The fateful moments of Commodore and Atari

What happened to Commodore and Atari?

The 1970s and 1980s were a boom time for the microcomputer market. New devices and manufacturers with their own personal solutions appeared for consumers to purchase to solve their home computing needs. Spectravideo, Sinclair, Dragon, Oric, Amstrad, Texas Instruments. Acorn… all these were familiar names alongside Atari and Commodore. Perhaps one of these might even have been an option when considering that first computer for the home. But then computer manufacturers started to disappear from the market, but a few like Commodore, Acorn, Atari and Amstrad survived until the 1990s. The course of developments can be easily followed in Mikrobit 1/1984, 4/1984 and 12/1985, for example, which featured computers on the market. Reading the articles, you can see how the great harvester had gone about picking off the unlucky hardware manufacturers and their products from the market.

Commodore and Atari were big players in the computer boom of the 1970s and 1980s. But why then did these manufacturers disappear from the market, what happened? Why the both companies failed to survive as future alternatives, even though both manufacturers had advanced products in the mid-1980s at a fraction of the price of PCs?

Own products, own technologies

Commodore’s success story with microcomputers began with the PET computer in 1977, and Atari’s success was also based on the 8-bit successes of the 1970s. Both success stories came to an end in the early 1990s as the computer market consolidated around PCs and, to a lesser extent, Apple’s Macintosh. It is fair to say that many Commodore and Atari fans found this development hard going. They had to replace the computer, software and technology of a familiar manufacturer with a PC. More than a decade might have passed with the familiar Commodore or Atari computers, but then the manufacturers and technologies simply disappeared from the market.

Commodore and Atari were microcomputer manufacturers with their own technology and architecture. The companies marketed and sold the computers they developed themselves and had exclusive control over the manufacture of their computer models. It was also profitable for a while. The market dominance of the Commodore 64 suggested that Commodore would continue to be a powerhouse in its field in the future. This perception was confirmed in 1985 with the introduction of the advanced features of the Commodore Amiga. In addition, the smooth running operating system of Amiga’s competitor, the Atari ST, combined with the machine’s ability to produce music and publications, made other computer manufacturers look old-fashioned and expensive. This easily gave the impression of Commodore and Atari’s progressiveness and technological superiority over much more expensive PCs. An Olivetti PC in a high school classroom in the 1980s, with MS-DOS and four-colour CGA graphics, failed to impress after Amiga and Atari ST.

Coincidence created the mainstream technology platform accidentally

The biggest misfortune and fateful moment for home microprocessors was the formation of the accident platform of their time in 1981, when IBM launched the PC it had developed. At the time of its release, the IBM PC was just one productised computer model among others. Viewed as a single-manufacturer product, the IBM PC was not a technological pioneer in the same way as Apple’s Macintosh, released in 1984, or the Atari ST and Commodore Amiga, released in 1985. But thanks to IBM’s design flaw, the IBM PC opened the market to consolidation in the computer market. As a result, the IBM PC made it possible for virtually anyone with sufficient resources to manufacture, sell and market IBM PC-compatible computers. This set in motion a chain of events that sealed the fate of Atari and Commodore computers.
Manufacturing methods as innovation

Manufacturing methods as innovation

Thanks to a mass-producible and easily exploitable architecture, a volume market for PC-compatible computer components and their assembly gradually developed. This triggered a spiral that drove down the unit price of the parts needed for manufacturing, and hence the unit price of PCs. As a result, the PC was soon a home alternative to the Commodore Amiga and Atari ST. Price competition and manufacturing volumes turned to PC-compatible computers with hundreds of hardware manufacturers, the largest of which still dominate the PC market. Many new companies became involved in the development of peripherals for PCs. Manufacturers of peripherals began to offer more powerful graphics cards, better sound cards and larger mass storage devices.

For the consumer, this was a good thing, even if it meant that the equipment got old in a couple of years. In the PC-based ecosystem, you didn’t have to give up the old to get something new. As a result, a number of companies specializing in the development of PC technology emerged. These were able to bring new features to PCs that did not depend on a single computer manufacturer. In this way, value chains began to form around PC technology, allowing PC manufacturers to focus only on the most efficient assembly and distribution by selecting suitable components from the market for their devices. Technological development took place away from the manufacturer. Manufacturers did not have to take responsibility for the development of the operating system or even the components of the PCs they produced. It was enough for the manufacturer to focus on the most efficient distribution and marketing on an industrial scale. This was a process that gave birth to an entire industry.

As a result, the threshold to become a computer manufacturer was low. Getting started was a matter of selecting the most suitable components, acquiring manufacturing capacity on the production line and licensing a compatible MS-DOS operating system. As a result, a value-chain PC ecosystem emerged, the volume of which could not compete with that of low-end domestic PC manufacturers.

A Commodore or Atari product was what it was when you bought it, but a PC wasn’t necessarily.

