Commodore Advert - February 1987
From Sunday Times
"New Amiga 500 - Now other home computers are just toys"
The original Amiga, or A1000 as it came to be known, nearly didn't make it when it launched in 1986, as Commodore was going through some major financial problems whilst its saviour machine was being increasingly delayed. Even after it launched, no-one was sure whether developers would actually produce any software for it, and even Commodore didn't seem that convinced by its own product as it shipped without the company's logo on the front of the machine. Commodore did however survive its financial scare and went on to produce several subsequent Amiga models, including this - the Amiga 500 - a model which saw a return to Commodore's tradition of selling through mass-market retail outlets, a move which enabled the 500 to become the best-selling Amiga model. In the US, the Amiga had finally started making some headway in the market and appeared to have contributed to Commodore International's financial turn-around, with the company going from a loss of $53.2 million in the second quarter if 1986 to a profit of $21.8 million in the same quarter in '87. However in the UK, Commodore's Amiga marketing had not worked particularly well and sales were low - factors which perhaps explained the unexpected "resignation with immediate effect" of Commodore Europe big cheese and one-time General Manager of Commodore UK Nick Bessey, who left to go to an IBM dealership in New Zealand. Amigas had previously been considered overpriced and definitely not mass-market, even though any mention of the machines were nearly always accompanied with words like "excellent" and "wonderful".
At around this time, parent company Commodore International announced that it had signed a major deal with arcade-machine builder Bally, which would allow Bally to develop a whole new generation of coin-operated arcade games based on the Amiga. As part of the deal, Commodore would receive software rights to anything developed, in return for the Amiga's graphics capabilities - the key to the deal being the three co-processors that made the Amiga so good: Agnus, Denise and Portia, plus 1.5Mb of ROM for game code - and Commodore's technical know-how. Commodore's US general manager Nigel Shepherd suggested that "this association will particularly enhance the value of the soon-to-be introduced A500" whilst Bally's Roger Keesee said "The Amiga's ability to generate over 4,000 different colours, plus special effects capabilities can provide for substantially improved high-resolution graphics, not only in our games systems but in our other video products". A few weeks later, games company Mastertronic announced that its arcade cabinets also contained the same Amiga-based "B-52" boards. Recently launched in the US under the Arcadia Systems subsidiary, Mastertronic was a new entrant in the competitive arcade games market and was now a direct competitor with Bally. Mastertronic's Geoff Heath was somewhat pragmatic about this situation, suggesting that "[Bally is] a multi-million pound company, and we're still working on it".
Finally, the affordable Amiga
Frank Herman of Mastertronic, © Popular Computing Weekly, December 1987It really took the release of the A500, which was essentially an A1000 at less than half the price, to finally make the Amiga affordable enough to take on its closest competitor - the Atari ST - and finally kick off the company-saving sales Commodore had been staking its future on, a fact borne out by various comments from leading software houses of the day, including Mastertronic's chairman Frank Herman who said "I think the A500 is a very sensible move - it makes the Amiga more affordable. We're developing Amiga product, in fact we're already fully committed to it". Leigh Richards of Creative Sparks was a little more cautious, suggesting that "It's early days yet. It's a significant launch, certainly, and will encourage development of software. The Amiga is a super machine". Enthusiasm seemed to split along geographic lines, with companies in the UK, where the 16-bit market was still in its infancy, being more wary. Ian Stewart of Gremlin reckoned that "The ST has opened the market. The Amiga is a superb machine, but it is still too expensive as a games machine for Europe". Mirrorsoft marketing director Pat Bitton pointed out one of the issues for smaller UK software houses was that "Software for the 16-bit machines has to be done on an international scale, because of the high development costs".
