The Smile That Sealed Commodore's Fate

Jack Tramiel was gone. One could write dozens of books about the Commodore 64, but the TED series was as described in previous pages. It had taken about 30 years for someone of Tramiel's caliber to build everything from nothing and take the helm of a company like Commodore. In Chapter 3, we read that Irving, feeling threatened by Tramiel's growing fame, facilitated his departure from the company.

Jack knew what the market wanted. In about five years, he had not only gifted the world with Commodore's immortal 8-bit home computers, but had also played a role in the rise of figures like Steve Jobs and Bill Gates — who for years have been numbers one and two in the world of industry and technology.

It is no surprise. The hidden jealousy of someone who had never discovered a world bigger than his own presidential desk dragged such a magnificent industry into decline. Tramiel had left after the introduction of TED. Perhaps if he had stayed, he could have pushed the massive MOS subsidiary to work around the clock for two or three more years and introduce something glorious — and of course "inexpensive" — from the heart of this new invention. But in the world of American capitalism, Tramiel's access to MOS facilities had vanished, and the pages of 8-bit computer history turned differently.

MOS may have excellent facilities and brilliant engineers. Commodore may be a wealthy and renowned company. But the ideas — and the spirit Tramiel breathed into those ideas — were no longer there. That signature was now seen on the products of Commodore's rival, "Atari," and Tramiel had created fierce competition with Commodore through Atari's outstanding products — visible in the smile of this photograph.

And that strange smile ultimately led to Commodore's collapse. Commodore's subsequent products not only lost Tramiel's signature but also suffered management and marketing problems that we will review.

The Need for a Savior

By late 1984, the need for Commodore's business machines to build a successor to the Commodore 64 was growing. After the absolute failure of the Commodore 16, 116, and Plus/4 line, and the sluggish Amiga market struggling amid increasing competition and Commodore's weak marketing, the need for a new and more successful line of Commodore computers comparable to the 64 became evident.

Commodore needed its next computer to be a serious upgrade from the C64 and successfully fight its main enemy. They had to stop Jack Tramiel and Atari. Tramiel and his new team had introduced a new product called the Atari ST as the "next Commodore 64."

However, everything was rapidly becoming more difficult for designing and marketing a new computer. First, CBM faced management crises following the loss of visionary Jack Tramiel and his rise to prominence at Atari. The new management lacked the vision and business experience that had allowed Tramiel to turn CBM into the dominant force in the personal computer market. With increasing competition, CBM quickly lost its market dominance. Companies like Apple, IBM, and Atari rapidly penetrated CBM's territory. Thus, CBM was not financially in the strong position it had grown accustomed to.

It was in these turbulent conditions that Commodore decided to invest in designing and marketing the Commodore 128. By doing so, they hoped to regain their footing in the personal computer market and eventually restore the dominance they had when the 64 was first introduced.

Bil Herd and the Design of the 128

The design of the Commodore 128 was the brainchild of computer engineer Bil Herd. Young Bil Herd, who had quickly risen to senior engineering at Commodore due to his sharp criticism of the Plus/4 management team, learned from the biggest mistake of the Plus/4 line from the very beginning and made full compatibility with Commodore 64 software one of the 128's key features.

One of the most important aspects of the 128's design was its use of multiple CPUs. The 128 had two CPUs: a MOS 8502 running at 2 MHz and a Zilog Z80A running at 4 MHz.

Commodore had previously released the first multi-processor personal computer called the SuperPET in 1982 under Tramiel's management. It cost $2,800 and targeted educational and scientific markets.

The Commodore 128 was meant to be the first multi-processor computer in the mass market. It also had two video systems, one of which allowed TV connection. The 128's 80-column display mode produced 640×200 graphics — better than the CGA mode that IBM PCs could produce even in the early 1990s!

Three Computers in One Case

This powerful new machine functioned as three completely separate computers:

The Z80 had previously been used in the 64 via external expansion cartridges. But to solve several engineering problems, Bil Herd designed the Z80 into the main board. This mode required loading CP/M software disks during startup.

This does not mean the 128 was a true multi-processor, as it could not use both processors simultaneously. Commodore management envisioned marketing the 128 as an all-in-one computer by integrating business functions. All this sold at an initial price of just $300 — half the price of the 64 at introduction.

However, this design made the 128 an expensive and complex computer to manufacture. As someone who has spent many hours researching for this book, I am confident that had Jack Tramiel been in Commodore management, the probability of him accepting this design would be close to zero.

