Commodore Amiga Unveiled as Firm Seeks a Rebound

Commodore Amiga Unveiled as Firm Seeks a Rebound

By Dennis Kneale, Staff Reporter
The Wall Street Journal

July 24, 1985

New York -- Commodore International Ltd. staged a lavish news conference at Lincoln Center here to introduce its Amiga computer, the centerpiece of the company's comeback bid.

Commodore hopes the highly touted Amiga will revive the dormant home-computer market, stem the company's recent losses and mitigate Commodore's toy-computer image. Amiga is priced at $1,295 without a screen; shipments are scheduled to begin in September.

Commodore executives didn't return phone calls yesterday, but the company previously has said it hopes to sell 150,000 Amigas by year-end. Commodore said in printed material that an accessory letting the Amiga run International Business Machines Corp.'s Personal Computer programs eventually will be sold. "It's the ace in the hole we need," said Adam Chowaniec, technology vice president, adding that the full IBM-compatible option will be available in October.

Amiga may most directly affect sales of Apple Computer Inc.'s Apple II line, but also may affect sales of the $2,195 Apple Macintosh. At its current price, Amiga offers twice the internal memory of the $1,195 Apple IIc and six times its disk-storage space as well as higher speed and screen clarity or "resolution." An Apple spokeswoman declined to comment.

Thomas J. Rattigan, president of Commodore's North American operations, said that "Apple had the right idea, but it failed to deliver an expansion path to the future," and that Amiga "runs rings around the IBM PC." He said Commodore will double its sales and marketing budget and will hold 37 meetings in the next four weeks with retailers across the country to push the machine. "Commodore's going to light a fire under the tail of the entire computer industry," he said.

The Amiga is said to be able to display 4,096 hues, perform several jobs at once, draw cartoon-like animation and offer sound quality two-thirds that of stereo compact-disk players used for music. But much-praised technology has failed before, most notably with Apple's now-discontinued Lisa and Xerox Corp.'s Star, which never sold strongly.

Commodore also faces major financial and marketing obstacles. The three largest computer chains with more than 900 stores won't sell Amiga; and though it aims at both consumers and businesses, mostly home-entertainment titles are ready now and much new business software probably won't be available for a year. Commodore, which posted a $20.8 million loss in the quarter ended March 31 and hasn't reported results for the quarter ended June 30, also must deal with bloated inventories and sluggish industry sales generally.

Electronic Arts Inc.'s president, Trip Hawkins, whose software company is developing 15 programs for Amiga, said it could appeal to consumers as a home-entertainment system, particularly as sales of videocassette recorders slow down. "People need to be turned on; they aren't going to just stop buying new technology," once the VCR boom fades, he said.

But industry analyst Jan Lewis of Lewis Research, who expects Commodore to sell at most 60,000 Amigas by Christmas, argues that Amiga will be hurt by "sort of an identity crisis." Its vaunted visual and sound features will appeal to consumers but may be too expensive for many to buy, she said, while small businesses "are the very guys who are willing to give up the bells and whistles and frills just to save money."

In composite trading on the New York Stock Exchange yesterday, Commodore stock closed at $11.50, up 25 cents.