Thursday, May 10, 2007

Jack Tramiel - Commodore man

Jack Tramiel is a businessman, famous for founding Commodore International, manufacturer of the Commodore PET, Commodore 64, and Commodore Amiga home computers, and later President and CEO of Atari Corp.
In 1970, Tramiel started work on electronic calculators, and in the early 1970s Commodore became a major supplier of calculators based on a Texas Instruments chip-set. In 1975 TI decided to take over the market, and started producing their own complete calculators which sold at a cost lower than the price of the chip-set alone. This drove most manufacturers out of business, but by this time Commodore had enough of a war chest to survive.
Tramiel started looking for a chip producer to buy, thereby guaranteeing a supply of chips in the future. The obvious solution was MOS Technology, a small company in Pennsylvania that had been set up as a second-source of the TI chips, and was currently struggling with cash-flow problems. MOS was bought in 1976, becoming a part of Commodore.
One of the engineers at MOS was Chuck Peddle, the man who had designed the ground-breaking 6502 chip. Peddle convinced Tramiel that the calculator was a dead-end as a product, that the computer would take over, and that the 6502 was the first in line for success. Peddle showed him a "test system" using the 6502, the KIM-1, and while Tramiel was interested he demanded that Peddle and Tramiel's son Leonard put it into an all-in-one form in time for the COMDEX in six months.
Combining the KIM with a new display driver chip, 4kB of RAM, a version of Microsoft's BASIC programming language, and an all-in-one case including a monitor and cassette tape drive for storage resulted in the PET 2001. At US$599, it became a hit, notably in schools where its tough construction was a major advantage over technically superior machines like the Apple II and Atari 8-bit family, which came out a year later.
Although Peddle left the company in 1980, improvements were made to the platform. In 1980 a new graphics chip with basic color output and a RF modulator for television display produced the Commodore VIC 20, which became a huge seller. In 1982, another new graphics chip, a new state-of-the-art sound chip and 64K of RAM resulted in the Commodore 64 (C64), which was an even more popular and went on to become the best selling home computer in history, with about 22 million units shipped. In 1984, Commodore's sales surpassed US $1 billion.
The success of the C64 was based on a massive manufacturing effort that cost a huge amount of money to set up — borrowed money that should have been easy to pay off in profits on the sales. However, Texas Instruments entered the market, and it appears that Tramiel was so upset about their earlier dealings in the calculator market that he decided to kill them in this one. Publicly declaring "Business is war", he started a price war, with the C64 quickly dropping from US$595 to US$199. While sales continued to skyrocket, profits plummeted, and Commodore's cash flow along with it. It seemed Commodore would soon be in command of a market worth nothing.
By late 1983 Jack and the Board of Directors argued over the direction of the company, which resulted in Jack resigning or being forced out, and several Tramiel loyalists quit Commodore in protest. Jack took a brief hiatus but decided to come back to the computer industry under the claim that he felt no current US computer company was strong enough to compete against the Japanese, who were now moving to enter the US market. So, he formed a new company named Tramel Technologies, Ltd., in order to design and sell a next-generation home computer. (According to Leonard Tramiel, "Our name Tramiel was constantly being mispronounced as 'Tra-meal' and my dad hoped that the other spelling would get people to say 'Tra-mell' (it rhymes with 'done well'). It didn't work."). Several former Commodore employees (including his son Sam and lead Commodore engineer Shiraz Shivji) soon joined him at the new startup, and by March Jack had his new computer design underway.

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