done before – for the first time, the conversion of an arcade game to a home computer looked exactly like the original. It was stunning.
But strangely enough the actual „killer application“ wasn’t a game, but the graphics and drawing program Deluxe Paint by Dan Silva. Originally intended only as a tool for their own graphic designers, EA quickly recognised the potential as a fully-fledged commercial product.
Deluxe Paint, released in November 1985, has since then been continuously developed further and was by far the most powerful and comfortable graphics program on all commercially available platforms for years – a true „system seller“.
The program quickly became one of the most popular tools for graphic artists, who created true digital works of art with it. One of the best and most productive of them was Jim Sachs, whose fantastic illustrations for Defender of the Crown made a decisive contribution to Cinemaware’s huge success.
Bob Jacobs, one of the two founders of the Californian company, had seen an Amiga prototype at Island Graphics, who were working on an Amiga graphics program on behalf of Commodore. He, too, immediately recognized the possibilities that would open up with the Amiga and he decided to abandon his previous career as a consultant and mediator and chose to entertain the world with movie-like computer games. Cinemaware and the Amiga soon became an inseparable couple, just like the two in front of the fireplace. 😉
Other companies that have made a major contribution to the success of the Amiga in its early days were, among others, Aegis Development (Aegis Draw, Animator, Sonix, VideoScape 3D) and NewTek (Digi-View, Digi-Paint).
Of course, this list is not exhaustive and should I have forgotten an important „early supporter“, I apologize and ask for a nice comment at the end of the article.
The companies mentioned above had one thing in common: They all placed a bet on the success of the Amiga at a time when it was anything but certain. Admittedly, the stakes and the risk were different from case to case, but all of them provided more than just a jump-start to the Amiga and for that they deserve the thanks of all Amigians around the world.
The Bomb Bursts
Let’s remember: Commodore’s management had been optimistic that they would be able to return to the black in the last quarter following the restructuring measures and a significant reduction in expenditure.
Unfortunately, this wasn’t to happen. At the end of 1985, Commodore was stuck with unsold inventories worth nearly half a billion dollars and had to make drastic price cuts to reduce them. In addition, unexpectedly high costs (severance payments, penalties) were incurred for job cuts and the closure of several production facilities.
Instead of a successful turnaround, Commodore had to report losses of over $53 million for the fourth quarter of 1985.
Naturally, Commodore’s banks knew long before the public. Nevertheless, they were surprised by the amount of the losses and were forced to pull the emergency brake. They immediately put a halt to all spendings and froze all marketing budgets.
The fact that Commodore, once again, was facing severe financial difficulties, became evident for the entire industry in November 1985, when the company stayed away from COMDEX. The Computer Dealers‘ Exhibition was the world’s second largest (after CeBIT) trade fair for the IT industry and it was simply unthinkable not to participate. For marketing the Amiga as a serious competitor to the IBM PC and the Macintosh, the absence at this fair was a catastrophe and a disastrous signal.
Also at CES in January 1986 there was no sign of Commodore and the Amiga at all. At about the same time, all marketing measures came to a halt – print ads and TV spots that had already been booked got cancelled.
In view of the expiring credit lines and the approaching February deadline with the banks, Commodore’s future seemed more uncertain than ever before.
At the beginning of 1986, there was some evidence that Andy Warhol’s pronouncement might become true for the Amiga, who would have had its fifteen minutes of fame at the Lincoln Center gala.
I have deliberately decided to end the article at this point. My intention was to outline how unlikely it was for quite a long time that the Amiga would become a success story and how many hurdles it had to overcome on its way there. I hope that I have succeeded in doing so, at least to some extent.
The realist inside of me knows that it was thanks to the banks who, despite four quarters of losses in a row, reached an agreement with Commodore on February 25th, 1986 about a further credit line of $135 million until March 15th, 1987. This agreement enabled the company to finally turn the Amiga into the most successful home computer since the Commodore 64.
The romantic inside of me prefers to believe that it was the Amiga itself that in the end made it through, despite all adversities, just because the world would have been a poorer one without it. Or as R. J. Mical put it so aptly: „From the very beginning, the Amiga belonged to the dreamers.“
Finally, I’d like to thank Brian Bagnall very much, because this article would not have been possible without his new book „Commodore: The Amiga Years“. The author financed his book through Kickstarter and as one of the early supporters, the digital Kickstarter Edition was already available to me since December 2016. It served me as a very valuable source and I cannot stress enough how much the book helped me in writing this article.
The book is available in stores since September 18th, 2017 and I can only warmly recommend it to my readers. In combination with „Commodore: A Company on the Edge“, Bagnall’s books are likely to be the most comprehensive and detailed review of Commodore’s history currently available.
List of references (besides those directly linked in the article):
- Bagnall, Brian: „Commodore: The Amiga Years (Kickstarter-Edition)“, 2016, chapters 8,11,12,15,17,18,19,20,21,22
- Tomczyk, Michael S.: “The Home Computer Wars: An Insider’s Account of Commodore and Jack Tramiel”, 1984, chapter 9
- Maher, Jimmy: „The Future Was Here: The Commodore Amiga“, 2012, chapter 3
- Tyschtschenko, Petro Taras: „Meine Erinnerungen an Commodore und Amiga“, 2014, appendix
(This article was first published here on January 27th, 2017 under the German title „Die Leiden des jungen Amiga“)