Apple rejected by Commodore, a look back 25 years later

Easy to see who got the better of that deal. Innovators reminisce about that relationship and others during the PC years

An Apple II PC being sold by Commodore International in 1982? It came very close to happening, but luckily for Apple, Commodore rejected the idea, instead going with its revolutionary Commodore 64.

Apple was one of the companies that approached influential Commodore to sell PCs, Apple co-founder Steve Wozniak said during an energetic panel discussion to celebrate the 25th anniversary of the Commodore 64 PC, which took place at the Computer History Museum in Mountain View, Calif., on Monday evening.

"We had this Apple II that we thought was so far ahead of the rest in features -- color, graphics, sound, games -- the computer was the whole deal," Wozniak said.

With no money to build thousands of Apple II machines, Wozniak and Apple co-founder Steve Jobs both approached Commodore with the Apple II. "Chuck Peddle from Commodore came to the garage and he was one of about three people we showed the Apple II prototype ever," Wozniak said.

As struggling 20-year-olds with zero savings and no business experience, the idea of a stable job at Commodore comforted them, Wozniak said. "Steve [Jobs] started saying all we want to do was offer [Apple II] for a few hundred thousand dollars, and we will get jobs at Commodore, we'll get some stock and we'll be in charge of running the program," Wozniak said.

Commodore rejected the idea, preferring to develop its own simpler, lower-cost, black-and-white-only machine without a lot of the pizzazz of the Apple II, Wozniak said. Commodore could do it in a shorter time and thought that would be a better course for the company, he said.

Commodore started selling its Commodore 64 PCs for $599 and managed to reduce the price to $199 over time, a revolutionary price then. Apple PCs were more expensive, said panelist Jack Tramiel, former chairman of Commodore International.

"We made machines for the masses, they made machines for the classes," Tramiel said, teasing Wozniak.

Tramiel said it was necessary to drive prices down in order to cut down the competition. Keeping prices high invites competition, Tramiel said.

Ultimately, Apple managed to survive the threat posed by Commodore, which filed for bankruptcy in 1994 and liquidated its assets, even after becoming the first to sell a million PCs.

"But we gave Apple a few chips for free," Tramiel said.

Tramiel admitted that Commodore may have failed by not supplying hardware and software in one package. The company almost adopted CP/M OS, but was more focused on supplying hardware to the market.

However Commodore 64 did incorporate Microsoft Basic, an interpreter, and Tramiel reminisced on his business dealings with Bill Gates, now chairman of Microsoft.

Doing business with Gates was decent, Tramiel said. "He came to see me, tried to sell me Basic, and he told me that I don't have to give him any money, all I had to give him was $3 per unit. I told him I was already married," he said.

Tramiel instead told Gates he'd pay a flat fee of $25,000, rejecting the idea of paying $3 for each Commodore 64 sold. "In about six weeks [Gates] came and took that $25,000. Since then he did not speak to me," Tramiel said.

Another early PC maker, IBM, also remembers working with Gates in the early days. Even though Microsoft had only 110 programmers compared with IBM's 13,000 programmers, Gates was tenacious when working to overcome design and development challenges for OS/2, said Bill Lowe of IBM, sometimes called the father of the PC.

IBM was another PC developer that managed to outlast the iconic Commodore. The PC Junior, manufactured by IBM between 1983 and 1985, never felt threatened by Commodore 64 as it was having problems of its own, Lowe said. "There was a basic flaw in trying to artificially limit the performance in a product, and bring it to market at a different price, and it was a big mistake," Lowe said.

In the early 1980s, computers were not generic brands like they are today, the panelists said. Wozniak said Apple and Commodore users generated excitement, especially among PC user groups who would discuss what they could do to tweak the PCs and make them expandable.

Learn more about this topic

Take a look at our slide show and quiz that asks what technologies you used during the 1980s.

Copyright © 2007 IDG Communications, Inc.

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