By Jeremy Reimer

On the cusp of greatness

By July 1985, Commodore had everything going for it. The Amiga computer had been demonstrated in public to rave reviews, and everyone was excited at the potential of this great technology.

That's when the problems started.
Commodore's primary woes were always about money, and 1985 was no exception. Sales of the Commodore 64 were still going strong, but the price wars had slashed the profits on the little computer. The company had invested millions of dollars creating new and bizarre 8-bit computers that competed directly against the venerable C-64, such as the wholly incompatible Plus/4, that had no chance in the marketplace. To make things worse, the company had to deal with lawsuits from its ousted founder, Jack Tramiel. Finally, Commodore had invested $24 million to purchase Amiga outright, but as the computer had not gone on sale yet, there was no return on this investment.

All these financial problems put a strain on the company's ability to get the Amiga ready to sell to the public. Without a lot of spare cash, it was difficult to rush the production of the computer. Further software delays pushed back the launch as well. The end result was that the Amiga did not go on sale until August of 1985.

This wouldn't have been a huge problem, had Commodore been able to gather enough resources to ship the machine in quantity. Instead, production delays meant that the computers trickled off the assembly lines, and by October there were only 50 Amiga 1000 units in existence, all used by Commodore for demos and internal software development.

This delay was doubly crippling because Jack Tramiel had managed to rush the development of the Atari ST, using off-the-shelf chips and an operating system and GUI purchased from Digital Research. Tramiel was able to show the ST off at the January CES and started taking orders for the computer shortly thereafter. This sudden competition from Commodore's former CEO took everyone by surprise.
Missing Christmas

Amiga 1000 computers did not start to appear in quantity on retail shelves until mid-November 1985. This was too late to make a significant impact on the crucial holiday buying season. Most retailers make 40 percent or more of their yearly sales over the holidays, and Commodore had missed the boat.

To make matters worse, the company was not really clear about how it was going to sell the computer. The Commodore 64 had been sold at big retail chains like Sears and K-Mart, but marketing executives felt that the Amiga was better positioned as a serious business computer. Astoundingly, Commodore actually turned down Sears' offer to sell Amigas. Back in the 1980s, Sears was a major player in computer sales; I personally used to cherish parental shopping visits so that I could get my hands on the latest in computer technology. The Atari ST was sold there, but the Amiga was not.

Even these blunders might have been mitigated had Commodore come up with some truly amazing advertising campaigns to drum up interest in the new computer. The delays gave the company extra time to do this, but what Commodore came up with was so awful that it sickened many of its own employees.







Stephen

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Bad advertising

Because the Amiga was years ahead of its time compared to the competition, many Commodore executives believed that the computer would sell itself. This was not—and has never been—true of any technology. When personal computers first came on the scene in the late 1970s, most people had no idea what they would be useful for. As a result, the only people who bought them initially were enthusiastic and technically skilled hobbyists—a limited market at best. It took a few killer applications, such as the spreadsheet, combined with an all-out marketing assault, to drive sales to new levels.

The Amiga was in the same position in 1985. It was a multimedia computer before the term had been invented, but there were no killer applications yet. What it needed was a stellar advertising campaign, one that would drive enough sales to get software companies interested in supporting the new platform. Instead, what it got was a half-hearted series of television ads that ran over Christmas and were never seen again. The first commercial had a bunch of zombie-like people shuffling up stairs towards a pedestal, from which a computer monitor emanated a blinding light. It was a poor copy of Apple's famous 1984 advertisement, and failed to generate even a tiny amount of buzz in the industry.

From there, things got worse. The next ad was a rip-off of the ending of 2001: A Space Odyssey and featured an old man turning into a fetus. Some pictures of the commercial's production made their way to the Commodore engineers, and soon the "fetus on a stick" became a standard joke about their company's marketing efforts.

Further advertising used black-and-white and sepia-toned footage of typical family home movies, with some vague narration: "When you were growing up, you learned you faced a world full of competition." Amiga did indeed face a world full of competition, but this kind of lifestyle avant-garde advertising was already being done—and being done much better—by Apple.

What Commodore really needed at that time was some simple comparative advertising. A picture of an IBM PC running in text mode on a green monochrome screen, then a Macintosh with its tiny 9-inch monochrome monitor, then the Amiga with full color, multitasking, animation, and sound. For extra marks, you could even put prices under all three.

As a result of Commodore dropping the ball on production and marketing, the firm sold only 35,000 Amigas in 1985. This didn't help with the balance sheet, which was getting grim.
Missing CES

Commodore had experienced a financial crunch at the worst possible time. In the six quarters between September 1984 and March 1986, Commodore Business Machines International lost over $300 million. Money was tight, and the bean-counters were in charge.