Popular Computing Weekly was another that, even after the price cut to £500, reckoned that the Amiga was still too expensive. In an article defending the magazine's seemingly pro-Atari ST stance, Peter Worlock suggested that "Yes, the Amiga is a great machine. Technically, it may even leave the ST for dead. But, assuming [we] speak for the silent millions, I would say: I'd love an Amiga but I can't afford it. Maybe you can do wonderful things with its graphics, but a Sun Apollo workstation does 'em better, and I can't afford that either". He continued by comparing the similarity of the price of an ST to that of the mass-market Commodore 64 a few years earlier, before suggesting that no computer at the Amiga's £500 price point had ever sold in large quantities in the UK and concluding "We're not being paid by Atari, we're paid by thousands of computer owners every week who expect hard facts and informed opinion. Our informed opinion is that, for the ordinary computer enthusiast, the ST currently represents a better buy".
The A500 also seemed overpriced if the grey market was anything to go by, as by October 1987 Commodore was having to warn UK users against buying discount 500s which had been imported "without Commodore's knowledge" and which had been made available via "unauthorised dealers and distributors". The machines appeared to be European models rated at 220V, which although close enough to the UK's 240V supply, were not approved: if anything went wrong it was tough luck as Commodore would only warrant machines in their country of origin.
First signs of a grey market had appeared at least a month before this when it had been noted that poor sales in Germany and Europe might have been the source of the dubious import market, as dealers sought to dump their machines. The UK was in the midst of an Amiga turn-around following a voucher promotion, which offered £100 off an Amiga or £200 off a bundle including the 1081 monitor, the effect of which was to bring the Amiga 500's price down to £399 - the same as the 1981-vintage BBC Micro. Although Commodore UK's consumer sales manager Tom Hart suggested that the company had "no plans to do anything with the price of the A500" and that "[the offer] will end on the 12th September", Popular Computing Weekly was forecasting a price drop to £299 plus VAT before Christmas whilst Amiga distributor Zappo Computers' chairman Don Carter had been staggered by the effect of the promotion, saying "A500 sales are currently phenomenal. The Amiga has moved from being a product that was important to us, but frankly didn't sell very fast, to being a product that is currently our fastest-selling computer". Popular Computing Weekly observed that retailers in Germany - where the grey imports appeared to be originating from - might want to press Commodore for a similar promotion over there.
The grey imports issue rumbled on for a while, and mirrored a similar "crisis" 18 months before when there had been a threat of a wave of imports of Sinclair Spectrums from Brazil. As more stories of "dodgy computers" started to appear in the press, Commodore was poked in to action, although the company admitted that the machines, which had initially been described as outright "fake" and which Commodore's UK Consumer Division's Tom Hart had said were coming from "unscrupulous dealers who cannot get a Commodore dealership and are trying to make a fast buck", were still perfectly legitimate machines having been produced at the company's Braunschweig factory in Germany. On the downside, the grey machines were all European spec with round-pin Euro plugs and everything and even came complete with bogus UK warranty cards, printed with a non-Commodore luminous red ink. Commodore's new UK boss Steve Franklin - who started in July 1987 and who was the latest in a string of MDs, as Commodore seemed to be continuing the "revolving door" staffing policy popular during the Jack Tramiel years - was forced to admit that Commodore could take little action over the incident, whilst still suggesting that customers should be careful. Zappo Computers popped up again as its chairman Don Carter defended Commodore's position by suggesting that "Under the treaty of Rome we are in a free market, so there is no reason why products shouldn't be imported into this country from Europe. Commodore would stand in contravention of the treaty if it tried to stop those imports". However, he continued "Obviously Commodore [isn't] thrilled that someone in Europe is screwing up their market, but on the other hand have a duty to warn people that these products are not UK products. The technical subtlety is of significance - these products coming in from Europe have not been through UK quality control, so there is every possibility that they will be more prone to failure". The upside of the whole issue was that it did seem to have spurred Commodore into addressing its Amiga pricing, in order to compete with the "unofficial" grey Amigas. Carter pointed out that "in the early days, the Amiga didn't sell well Europe-wide. All the companies had targets to achieve, and some dealers and distributors tried to engineer prices which resulted in the machines coming in at silly prices. Commodore UK put a stop to it, and the only reason that the grey imports have ceased is that the promotion that Commodore UK is offering is better than the price of the grey import. Grey imports prosper when there is a market for them".
