Was anyone else disappointed with the A1200?

[oscar_ates]

As it is said here A600 was a big flop and sold for loss to get rid of the large stock they had built. Diminished C64 sales also helped for the 1993 blow. We know A1200 and CD32 were not competitive to bail commodore out of the muddy quicksand it entered. For the A600 flop they kicked Bil Sydnes out. But nobody touched Mehdi Ali for the years of bad management. A bit strange

[Gorf]

Originally Posted by sokolovic

Interesting article. This part is a bit strange thought.

Yes
I also did find this bit funny - the technical expertise of the author "Anthony Gnoffo Jr." is rather questionable. He is not only not realizing that Macs are 68k based too, but that the C64, which still made up at least 20% of Commodores sales, is not ...

Otherwise the article is at least fair:

Most of its sales there are from its line of Amiga computers, which start at less than $600 each and are used largely as game-playing machines, although they are also capable of running productivity programs such as spreadsheets and word processors.

certainly true.

Still, Commodore's computers in the United States have won acclaim from users for their capabilities in combining sound, video and data. But its products face new threats even in its niche markets -- which include video production, business presentations and education -- from bigger-name personal computer makers such as Apple ....

also true.

[grond]

Originally Posted by Gorf

Washington Post - June 21, 1993

So that's a 13.4% (12%) market share in device numbers ... but only 5% (4.4%) of the money..

Looks like they should have made an A1200 for 200UKP instead of the 400UKP A1200 we got. They would have sold many more devices and everything would have been good. With the RAM cut to 64KB and the expensive 7 MHz processor replaced by a 6510, they clearly would have had a winner. But PC envy spoiled it all...

[sokolovic]

The US Market was the key. Sadly, I'm not sure that any of their machine were aimed at it. Wasn't the A600 and the CD32 initially asked by Commodore UK ?
Also we rarely quote the CDTV as one of biggest Commodore mistake. IIRC it was an huge financial disaster also, which could also explain the revenue breakdown between 1991 and 1992

[OlafSch]

Originally Posted by grond

Looks like they should have made an A1200 for 200UKP instead of the 400UKP A1200 we got. They would have sold many more devices and everything would have been good. With the RAM cut to 64KB and the expensive 7 MHz processor replaced by a 6510, they clearly would have had a winner. But PC envy spoiled it all...

At least these numbers look like they have only sold PCs with very low prices in a very competitive market where you anyway always had only low margins. To me it looks like they sold PCs with losses just to keep market share. A crazy strategy

[Gorf]

Originally Posted by OlafSch

At least these numbers look like they have only sold PCs with very low prices in a very competitive market where you anyway always had only low margins. To me it looks like they sold PCs with losses just to keep market share. A crazy strategy

They probably did - at least the PC business was probably not profitable for some years.
But here in the context of the WaPo article "personal computer" is used for PCs, Amigas and C64s alike.

[Gorf]

From Commodores annual report 1989 (the last one I could find)

The growth in Commodore’s revenue resulted from higher sales of our Amiga and MS-DOS PC product lines, which more than offset softness in sales of the consumer-oriented C64 and C128D computers.
The Amiga product line now accounts for over 45% of total Company sales, up from 41% last year and less than 20% in fiscal 1987.

So the C64 is already in decline in 89 ... and Amiga is gaining traction. And so does the PC ... at the first glance.

Our MS-DOS PC compatible line has also shown substantial growth, rising from 20% of Commodore's total sales in fiscal
1988 to 24% of sales this year. The product line includes a range of computers incorporating 8088 to 80386 technology, and the new "Professional Series-I/|" 80286 machines released this year have been very successful due to exceptionally attractive price/performance characteristics.

Already in 89 the biggest advantage of Commodore PCs seems to be the low price ...

But what about the margin?

Gross margin was $268 million or 31% in 1988 compared with $212 million or 26% in 1987. The increase was due to a favorable mix of higher margin Amiga products and margin improvement programs.

Not a single word about the PCs on this page in the report!
You know what that means ...

[OlafSch]

@Gorf

So it seems they have only made losses by selling PCs. At the end I think Commodore finally tried to do the right thing and concentrated on Amiga (PCs were dropped) but then it was too late

[lionagony]

Originally Posted by Gorf

They probably did - at least the PC business was probably not profitable for some years.

And then Commodore did this: "[Wiki article on A600] Snydes canceled the still-popular A500 that year to ensure demand for the new system, and development on the Amiga series stalled for the first six months as he and Ali focused on targeting the PC marketplace while selling the new model."

Makes you want to scream! Oh, what could have been. I heard Jim Sachs suggest in an interview that Commodore used their stock as a pump and dump. Making deliberate bad choices, then buying the stock dip, then making a good choice to pump it back up and sell. Who knows if there is any truth to that but the decisions back then just make me so sad.

[TCD]

Originally Posted by lionagony

Makes you want to scream! Oh, what could have been. I heard Jim Sachs suggest in an interview that Commodore used their stock as a pump and dump. Making deliberate bad choices, then buying the stock dip, then making a good choice to pump it back up and sell. Who knows if there is any truth to that but the decisions back then just make me so sad.

