From: oleg@crumpet.cts.com (Oleg Rovner)
Newsgroups: comp.sys.amiga.advocacy
Subject: A Couple of Theories to Explain Commodore (very long rant)
Keywords: spam advocacy paranoiia blazemonger authority
Date: 29 Jul 92 11:55:24 GMT
Organization: Church O' Lantern
X-NewsSoftware: GRn 1.16e (7/4/92) by Mike Schwartz & Michael B. Smith

As an Amiga owner since the day the A1000 was publicly available in San Diego
(actually 6 months prior to that. I prepaid :-) and someone who pushes the
machine fairly hard, I've thought long and hard about how one would go about
explaining CBM as a company. There are just too many weird things about
one of worlds biggest hardware manufacturers. Consider:

1. CBM is nominally composed of fiscally independent companies (CBM US, CBM 
Canada, etc)

2. CBM has had a respectable overall financial performance, yet CBM shares
are among the most unpredictable outside of emerging technologies companies and
penny stocks.

3. CBM does not go after the world's biggest personal computer market (US) 
with any sort of perseverance, most of the effort is seemingly spent on 
maintaining the user base instead of expanding.

4. CBM R&D has been minimal and the results have not gotten the 
support that they deserve. Witness the A3000, CDTV, Amiga Unix.

5. CBM is doing quite well marketing PC clones and low end Amigas in Europe,
adequately in the rest of the world.

6. CBM owns their own silicone foundries, yet CBM companies paid MORE for
commodore parts than 3rd parties.

One plausible hypothesis that seems to tie everything together is that
CBM is structed as a tax shelter and huge money laundry that depends on 
a lot of sales with a relatively low profit margins on each sale
and multi-national presence to produce an easily manipulated financial
picture yet produce significant income for stockholders with large 
interest in the company.

This would explain the (dis)organization of the company, where the
right hand (CBM Canada) does not know what the left hand (CBM US) is doing,
where products marketed in one country are unavailable in another, where
profits can be seemingly whittled down by creative intra-company purchasing,
where the 'home office' of a multinational is a suite in the company lawyers'
building and where the board of directors does all it can to avoid
rank and file stockholders from appearing at the meetings.

As far Commodore R&D goes, I think 3 and 4 provide clues for that:
CBM has apparently positioned itself as a provider of commodities (which the
A500 and A600 as well as PC clones certainly are). This position makes it
unnecessary to pump huge amounts of money into developing tomorrow's technology
for sale today (with the resultant premium in the product's market price) but 
emphasizes cost efficiency and development of today's high tech into
tomorrow's commodity. Thus we see incremental progress in the development of
the A3000, which is nowhere near as revolutionary as the original A1000, but
is positioned as a bang-for-a-buck product when the next generation of personal
computers arrives with RISC, CDTV which is poised perfectly to become a 
video system mainstay along with the VCR, the slap 'em and ship 'em
cheapest approach of the breadwinner A500/A600. The A2000 (aka A1500) is the 
product which keeps the Amiga in the business market due to the number and 
price of professional quality performance-enhancing expansions available, but 
is due to fade when the A3000 becomes a bit cheaper to manufacture. When the
new machines get here they will probably be the result of Commodore's 
management's views on what shall be good value for the money when it comes
time to downmarket the A3000, and will not be affordable or made in any 
significant numbers until then. The US will continue to be the testing ground
for new generations of CBM machines, while Europe will receive the 
benefit of the "consumer" versions designed for the mass market, the CDTV and
the A570 being good examples of Commodore introducing the product in the US and
marketing the consumer priced version in Europe.

What do these policies do for Commodore? They keep bread on the table, the
tax hounds on a shorter leash, and the assurance that the company will not
be placed in a situation where a single major product failure would place
Commodore in dire straits, as was the case with the C-64 days and the
C-128 debacle. What they do NOT do for Commodore? They do not allow the
company to dictate to the PC market by introducing the Next Big Thing and
shoving it down people's throats, charging for the glitz (ala Mac and Apple's
financial and intellectual premiums for providing a machine for technophobics
with cash)  or introducing an easily reproducible design which can be copied
and marketed by a multitude of producers at a discount (ala the original IBM 
PC which showed that even IBM cannot afford to make TOO much money). 

