Amiga's High-Tech Gamble

Amiga's High-Tech Gamble

By Susan Chira
The New York Times

Santa Clara, Calif. -- August 29, 1984 -- In the obscure headquarters here of a two-year-old corporation lies a prototype of a computer that has sparked a pitched battle between the two largest competitors for the home computer market, Commodore and Atari.

The computer and its sophisticated graphics chips, the product of the Amiga Corporation, won attention and praise from analysts and competitors many times Amiga's size when the machine was first shown at a Chicago trade show in June. The Amiga computer has been heralded by some as a serious challenger to the popular Apple Macintosh or the International Business Machines Corporation's PCjr.

In mid-August, Commodore announced that it had bought Amiga. But Atari, now run by Commodore's ex-chief, says the chips are rightfully Atari's as a result of a previous agreement, and has sued Amiga for fraud.

The reason for the furor over the Amiga computer, analysts say, is a graphics capability - including full- color display, cartoon-like animation and fairly high speed - that some say is more advanced than the Macintosh, which has no color capability. Graphics have become a critical selling point because they expand the range of applications and users. A better graphics display may entice engineers, advertising designers or architects, for example, and is a proven drawing card in attracting home computer users.

Moreover, Commodore has predicted that it could sell the machine for under $1,000, compared with the $2,500 price tag on a Macintosh.

''I've been wanting to do this machine for six years,'' said Jay Miner, the 52-year-old co-founder of Amiga and former Atari engineer who headed the design team on the computer. Although neither he nor David Morse, 41, Amiga's president and other co-founder, would disclose the terms of their deal with Commodore, the two men have certainly become two of Silicon Valley's newest millionaires.

''I've always wanted to do a machine with the graphics of a good flight simulator,'' Mr. Miner said. ''Its ability to do high-speed animation still excites me the most. It opens up all sorts of educational opportunities.''

Many challenges and questions remain - whether the Amiga can be produced at the projected price, when it will appear on the market, and what kind of software it will have and whether it will be compatible with Apple's or I.B.M.'s.

Colorful Scenes and Shapes

But there is no debate over the excellence of Amiga's graphics, which engineers displayed the other day in a back office whose walls were covered with scrawled equations.

First the screen filled with red, yellow and blue triangles that twisted and turned, creating patches of shaded colors. Next a pie chart of aqua, purple, fuschia, green, yellow and white sprang onto the screen. Then there was a futuristic street scene, complete with a figure walking a dog and a fire hydrant that constantly changed shapes. Finally a red-and-white-striped ball began to bounce, the sound changing and echoing as it bounced to different heights.

The computer's developers say that it has been designed with the color television industry standard, so that its displays will read clearly on a television screen. Its resolution is about twice that of the I.B.M. PC.

Analysts, while cautioning that many computer prototypes never make it to market, generally agreed that the Amiga computer seemed worth all the fuss.

''What I have seen of the machine leads me to think it is exciting enough that the entire industry is going to have to take notice,'' said Barbara Isgur, an analyst with Paine Webber.

''It's just exceptional,'' said Tim P. Barajin, an analyst with Creative Strategies International, based in San Jose. ''It's a Mac with color graphics built in.''

The Company's Infancy

The company was born in September 1982 when its two founders began three months of research - Mr. Morse, a former vice president of marketing and sales for the Tonka Corporation, into what consumers wanted most from computers, and Mr. Miner into the limits of available technology.

They found that consumers wanted a machine that was easy to use and had a wide range of applications, Mr. Morse said, and they decided that good graphics would satisfy both counts.

In January 1983, Mr. Morse said, they began hiring engineers - from Apple, Hewlett-Packard, Tandem, Ford Aerospace and other companies - to design the machine. By all accounts, it was a typical Silicon Valley start-up - long hours, obsession with the developing machine, and a race against deadlines and funding limits.

Mr. Morse recalled that the office became lined with mattresses as engineers worked to prepare the prototype for the spring computer show. And Mr. Miner remembered cost-cutting measures - renting rather than buying some equipment, hiring staff by the day rather than permanently. ''It went from lean to leaner,'' he said.

But after the Chicago show, Amiga engineers were no longer unknown. ''All of a sudden, '' Mr. Morse said, ''a lot of people knew about Amiga.'' Although he would not say so, citing the pending lawsuit, industry analysts said those people presumably included Commodore.

Potential Apple Rival

Atari's suit, according to Leonard Schreiber, Atari's general counsel, contends that Amiga signed an agreement in March to develop chips for Atari. Atari then advanced the company $500,000. In late June, Mr. Schreiber said, Amiga returned the money, saying that the chips would not work. The suit was filed on Aug. 14, just before the announcement that Commodore would buy Amiga.

Mr. Morse would not comment on the suit.

The Amiga machine is based on the same 32-bit microprocessor chip, the Motorola 68000, as the Macintosh. If manufactured as planned, it would have the same memory and perform slightly faster than the Macintosh.

These similarities, in addition to the Amiga's projected lower price and flashier graphics, are prompting some analysts to see it as potent competition for Apple machines.

''Apple has set the target for everyone to try and shoot at,'' said Ulric Weil, an analyst with Morgan Stanley. ''Commodore has a window of opportunity to come in at a lower price'' before a Macintosh with more memory and software appears.

Although Mr. Morse said that he believed the Amiga machine could be finished in a few weeks, analysts said they did not believe that it could be ready to market before spring 1985.

Commodore has said little about its plans for the Amiga. Accordingly, it is not clear that the Amiga machine is even aimed at the same market - the office - as the Macintosh.

Andrew Herrington, senior engineering manager for Commodore business machines, would say only that Commodore has traditionally aimed at the home and so-called low end business markets - less expensive and less elaborate business computers.

Analysts cautioned that several obstacles lie in the way of successful development. Among other things, they question whether Amiga will be able to keep its promised low prices and thus meet the Macintosh challenge, and whether it will have distribution and software problems.

Donald R. Greenbaum, Commodore's treasurer, insists that Amiga's low price will be achieved through manufacturing in Hong Kong and Taiwan, large volume and an established distribution network.

Commodore has traditionally marketed its domestic products through mass merchandisers, rather than through dealers who offer the support services necessary with a more complicated machine. Mrs. Isgur said she doubted that potential business customers, if they are indeed one of Commodore's potential markets, would buy from mass merchandisers. Furthermore, Mr. Weil said, Commodore's relationships with dealers are somewhat sour.

Mr. Greenbaum said Commodore had not decided whether to distribute the machine through mass merchandisers or dealers. Nor has the company decided whether the Amiga's software would be compatible with its competitors.

GRAPHIC: photo of David Morse