As well as the headline-grabbing A500, Commodore also announced the A2000 at the same time as the A500 but actually managed to start shipping it several months before its cheaper sibling, and several weeks before it was actually due. Kaday, who was not surprisingly claiming that the move was as a result of the response to the launch by dealers and members of the public, said that "We are delighted to be shipping the new A2000 early following a positive press from this month's launch" and reckoned that Commodore was now "ready to fulfil [the public and press's] expectations".
Chris Kaday, MD of Commodore UK, © Popular Computing Weekly, May 1986In early April, Chris Kaday suddenly resigned, prompting speculation that his disappearance had been demanded by Commodore's European headquarters. Kristian Andersen, Commodore UK's marketing head, dismissed these rumours as "fairytales" (geddit?), saying, not entirely convincingly, that "It's not dramatic. It was just one of those things. Chris just thought he'd prefer to go for other opportunities". The rumours in the press however were that Kaday had been "asked to leave" following concerns from Commodore's president Tom Rattigan about Commodore UK's prospects, with Rattigan having stated that "the UK market's been a real problem for us over the past year". Those "problems" were primarily the lack of Amiga 500 and 2000s, which left Commodore UK without any new models to sell, unlike the rest of Europe. Beyond the mystery disappearance of Kaday, Andersen also took some time out to diss the company's own PC1 - a single-floppy-drive MS-DOS-based entry-level PC aimed at the home market. Andersen said of it that "The PC1 is a downgrade of our PC line. There seemed to be an interest in a product like that so we built one and showed it at Hannover". He continued "I'm not very convinced that people will buy it - for one thing MS-DOS will bore the home computer market stupid".
The sense of having to build crummy IBM clones to satisfy a perceived market need seemed to be quite common at the time - Commodore's founder and now CEO of Atari, Jack Tramiel, had been as dismissive of his new company's own PC entry as Andersen was of Commodore's attempt. Kaday had also been skeptical about the PC1, suggesting that "If the PC1 can be released at the right price then we in the UK will participate. But, we feel we've just launched two very exciting products in the [A500 and A2000] Amigas and we don't want to distract too much attention from them". Maybe Kaday's sense of independence was getting too much for Commodore HQ, as he went on to suggest that "The whole question of price is academic. We will announce the UK price at the time of launch, but the machine is not yet in production. Commodore UK is focusing on product that is shippable".
Commodore UK had appointed Steve Franklin, former Rank Xerox alumnus for 11 years and sales and marketing director of Granada Business Centres for the last three years, as its new General Manager, three months after the departure of Chris Kaday. UK operations, partly thanks to Kaday's slimming operations over the previous year which included the closing down of LCD watch and game manufacturer Commodore Electronics, had become something of a minor offshoot of CBM Europe in Frankfurt. Power was becomming increasingly centralised in West Germany, with local chief Ernest Tarien reporting directly to Commodore International's chief exec Gould, and Popular Computing Weekly was even questionning whether Franklin would simply become a puppet of the European operation - a sad end to the years when Commodore UK was the absolute jewel in the whole of Commodore's European crown. Franklin was due to start in his possibly-powerless poisoned-chalice role on the 1st July.
Within a few weeks, he was interviewed in Popular Computing Weekly and kicked off by suggesting that his plan was to "put Commodore back on the map", referring indirectly to the company's recent string of disastrous financial results and reduced sales. He also explained the continuing existance of the now-five-year-old C64, justifying its positioning as an entry-level machine "for some time" on the grounds that it was cheap and it had a massive software base. This was broadly true, except that the price of £388 for a 64 with disk drive didn't exactly compare well to the Atari 520 STFM's £299. It looked like a price cut had to be one the cards, with Franklin suggesting that "Come September, [you will see] some very attractive buys on the C64". He seemed less convinced about the company's C128 and C128D, hinting that "there is a question as to whether they're competitive", but he was also keen to rule out a return to the vicious price wars of 1983: "I will never get into a price war. It's bad for the industry, bad for dealers and ultimately it's bad for the end users, because if companies keep cutting their prices, then something will have to give, and that something will be quality". As well as Atari, Franklin also acknowledged the presence of Amstrad, pointing out that when a home user wanted a serious machine, the choice was "Amstrad, Amstrad or Amstrad". Here too was a willingness to avoid a price war on a second front, as Franklin stated that Commodore didn't want "to start a war with Amstrad, we simply want to provide an alternative". Popular Computing Weekly concluded that whilst wanting to avoid a war was understandable, "standing between Alan Sugar [of Amstrad] and Jack Tramiel [of Atari] is to place yourself squarely in the combat zone".