But it was definately kids pirating games that doomed the Amiga

[Pyromania]

Or Commodore wasting time on the 128, C65 and PCs instead of being all in on Amiga and upgrading it actively could have doomed it. Piracy never hurt Adobe.

[oscar_ates]

C128 was targeted for the business users without any success. It went with go64 mode to play the c64 games. If they did not buy the Amiga I am not sure commodore could produce a nextgen machine

[grond]

Commodore PCs were quite good, as far as I know, there could have been a place for them. But Commodore didn't have a distribution network of its own and thus had to rely on shops ordering PCs from them while the competition opened shops in every town and sold PCs they put together from parts. In Germany you had Vobis and Escom and probably more such chains, they sold their own PCs for a budget price. Perhaps they carried some brandnamed products but that didn't leave much of a margin because of the higher-specced or cheaper comparable offerings of their housebrand. With the delay of producing, offering, ordering, shipping overseas, all that potential margin was consumed before the quality PC arrived at the shop. Escom went under because they were sitting on too many parts and couldn't sell that many in time before their value dropped below the price the bought them for. This shows the fierce competition. How would a company such as Commodore that didn't just have to move boxes from their central warehouse to their own shops survive?

[Gorf]

Originally Posted by grond

How would a company such as Commodore that didn't just have to move boxes from their central warehouse to their own shops survive?

Of course not by selling PCs.
You mentioned the business model of Escom and Vobis … Gateway was more or less the same, but in USA.
None of these survived either … the ones that are left did predominantly mail order (Dell), avoiding the cost of shops and not holding parts in storage, but prodding just in time.
Or having strong ties to businesses and offering service and guaranties like HP and IBM/Lenovo

How could Commodore have survived the 90s?
Learning from Apple and maybe Dell.

concentrate on your own plattform: Apple only got into real trouble after they allowed clones - they totally miscalculated how cheap others could make compatible computers, which was an almost Commodore-like mismanagement move, since everybody else in business knew that Apple was terrible at production…
(Despite the higher price of their products Apple had most of the years a lower gross margin percentage than Commodore !!)

Selling stuff directly to the customers:
if you don’t have shops on your own anyways and retailers hesitate to sell your machines, just sell them directly to your loyal fans and customers - this could have been a win-win situation in the 90s.

[grond]

Originally Posted by Gorf

Selling stuff directly to the customers:
if you don’t have shops on your own anyways and retailers hesitate to sell your machines, just sell them directly to your loyal fans and customers - this could have been a win-win situation in the 90s.

But where do new loyal fans come from in this scheme?

As we both agree, selling new products to the same (and shrinking) group of people would require new technology that supersedes the stuff you already sold to this group of people. It's not like I will buy an A300 if I already have an A500 (except for the few individuals who love buying 2.5" harddisks and PCMCIA memory expansions, network cards and modems costing many times what the base machine cost).

[Promilus]

@Gorf

Apple only got into real trouble after they allowed clones - they totally miscalculated how cheap others could make compatible computers

I'm not really sure it's that bad choice. Should Commodore license architecture and sell chips to clone manufacturers along with OS "Amiga compatible" might've just be a better solution in the long run. Less risky business, bigger userbase. Internal competition between different manufacturers would still provide money to Commodore at the expense of 3rd party. Easy to sit back and enjoy tea while developing new OS and chipset only. ARM was creating his own chips for a while, then went fabless and just licensed design for 3rd parties. And is one of the most popular CPU architectures nowadays. WDC was fabless as well and they made CPU design used by SNES and Apple II GS. Both sold probably way more than all 68000 in Amigas. And WDC still exists!

[Gorf]

Originally Posted by grond

But where do new loyal fans come from in this scheme?

From good marketing!
Ok I am kidding, we are taking about Commodore after all

[Gorf]

Originally Posted by Promilus

@Gorf

I'm not really sure it's that bad choice. Should Commodore license architecture and sell chips to clone manufacturers along with OS "Amiga compatible" might've just be a better solution in the long run. Less risky business, bigger userbase.

That is a good strategy, when you downsize your company and stop own production (except maybe chips in the beginning, but that should be outsourced or licensed as well in the long run)

Apple just made the mistake of not downsizing at all and was still confident customers would prefer the expensive Apple made products over clones, which lead to the debacle of 1996 were they lost way more money than Commodore did in 93.

[Gorf]

Money spent for Research and Development as percentage of annual revenue:

Commodore:
1987  2.0%
1988  1.8%
1989  2.0%


Apple:
1994  6.1%
1995  5.5%
1996  6.1%
1997 12.1%

(sorry, Apple did not explicitly publish R&D costs before 94, but summarized it under general expenses. There is no reason why they should have spent a smaller percentage on R&D in the 80s)

[Bruce Abbott]

Originally Posted by Gorf

Money spent for Research and Development as percentage of annual revenue:

Commodore:
1987  2.0%
1988  1.8%
1989  2.0%


Apple:
1994  6.1%
1995  5.5%
1996  6.1%
1997 12.1%

(sorry, Apple did not explicitly publish R&D costs before 94, but summarized it under general expenses. There is no reason why they should have spent a smaller percentage on R&D in the 80s)

Not sure what relevance these figures have, but I notice that 5-6% wasn't enough to get Apple out of the hole.