Commodore 64 - History - Winning The Market War

Winning The Market War

The C64 faced a wide range of competing home computers at its introduction in August 1982. With a lower price and more flexible hardware, it quickly outsold many of its competitors. In the United States the greatest competitors were the Atari 8-bit 400 and 800, and the Apple II. The Atari 400 and 800 were very similar in hardware terms, but they used custom chips for graphics and sound, and so were very expensive to build. The latest revision in the aging Apple II line, the Apple IIe, had higher resolution graphics modes than the C64. Upgrade capability for the Apple II was granted by internal expansion slots, while the C64 had only a single external ROM cartridge port for bus expansion. However, the Apple used its expansion slots for interfacing to common peripherals like disk drives, printers and modems; the C64 had a variety of ports integrated into its motherboard which were used for these purposes, usually leaving the cartridge port free.

All four machines had similar standard memory configurations in the years 1982/83: 48 kB for the Apple II+ (upgraded within months of C64's release to 64K with the Apple IIe) and 48K for the Atari 800. At upwards of US$1200, the Apple II was more than twice as expensive, while the Atari 800 cost US$899. One key to the C64's success was Commodore's aggressive marketing tactics, and they were quick to exploit the relative price/performance divisions between its competitors with a series of television commercials after the C64's launch in late 1982.

Commodore sold the C64 not only through its network of authorized dealers, but also through department stores, discount stores, toy stores and college bookstores. The C64 had a built-in RF modulator and thus could be plugged into a television set. This allowed it (like its predecessor, the VIC-20) to compete directly against video game consoles such as the Atari 2600. Like the Apple IIe, the C64 could also output baseband composite video and thus could be plugged into a specialized monitor for a sharper picture. Unlike the IIe, the C64's baseband NTSC output capability included separate luminance/chroma signal output equivalent to (and electrically compatible with) S-Video, for connection to the Commodore 1702 monitor.

Aggressive pricing of the C64 is considered to be a major catalyst in the North American video game crash of 1983. In January 1983, Commodore offered a US$100 rebate in the United States on the purchase of a C64 to anyone trading in another video game console or computer. To take advantage of this rebate, some mail-order dealers and retailers offered a Timex Sinclair 1000 for as little as US$10 with purchase of a C64, so the consumer could send the TS1000 to Commodore, collect the rebate, and pocket the difference; Timex Corporation departed the computer market within a year. Commodore's tactics soon led to a price war with the major home computer manufacturers. The success of the VIC-20 and C64 contributed significantly to the exit of Texas Instruments and other smaller competitors from the field. The price war with Texas Instruments was seen as a personal battle for Commodore president Jack Tramiel; TI's subsequent demise in the home computer industry in October 1983 was seen as revenge for TI's tactics in the electronic calculator market in the mid-1970s, when Commodore was almost bankrupted by TI. In parts of the US in the late 1980s, new C64s could be purchased in retail chains for a little more than US$100.

In 1984, Commodore released the Commodore Plus/4. It had a higher-color display, a newer implementation of Commodore BASIC (V3.5), and built-in software in what was positioned as an inexpensive business oriented system. However, it was incompatible with the C64, and Amstrad and other PC and CP/M clones rendered the limited business software and lack of compactness of the multiple-lead Plus/4 system of marginal value. The Plus/4 lacked hardware sprite capability and lacked a SID chip, thus under-performing in two of the areas that had made the C64 successful.

In Europe, the primary competitors to the C64 were the British-built Sinclair ZX Spectrum, BBC Micro computer and the Amstrad CPC 464. In the UK, the Spectrum had been released a few months ahead of the C64, and was selling for less than half the price. The Spectrum quickly became the market leader and Commodore had an uphill struggle against the Spectrum. The C64 debuted at £399 in early 1983, while the Spectrum cost £175. The C64 would later rival the Spectrum in popularity in the latter half of the 1980s, eventually outselling the Spectrum after 1985.

Despite a few attempts by Commodore to discontinue the C64 in favor of other, higher priced machines, constant demand made its discontinuation a hard task. By 1988, Commodore was selling 1.5 million C64s worldwide. Although demand for the C64 dropped off in the US by 1990, it continued to be popular in the UK and other European countries. In the end, economics, not obsolescence, sealed the C64's fate. In March 1994, at CeBIT in Hanover, Germany, Commodore announced that the C64 would be finally discontinued in 1995. Commodore stated that the C64's disk drive was more expensive to manufacture than the C64 itself. Although Commodore had planned to discontinue the C64 by 1995, the company filed for bankruptcy a month later, in April 1994.

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