As a result, Commodore was a no-show for the January 1986 Consumer Electronics Show (CES). Ahoy! Magazine reflected on this conspicuous absence:

Understand that the last four CES shows in a row, dating back to January 1984, Commodore's exhibit had been the focal point of the home computer segment of CES, the most visited computer booth at the show—as befitted the industry's leading hardware manufacturer. Their pulling out of CES seemed like Russia resigning from the Soviet Bloc.

Commodore also missed the following computer dealer exhibition, COMDEX, as well as the June 1986 CES. The company had defaulted on its bank loans and could not get the bankers to lend any more money for trade shows.

The company's advertising also slowed to a trickle. Thomas Rattigan, who was being groomed for the position as Commodore's CEO, recalled those troubling times. "Basically, the company was living hand to mouth," he said. "When I was there, they weren't doing very much advertising because they couldn't afford it."

This strategic retreat from the market had a hugely negative impact on Amiga sales. In February 1986, Commodore revealed that it was moving between 10,000 and 15,000 Amiga 1000 computers a month. Jack Tramiel's Atari ST was beating the Amiga in sales figures, in signing up dealers, and worse still, in application support.





Stephen

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"They f***** it up"

Many Amiga engineers felt betrayed by Commodore's financial ineptitude and pathetic marketing efforts. They were disgusted that their company could take such an advanced and powerful computer and fail to capitalize on it. Most of these bad feelings were confined to grumblings in the hallways, but some of them wound up hurting the Amiga directly.

One of the software engineers working on upgrades to Workbench, the Amiga's graphical desktop environment, decided he would "get back" at Commodore for its failure to properly market the Amiga. He programmed in a hidden message, commonly known as an "Easter Egg" in the software industry, that would only appear only when the user pressed a certain combination of keys simultaneously. The message was "We made the Amiga, they fucked it up."

RJ Mical got a slight chuckle out of the message, but told the engineer (who remains nameless to this day) that it was unacceptable, and he would have to take it out. The engineer relented, and when Mical checked the final code, the offending text had been replaced with the message "Amiga: born a champion." He thought that was the end of it.

Little did he know that the engineer had added a second Easter Egg with the original message encrypted inside. To get to the message, you had to hold down eight separate keys, which would pop up the text "We made the Amiga" on the screen. If you kept the keys held down, and were very dexterous or had a friend to help you, inserting a floppy in the drive would flash the latter part of the message for 1/60th of a second. The engineer thought that nobody would ever see this last part, but because the Amiga could output its graphics directly to video, you could just tape the whole experience and press pause on the VCR to see it.

The message was discovered embedded in the ROMs for the European PAL version of the Amiga 1000, just after the computer had gone on sale in the United Kingdom. Managers at Commodore UK pulled tens of thousands of Amigas off the shelves and refused to sell the machines until replacement ROM chips were sent out that excised the offending message. The little joke by a single software engineer cost the Amiga over three months of sales in a major market and had ramifications that shook the whole company.
Leaving Los Gatos

After the Easter Egg fiasco, Commodore management decided that they should move the Amiga team closer to headquarters so that they could keep a closer eye on their activities. The Amiga engineers were asked to move across the country, from their offices in Los Gatos, California, to West Chester, Pennsylvania.

Many of the engineers shrugged their shoulders and started packing, but for some this was the last straw. RJ Mical, the software guru who had written the Intuition programming interface and designed much of the Amiga's GUI, decided that his future would lie elsewhere. He wound up working as an independent contractor on Amiga peripherals and software, including an early video capture device called a frame grabber.

Despite his issues with Commodore, Mical still was proud of the role he played in developing the Amiga. "Those were such cool days, you just couldn't believe it," he would later tell Commodore documentary author Brian Bagnall. "It was one of the most magical periods of my entire life working at Amiga. God, what an incredible thing we did."

The father of the Amiga, Jay Miner, also refused to switch coasts. While he left Commodore as an official employee, he continued to work as a consultant for them for many years. He also donated much of his time giving talks to Amiga user groups around North America, telling the story of how he brought his dream computer to life.
Searching for stability

The trials and tribulations of Commodore Business Machines International weren't the only problems that dogged the young Amiga computer. The initial release of the operating system was rushed, and as a result the first Amiga 1000 machines shipped with many bugs in the OS. The "Guru Meditation" error that started as a joke in the Amiga offices would come to haunt many early Amiga users.

Because the OS lacked memory protection, a fatal error in the OS or even in an application could lock up the system completely, forcing a reboot. Users might be taking advantage of the multitasking abilities of the Amiga to run many programs at once, only to lose work in all of them when the machine went down. The PC, Macintosh, and Atari ST, which had much simpler operating systems that could only run one application at a time, did not suffer from this problem.