Technical and Engineering Problems

The 128's specifications improved over the 64 in all hardware areas. It had a MOS 8563 integrated circuit supporting 16 colors and used an improved SID chip capable of producing 4 waveforms. At the time, 128KB of RAM was a significant amount for a computer.

However, reaching this point was a difficult and costly experience for everyone involved at Commodore. The multi-processor design led to many problems that Bil Herd's engineering team worked hard to overcome. Many prototypes had a disastrous tendency to catch fire or explode. Not only that, but the video chip yield for their early prototypes was extremely low — just 0.01 percent. Due to numerous processor bugs, production was delayed and became expensive.

Misguided Marketing

The technical complexity of the 128 not only led to engineering problems but also added marketing problems. The idea of a computer as a multi-purpose unit was still a new concept in the personal computer market, as many consumers used specialized business computers for work and simple computers for home.

Despite the 128's versatility, CBM believed marketing it in the business computer market would yield the best results. However, this decision kept the 128 from the broad appeal that had made the 64 the best-selling computer of the mid-1980s.

By denying the 128's potential as a gaming platform, Commodore management also prevented it from being marketed as a "home" system — something that had truly allowed the 64 to gain enormous popularity. Furthermore, when the 128 was launched, the marketing campaign was weak with half-hearted efforts from CBM management. Lacking the energetic driving force Jack Tramiel had provided during his tenure, the 128's marketing could not capture consumer attention like the 64.

Despite the 128 being an expensive computer to produce, Commodore worried that pricing it too high would affect the advanced Amiga personal computer market. Thus, the 128 was released at $299.95 and the improved 128D at $499.95. Meanwhile, its manufacturing cost was comparable to the Amiga 500 priced at $595.95.

This meant Commodore was marketing a powerful graphics computer at a low price to businesses and families who did not need multitasking or the 128's application programs — while the business and home computer markets were already flooded with cheaper, more specialized options. As a result, the 128 did not achieve the necessary marketing and sales success. Read about the end of the Commodore 128 in the exclusive AmigaStore article.

Games and Software Support

Regarding video game developer support for the 128, it must be admitted that it was very lackluster. Part of the reason was that the 128 had been specifically produced with the business market in mind, with gaming and entertainment considered secondary. Fewer than 50 dedicated games were released for the 128. Compared to the 64 with over 10,000 commercial and entertainment software titles (more than 2,000 video games), this was a significant failure for the 128.

Similarly, while the 64 and to a large extent the Amiga were able to create an active demo scene in the computer entertainment world, such support did not develop for the 128.

In total, by the end of production, about four million Commodore 128 units were sold. Compared to approximately 17 million Commodore 64s, the 128's market performance was considered disappointing by Commodore's management and sales team. Due to the 128's low price, Commodore received lower-than-usual profit per unit during initial sales.

It should also be noted that the 128 was the last computer to use CP/M. Within less than a year of its release, CP/M was replaced by Microsoft DOS for major businesses. Thus, Commodore's hope of establishing a foothold in the business computer market completely failed.

Commodore 128 Peripherals

Commodore did not produce many peripherals exclusively designed for the 128 line because they did not have to. They primarily relied on existing Commodore 64 devices like the 1541 floppy drive or cartridges. One exception was the Commodore 1902 monitor at $400, needed to use the new 128KB machine's advanced 80-column mode. The C1750 with a massive 512KB RAM was another new product. The most anticipated new peripheral was the 1571 double-sided floppy drive with 360KB capacity — more than double the 1541. More importantly, it could operate 7 to 10 times faster than the 1541.

The 128 and Internet Development

Many Bulletin Board Systems — BBS, the precursor to the Internet — used the Commodore 128. Some historians identify Commodore as the unsung development partner of the Internet. While the U.S. military and several universities developed ARPANET, the transition to the Internet would not have happened as quickly without online communities built on widespread Commodore hardware. The amazingly affordable VIC modem, combined with the powerful C128 mode, allowed thousands of BBSes to emerge from nothing.

With the production of the 128, a large volume of online information and growing consumer awareness — which created demand — was generated. Telecommunications capacity and skills were all needed for the development and commercialization of the Internet.

The End of an Era

The disappointing performance of the 128, along with the Amiga line struggling to maintain dominance, marked the beginning of the end for Commodore's business machines. While the company was once the producer of the most popular line of personal computers in the United States, losing Tramiel, management problems, and inability to adapt to the changing personal computer market spelled the death sentence for CBM.

This was Commodore's last 8-bit computer. After this, they would only produce Amiga and IBM PC clones in 16/32-bit. Read about the end of the Commodore 128 in the exclusive AmigaStore article.