On the 16th April, not long after Kaday's departure, Thomas Rattigan was sacked by Commodore, but this time it wasn't until October - a full seven months later - that chairman of Commodore International Limited, Irving Gould, had found a replacement in the absurdly-named Max E. Toy - apparently a well-known figure in the computer industry who had previously held jobs at IBM, ITT and Compaq. Rattigan, a former PepsiCo executive (echoing Apple's recruitment of John Sculley to replace Steve Jobs), had been hired to replace Marshall F Smith, who had held the post for only two years since Jack Tramiel's departure. He had re-established some trust with Commodore's bankers, who were said to have preferred his style and success in giving Commodore some product stability to Gould's hard-nosed approach. Gould, whose Canadian non-domiciled status meant that he could only work in the US for two days a week, felt threatened by Rattigan's increase in power and got the board to sack him, even though Rattigan's cost-cutting programme had been credited with turning around Commodore's fortunes following its significant losses in 1985 and '86, which had left it with debts of $100 million in May 1987.
In public however it was being said that the sacking of Rattigan, together with another five top executives, was down to the company's sales not growing fast enough, as well as delays in introducing and distributing new models of the Amiga. Gould, who had installed himself as interim Chief Executive (whilst still remaining chairman of the board), said of the sackings that "I am confident that these actions will improve operating efficiency and provide important momentum for our U.S. business to complement the continued strong performance of our European operations", which was a nod to the comparative popularity of the Amiga in the UK and Germany. The management sackings were not the only blood-letting at Commdore, as they were also accompanied by the sacking of 50 staff at the company's head office in West Chester, Pennsylvania. Rattigan, meanwhile, was suing Commodore for around $9 million with a claim that the company had "prevented him from doing his designated work", including a reduction in responsibility and authority and Commodore hiring and firing senior management without his approval. The animosity ramped up in July when Commodore filed a $24 million counter-suit, claiming that Rattigan - who was widely credited with Commodore's recent financial recovery - had resigned of his own accord and would have been fired anyway.
Not long after this, Commodore was in the embarassing position of having to publicly admit that it was suffering from an early computer virus - the Amiga's first - having previously dismissing rumours of the SCA Virus as a hoax. However, it couldn't actually be arsed to do anything about the problem until it considered that the situation was out of control, with a spokesman suggesting that "it's not serious at the moment. As soon as someone thinks it's got out of hand, they'll take action. Commodore will do all it can to get rid of it - they've just got to obtain the anti-virus disc". Whilst the Guardian newspaper was warning users of other machines not to borrow discs, the readers of Popular Computing Weekly were already suggesting fixes, which seemed to involve nothing more than over-writing the boot sector on each floppy affected.
The Amiga's first virus, courtesy of the "Swiss Cracking Association", seemed to open the floodgates as countless others rapidly followed. Most at the time seemed to be similarly bootloader based and so spread quickly as the Amiga - or Amy as it was being called - had a particularly large Public Domain Software user base. This meant a lot of disk copying between users, and even between computer shops using public software, all of which presented an opportunity for up to 1024 bytes of dodgy boot code to spread rapidly. Although some of these viruses, with names like SCA and Byte Bandit, were intended merely as rogue advertising where destroying disk data was simply an unintended side-efect, the problem was clearly bad enough that by 1989 it had spawned the creation of an entirely new form of software: the anti-virus tool. In a neat sort-of circular reference, several of these were also available as Public Domain (i.e. free), and one of them - VirusX from Steve Tibbett - even provided its own source code, so the really paranoid could inspect it and even recompile it if they felt like it. This anti-virus tool also seemed to set the precedent for the way that most future virus checkers would work - it didn't just recognise changed boot sectors, but could recognise the various signatures of several known viruses of the day, even the ones that didn't have obvious ASCII messages like "Your Amiga is alive!" in them.
