Commodore Atari Square off in Dazzling Computer Battle

Commodore Atari Square off in Dazzling Computer Battle

Andrew Pollack
The Journal Record

January 8, 1986

San Francisco - To demonstrate the stunning capability of its new Amiga computer, Commodore often displays on its screen a surprisingly realistic picture of a colorful bouncing ball. So it was a deliberate challenge when, at a recent trade show, rival Atari placed its new 520 ST computer beside the Amiga - and displayed on its screen a virtually identical bouncing ball.

But there was a major difference: ""Amiga, $1,795'' read the sign under the Commodore product. ""Atari ST, $999,'' read the Atari sign.

""A picture is worth a thousand words,'' said Jack Tramiel, the chairman and chief executive of Atari.

The biggest battle between these two companies, and the newest skirmish in a jaded computer market, has begun. Both Commodore International Ltd. and the Atari Corp., fierce competitors for years, are challenging each other - as well as the industry giants, the International Business Machines Corp. and Apple Computer Inc. - with these two flashy machines aimed at business as well as home users.

For both companies, success with these products is vital if they are to remain in business. Yet there is a feeling within the industry that only one product will make it.

The two computers are the major new ones on the scene for this year's holiday buyers. And both are selling well, according to the companies and their retailers, except that both computers arrived on the market too late and with too little software available to make a big dent in the market this Christmas.

In addition, production volumes and distribution of the two newcomers are still limited, and many machines are being bought primarily by computer enthusiasts. Hence, the battle will actually be decided after Christmas, when production volumes rise.

The main attraction of both the Amiga and the ST is their color graphics capability at a relatively low price, especially for the business user. Many in the industry say that the Amiga, which sells for $1,300 without a monitor or $1,795 with one, is more impressive technologically than the Atari.

""Video and music people have freaked the worst over it,'' said Jim O'Flaherty, Dallas manager for Computer Age Inc., a Texas computer store chain. But the Atari machine, at $999 with the color monitor, or $799 with a monochrome one, has the price advantage.

Atari, which reached the market in mid-summer, projected sales of 100,000 units by the end of 1985, according to Tramiel. Over 50,000 machines had been sold to dealers. But more than 70 percent of Atari's sales have been to dealers in Europe, where the machines has been accepted more readily than in the United States, Tramiel said in an interview.

""I'm not happy in the United States,'' he said.

Commodore began shipping Amigas at the end of September, but supply has been limited and delivery of monitors has been slow. Company officials and some analysts estimate the company will ship 40,000 to 60,000 by the end of the year, but other expectations are lower. Charles Wolf, an analyst with the First Boston Corp., predicts Commodore might ship only 20,000 to 30,000 machines by the end of year. So far, however, because of limited supplies, the computers are selling as fast as Commodore can ship them.

To sustain early momentum, however, both computers need more software and wider distribution. Thus, in addition to battling for consumer purchases, they are competing for the support of software writers and dealers.

""It reminds me of a presidential election,'' said Trip Hawkins, president of Electronic Arts, a home software producer. ""There is a lot of innuendo floating around about both machines.''

In the software campaign, Atari has an early lead. Indeed, many industry experts were surprised to see more than 30 companies displaying programs at a huge Atari booth at Comdex, the personal computer industry trade show held in Las Vegas late last month.

For the Amiga, however, there is virtually no software yet, and this threatens to slow sales. ""There's nothing to do with it,'' said David Lau, president of Island Micro Systems, in Minneapolis, which sells to large businesses.

Still, many companies have committed to developing programs for the Amiga, which remains the choice of the software-industry establishment. While Atari software developers are generally small, little-known companies, some from Europe, several leading home computer software companies, such as Electronic Arts and Activision, are coming out soon with programs for the Amiga.

But the leading business software companies, such as Lotus Development, Microsoft and Ashton-Tate, have not committed to either the Amiga or the Atari. This could end up the biggest problem for the Amiga and the ST, since, as machines destined for business, they face stiff competition from IBM and Apple computers, and it is not clear that the business computer user really cares about colorful graphics.

In terms of distribution, neither company has been able to attract the top chains, such as Computerland or Businessland, and, instead, have gone more to independent stores. Commodore says that its product is carried in more than 700 stores and that there is a long waiting list of dealers. Atari vice president Michael Katz said the ST is carried in 1,000 outlets, but industry analysts think the number is smaller and say that Commodore seems to have better distribution.

One thing deterring dealers from carrying the Atari is the reputation its chief, Tramiel, gained in his Commodore days. As head of the company that he founded more than 25 years ago, he would suddenly drop prices and move a product into mass distribution, undercutting the dealers. Many in the industry say that it is virtually a certainty that after Christmas, Atari will move the 520 ST to mass distribution and cut its price.