Still, come to think of it, Commodore might be able to get away with releasing
the base machine designs for manufacture under license and charging a premium
for the "brand name" inasmuch as what ruined IBM's PC position was the fact that
the DOS for the design was not available solely from IBM and prohibitively
expensive to reverse-engineer. Microsoft makes piles o' dough from selling
software designed to run on machines manufactured by companies with
~$0.00 R&D expenses, while companies dishing out the money for improving
the clones are struggling to make a buck. Commodore could sell the A600
design to someone for marketing as an upscale ROM console or designing an
A-500 on-a-board for the clone market. We still have the best price/performance
game machine and for the price of a good sound board the clone people could
play high-quality games on a '286 that would bog down trying to run the
equivalent IBM software, and as a bonus get a good selection of reasonably
priced productivity software. Naturally the board would not need to interact
with MS-DOS beyond getting the power from the system PS, and being able to
assume control of the mouse, the monitor and the keyboard at the start of
the session. Amiga users would gain a large software market expansion, Commodore
would make some cash out of licensing AmigaDOS and perhaps some people
deciding to purchase an upmarket Amiga as their next computer.

Anyway, back to the status quo. What do Commodore's policies do for Commodore's
customers? The consumers get access to cheap medium-performance hardware and low
software prices for productivity packages (hard to sell mass-market software
that costs more than the machine). The professionals benefit from professional
performance  hardware more than reasonably priced and extremely low-cost 
specialized application packages IF (and that's a big 'IF') their proffession
happens to be an established Amiga field (ie video graphics). What do the 
customers lose? High performance software. Because the base machine serves
well enough as a game box but does not have the power to run typical
business applications (due mainly to the lack of a hard drive and on-board
RAM expansion beyond the 1 meg limit) there is no incentive for consumer
to upgrade the equipment to run the desirable games, and consequently no need
to justify the hardware investment by buying "serious" software, unlike the
clone market where a good game machine requires about $1000 of peripherals
and allows decent performance on a hog like MS-Word or the Mac world where
any machine which runs the OS from hell tolerably well is good enough
to play most games and run virtually all productivity software. The Amiga
situation is changing due to the obsolescence of the base design which
makes necessary the purchase of more power by anyone who does things other
than play platform scrollers or shoot 'em ups. 

The future according to me: 1. Immediate future: Hopefully most people that 
have Amigas will realize that it is still more cost-efffective to expand the
machine than purchase a clone, leading to better third-party graphics 
expansions and very low end HD+RAM boxes, the increased base of expanded 
machines will lead to fancier games, leading to more customers leading to 
better variety and quality of productivity applications, with the whole thing
resulting in somewhat of a snowball effect. :-) 2. Medium range (say 6 months
to a year): New machine from Commodore with high end CPU and gee-whiz
capabilities, along with a re-packaged A3000 at consumer prices, 
and an OS modification to deal with non-Commodore graphics. This will 
decide long-range future of Amiga. If CBM pulls it off and makes money with 
the A3000-consumer package then Amiga should be around for a while, if the 
thing does not appear or does not sell, look for Commodore marketing 
CDTV and maybe HDTV  equipment, probably Euro-clones, and OEM'ing stuff for
Taiwanese, as well as a withering of the Amiga market on the vine. Long range:
Entropy makes life and circuits based on presence or absence of energy 
problematical.

The pessimistic view: 1. Immediate future: Amiga market drops like a rock
as the A500s are delegated to closets by people who think that Windows
multitasks and a clone that runs more games better than the A500 can be
had for less than $1500.00. 2. Medium range: Commodore tries shoring
up against the tide by releasing a high end machine for mass production
to be sold virtually at cost. This does not work well at all since 
there is no income to finance further R&D and the projected profit margins
disappear in the face of lower-than-expected sales and resultant low-turnover
of merchandise on the dealer floor. The remaining one million Amiga owners
get really good deals on hardware and software as close-outs start and
the Amiga market undergoes a two or three month long mini-boom before 
joining the Great Swap Meet Circuit (and finally killing off the C-64
by taking its place there). Commodore sells home entertainment equipment
and OEMs the same for Radio Shack, J.C. Penney, Monkey Ward and Wal-Mart.


I tried taking a stab at guessing the mechanics of Commodore's thinking
and extrapolating the future of the Amiga from my observation of the
state of the market as well as my perception of CBM operations. The results 
is likely to be gravely flawed due to insufficient data (you want guesses 
based on real market surveys, quarterly financial reports and media
research, you can pay me, and you'll get projections instead of 
speculation :-) but I attempted to keep wishful thinking to a minimum,
and believe that the "Future according to me" is likely to resemble the
real life scenario. I am especially confident about the long term 
projection. :-) I sincerely hope that this post IS NOT taken as 
a Mark Barret "Amiga is dead. The market is doomed. Go away or I shall
taunt you some more!" work. I would also be interested in other people
making EDUCATED predictions or (especially) posting or e-mailing me with
reasonable criticisms of my guesses. I am not interested in receiving
mail like "AMIGA RULEZ!" or "You suck, buy a clone". If you feel the
need to express either sentiment or similiarly sophisticated variations
thereof, do it in /dev/null. Oh yeah, posting will do fine also. Who cares
about bandwidth, this IS c.s.a.advocacy!




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