All Amigas up to the A500 had used Motorola's 68000 CPU, although there had been rumours of a 68020 CPU appearing in the A2500 "Ranger" Amiga, launched at November 1986's Comdex Fall show in Las Vegas. This didn't happen, but San Diego-based CSA did announce a 68020-based add on module which, with 512K of extra memory added, ran 280% faster than the standard Amiga it was attached to. It could generate a Mandelbrot image in three minutes, which compared against the 50 minutes for a standard Amiga or the 24 hours a standard IBM PC would take. The Ranger had been subject to rumour for a while, however Clive Smith of Commodore US was trying to dampen interest by suggesting that "I'm not even sure Commodore will be at Comdex. We don't comment on un-announced machines. I have read the rumours about it as well but I cannot say anything. The Amiga was always intended to be a family machine, so there will be more appearing in the future". Commodore UK's Chris Kaday was a bit more hopeful that the parent company would throw him something, saying "In the UK, we'll take anything that they make in the States, but I don't know of anything at the moment. As far as we're concerned there will be no new Amigas this side of Christmas".
Meanwhile, Commodore was expanding its sponsorship program. Having already picked up the sponsorship of Chelsea Football Club for £1.25 million, which complemented Commodore Germany's sponsorship of Bayern Munich and a similar deal with Dynamo Kiev, Commodore added Olympic gold medalist Tessa Sanderson to its roster in the December of 1987. Sanderson had found herself without sponsorship for the 1988 Seoul Olympics, a situation which Commodore's then-manager and sometime marathon runner Steve Franklin thought apalling. Commodore subsequently arranged a deal with Sanderson's manager - musician Adam Faith - to the tune of £50,000, with Faith keen to point out that "the deal was not only important for Sanderson but for all other athletes seeking sponsorship". As Popular Computing Weekly's editor John Brissenden pointed out, "For years the tobacco barons have seen sports sponsorship as a lucrative way of advertising their products. If it is good enough for them, surely it is time multi-national companies like Commodore and Atari got in on the action". At the press conference announcing the deal, Sanderson was joined by fellow Olympic athlete Sebastian Coe, as well as Faith and Commodore's Steve Franklin. The deal followed a few months after Commodore had been rumoured to be in the running for the gig to sponsor the entire Football League, which eventually went to Barclays (or Boerclays as it was sometimes referred to by the student anti-Apartheid movement at the time), although the company was also planning to sponsor the break-away "Full Members' Cup" - a competition involving all the English clubs that had been banned from Europe following the Heysel stadium disaster.
By the late summer of 1987, Irving Gould's boardroom blood-letting earlier in the year seemed to pay off as Commodore announced improved figures for the last quarter of its 1987 financial year, as it turned a 1986 loss of $127.9 million into a net profit of $28.6 million (£50 million in 2019) - despite lower turnover which was down to $806 million from $889 million the previous year. Gould commented "We achieved this profitability through operating efficiencies implemented without sacrifice to agressive new product development and marketing".
On its release, the Amiga 500 retailed for £500 - about £1,390 in 2019 terms, but was down to £400 (£1,110) by 1989.
In April 2014, a stash of previously-unknown Andy Warhol digital artwork was rescued from a set of old Amiga floppy disks. Warhol had been commissioned by Commodore in 1985 to produce some art to help promote the platform and had been given an Amiga 1000 together with a whole collection of peripherals. Of the images created, only one of Blondie's Debbie Harry was used in the promotion, and the rest were consigned to oblivion for nearly 30 years. Warhol and Debbie Harry had both made an appearance at the Amiga's launch party in New York.
text and otherwise-uncredited photos © nosher.net 2019