As a result, the Amiga gained a reputation for instability that would stay with the machine for many years to come. The lack of memory protection wasn't the real problem—an operating system with full memory protection can still be brought down by a bug in the OS itself, and an application that crashes all the time isn't useful even if the OS keeps running. The software engineers at Commodore worked tirelessly to track down these bugs and eliminate them, as did the application developers. Years later, most Amiga users would run many applications at once and keep their machines operating for weeks and even months without crashing or requiring a reboot. However, the initial stability problems hurt the reputation of the Amiga—and it carried this reputation for the rest of its life.








Stephen

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Rattigan takes the reins

What had seemed like such a promising start for the Amiga Computer had turned, at least early on, into something resembling a disaster. Yet all was not lost. There was still hope that the problems that plagued the platform and its owner could be addressed, and the Amiga given a chance to thrive. Doing so, however, would necessitate a change in Commodore management.

The company, which had been thrown into such disarray when founder Jack Tramiel was unceremoniously booted out by the jet-setting financier Irving Gould, was currently being run by an uninspiring man named Marshall Smith. Smith had come from the steel industry, where nothing much changes across decades, and was thoroughly unprepared for the task of running a computer company.

An indication of what kind of man Marshall Smith was came at Commodore's 1985 Christmas party held at the Sunnybrook Ballroom in Pottstown, Pennsylvania. Drinking heavily, Smith started slam-dancing with a bunch of the engineers, including Greg Berlin, Bil Herd, and Bob Russell. For some reason, unknown to anyone but Smith, he playfully slapped Herd in the face. Herd, who had also been drinking, replied with a slap of his own, but his right hand was in a plaster cast and his slap carried significantly more impact. As Smith staggered back under the weight of the blow, Herd simply said "Don't do that again." Smith said nothing, and Herd was never disciplined for hitting his boss. "Drinking and slam-dancing, that's about the only thing I think [Smith] was qualified to do," recalled Russell.


Smith certainly wasn't a good businessman. At the January 1985 CES, Commodore had shown off an innovative portable computer using an LCD screen. The laptop computer had a display that could show 16 lines of 80-column text, which compared favorably to the then-popular Tandy Model 100's 8 lines and 30 columns. Commodore took orders for 15,000 units of the machine just at the show itself, and it looked like it would be a smash success. That was when the CEO of Tandy/Radio Shack took Marshall Smith aside and told him that there was no money in LCD computers. Smith not only canceled the machine, but sold off Commodore's entire LCD development and manufacturing division, based solely on this dubious "advice" from his competition! Commodore had a chance to take an early lead in the emerging market of portable computers. Instead, the company would never produce a laptop again.

The man intended to replace Marshall Smith was Thomas Rattigan, an executive from Pepsi who had once worked with then-Apple CEO John Sculley. Like Sculley, he knew little about computers when he arrived at his new company, but he was a good listener and learned quickly. In late 1985, Rattigan was given the title of Chief Operating Officer (COO), reporting to Marshall Smith. Smith continued to bungle almost everything, and finally in February 1986 he was let go and Rattigan became President and CEO of Commodore International. He was given a five-year contract that was set to expire on July 1, 1991.

At last Rattigan could take on the task of righting the sinking ship that was Commodore. He had an ambitious plan that involved tackling every problem that plagued the beleaguered computer company. Firstly, to stop the bleeding and restore the company to profitability, he would cancel irrelevant projects, sell off unimportant divisions, and be brutal about laying off employees. Secondly, he would push for a redesigned and cost-reduced Amiga that could be sold at a lower price and allow Commodore to reenter the home consumer market that it once dominated with the C-64. Lastly, he would make a serious attempt to capture the more profitable high-end market by making a new Amiga that was more powerful and expandable than the 1000.

Rattigan would end up succeeding in every part of his plan. He would bring Commodore back from the brink of bankruptcy and back into profitability. He would reinvigorate the Amiga platform by splitting it into low-end and high-end models, each with different market possibilities. He would even preside over a new set of advertisements that, for the first time, properly showcased the power of the Amiga.

For all this effort, which Rattigan would achieve in a little under a year and half, he would be rewarded not with a pay raise, a promotion, or even a pat on the back. Instead, Rattigan would be kicked to the curb, fired before he had even run out his contract. In his place would come vampires, creatures dedicated not to the success of Commodore or the Amiga, but in sucking them both dry until they turned into dust.


Tune in to the next installment of the Amiga saga, in which we explore how Rattigan saved the company, witness the creation of the Amiga 500 and 2000, and learn the story behind Rattigan's forced removal from Commodore.








Stephen

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