It was easy to replace an ageing PC with a new PC or extend its life with new parts. From the user’s point of view, the PC’s life cycle continued and the software continued to work, even when the equipment was replaced by new and different PCs from different manufacturers. Atari and Commodore as companies were able to create many great individual products, but these companies were doomed to their own product-centric model, which did not allow the new industry to support their operations, which the PCs correspondingly benefited from. Commodore and Atari, the companies specialising in home computers, were the product companies responsible for the technology of the computers they made and sold. This model became obsolete for these companies in no time, as the PC did not allow a similar ecosystem of computer and component manufacturers to emerge.

The best products from technical point of view aren’t necessarily the winners in marketing economy. The best distribution wins.

Looking at the experience that the Olivet PC provided in a high school classroom in 1988, there was nothing to suggest that the PC was a viable product for home use. The price was completely out of reach, the graphics were lousy and the soundscape was bleepy. The great Dungeon Master from the Atari ST or the great demos from Amiga came to mind. There were clearly better products at home, or so it was believed. So why on earth would anyone buy a PC at home? It was a perfectly legitimate question between 1985 and 1990. This was all much cheaper on top of all the other good stuff, because in the computer market, price was a major factor in consumers’ purchasing decisions.
The low purchase price of home computers initially helped their manufacturers to achieve high volumes in the consumer market before the consolidation into PCs took place. In business use, the low purchase price of domestic PCs became irrelevant if the purchased product did not deliver the desired productivity. In the case of PCs, this means, for example, software, availability of accessories, support services, skilled staff, and organised distribution, manufacturing and continuity of the technology. And if any one of these things can deliver measurable productivity in business use, the importance of cheap purchase price can be ignored. This created a whole new industry for companies supplying PC technology, but Commodore and Atari, despite their advanced products, were unable to keep up with this development.

The creation of an ecosystem for Commodore and Atari would have created value for these companies by reducing the resources needed for development, creating demand for new distributors and lowering the unit cost of equipment manufacturing. The absence of this meant that large-scale industrial-scale IT companies could not create an ecosystem for manufacturing and distribution based on Atari or Amiga, as was the case on the PC side. Whereas the PC is a generic technology platform, Commodore and Atari as product companies were not. As a result of genericity, manufacturers had a low threshold to produce PCs and components on an industrial scale, but Commodore and Atari did not have this advantage. Instead of generic technology, Commodore had its own unique Amiga to offer and Atari had its own ST/TT/Falcon product family, of which Falcon in particular was a top product, but too niche to succeed in the volume market.

In total, around ten million Amiga and Atari ST series computers were sold over a ten-year period (1985-1995). By comparison, in 2024, around 700 000 PCs will be sold per day. Of course, daily PC sales figures were lower in the 1980s and 1990s. The reason for the large numbers of units is that there have been many manufacturers and distributors of PC technology, thanks to its consolidated operating model.

Only one product manufacturer survived the upheaval… With little help by Microsoft.

Why then did Apple’s computers survive the consolidation of the computer market, but Commodore and Atari did not? Apple’s business is also based on the same idea as Commodore and Atari. In that model, the computer and its technology is a product designed by its manufacturer and bought by the customer. Apple did try to get more volume from the market for its products by licensing the Apple II model to other manufacturers. Apple managed to get enough volume for its computers in the cash-rich corporate market, where there was a sufficient user base for Apple products. Naturally, what matters to computer manufacturers and their resellers is the profit margin on their equipment. Apple had this aspect right, but low margin manufacturers such as Atari and Commodore did not. You had to sell quite a lot of Amigas and Atari in order to get the same margin as a single Macintosh.

Comparing Commodore and Atari to Apple, the latter has been able to provide global success opportunities for software manufacturers. Commodore and Atari didn’t have that to offer software companies, although they did have some great software, such as Calamus, Notator and Cubase on the Atari ST and Amiga’s Deluxe Paint. Compared to the Commodore, the Atari did manage to some extent to provide opportunities for software companies to succeed, as software for music creation developed for the Atari has been ported to other platforms as well. But otherwise, the Atari and Commodore computers as technology platforms did not provide the kind of success stories for software companies that the PC and Apple did.

A more lucrative and diversified business market enabled service ecosystems around technology, but a low-margin, piracy-ridden consumer market focused on games and low-cost computers did not. The corporate market was left out of the reach of Atari and Commodore as the market became more concentrated, although Apple had a share of this market but not without the support of Microsoft. As hardware manufacturing and sales volumes also turned as PC prices fell within the reach of ordinary consumers, there was too little scope for low-volume specialist models such as Commodore and Atari. The only way to survive would have been to expand the product range and open the door to the emergence of new value chains – if done in time, of course. As if mobile phones had ever seen a similar development.

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“Why Commodore and Atari disappeared from the computer market”, is part of the I love 8-bit® products. The I love 8-bit® contains travellng computer exhibitions, the museum in Helsinki, computer magazines, and series of articles that researches, publishes and presents information about the events of its era. This article has also been published in SAKU, it is the Amiga user magazine (December issue 2024). The article is written by Tuomo Ryynänen.

These disappeared historical computer devices and culture can be seen and test at the Computer Museum of Kallio that provides the I love 8-bit® exhibition in the venue.

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I love 8-bit® -näyttelyt säilyttävät ja siirtävät osaamista sekä tietoa 8-bittisistä tietokoneista näyttelytapahtumien ja julkaistavien sisältöjen avulla.

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