Jack Tramiel
From Wikipedia, the free encyclopedia
Jack Tramiel (born 1928) is a businessman, famous for founding Commodore International, manufacturer of the Commodore PET, Commodore 64, and Commodore Amiga home computers, and later President and CEO of Atari Corp. He is known for his hard-driving style and cut-throat deal making.
Contents |
[edit] Pre-computer days
Tramiel was born in 1928 in Łódź, Poland, as Idek Trzmiel. After the Nazi invasion in 1939 his family was transported to the Jewish ghetto in Łódź, where he worked in a garment factory. When the ghettos were liquidated his family was sent to the Auschwitz concentration camp. He was examined by Dr. Mengele and selected for a work party, after which he and his father were sent to the work camp Ahlem near Hanover, while his mother remained at Auschwitz. While in the work camp his father mysteriously died, like many other inmates, near the end of the war. For an unspecified reason, the Nazis claim he died from Typhus, though there is no proof of this. Tramiel believes he was killed by a Nazi injection of gasoline. Tramiel was rescued from the work camp in April 1945 by the U.S. Army.
In November of 1947, Tramiel emigrated to the United States and soon joined the army. In the army he learned how to repair office equipment, including typewriters. In 1953, while working as a taxi driver, he bought a shop in Bronx to repair office machinery, and named it Commodore Portable Typewriter. He then later started a business importing typewriters from Europe, and in 1955, to circumvent import restrictions, he set up Commodore Business Machines in Toronto. Tramiel wanted a military-style name for his company, but names like Admiral and General were already taken, so he settled on the Commodore name.
In 1962, Commodore went public. During the 1960s the Japanese started producing low-cost typewriters and Commodore could no longer compete in that market. He then turned to adding machines, but it was not long before the Japanese were entering this business as well. Commodore's main investor, Irving Gould, sent Tramiel to Japan to learn ways to compete, but when he returned he had a different idea instead.
[edit] Calculators
In 1970 he started work on electronic calculators, and in the early 1970s Commodore became a major supplier of calculators based on a Texas Instruments chip-set. In 1975 TI decided to take over the market, and started producing their own complete calculators which sold at a cost lower than the price of the chip-set alone. This drove most manufacturers out of business, but by this time Commodore had enough of a war chest to survive.
Tramiel started looking for a chip producer to buy, thereby guaranteeing a supply of chips in the future. The obvious solution was MOS Technology, a small company in Pennsylvania that had been set up as a second-source of the TI chips, and was currently struggling with cash-flow problems. MOS was bought in 1976, becoming a part of Commodore.
[edit] Microcomputer business
One of the engineers at MOS was Chuck Peddle, the man who had designed the ground-breaking 6502 chip. Peddle convinced Tramiel that the calculator was a dead-end as a product, that the computer would take over, and that the 6502 was the first in line for success. Peddle showed him a "test system" using the 6502, the KIM-1, and while Tramiel was interested he demanded that Peddle and Tramiel's son Leonard put it into an all-in-one form in time for the COMDEX in six months.
Combining the KIM with a new display driver chip, 4kB of RAM, a version of Microsoft's BASIC programming language, and an all-in-one case including a monitor and cassette tape drive for storage resulted in the PET 2001. At US$599, it became a hit, notably in schools where its tough construction was a major advantage over technically superior machines like the Apple II and Atari 8-bit family, which came out a year later.
[edit] The Commodore 64
Although Peddle left the company in 1980, improvements were made to the platform. In 1980 a new graphics chip with basic color output and a RF modulator for television display produced the Commodore VIC 20, which became a huge seller. In 1982, another new graphics chip, a new state-of-the-art sound chip and 64K of RAM resulted in the Commodore 64 (C64), which was an even more popular and went on to become the best selling home computer in history, with about 22 million units shipped. In 1984, Commodore's sales surpassed US $1 billion.
The success of the C64 was based on a massive manufacturing effort that cost a huge amount of money to set up — borrowed money that should have been easy to pay off in profits on the sales. However, Texas Instruments entered the market, and it appears that Tramiel was so upset about their earlier dealings in the calculator market that he decided to kill them in this one. Publicly declaring "Business is war", he started a price war, with the C64 quickly dropping from US$595 to US$199. While sales continued to skyrocket, profits plummeted, and Commodore's cash flow along with it. It seemed Commodore would soon be in command of a market worth nothing.
[edit] Resignation from Commodore
By late 1983 Jack and the Board of Directors argued over the direction of the company, which resulted in Jack resigning or being forced out, and several Tramiel loyalists quit Commodore in protest. Jack took a brief hiatus but decided to come back to the computer industry under the claim that he felt no current US computer company was strong enough to compete against the Japanese, who were now moving to enter the US market. So, he formed a new company named Tramel Technologies, Ltd., in order to design and sell a next-generation home computer. (According to Leonard Tramiel, "Our name Tramiel was constantly being mispronounced as 'Tra-meal' and my dad hoped that the other spelling would get people to say 'Tra-mell' (it rhymes with 'done well'). It didn't work."). Several former Commodore employees (including his son Sam and lead Commodore engineer Shiraz Shivji) soon joined him at the new startup, and by March Jack had his new computer design underway.
[edit] Atari
Meanwhile, Warner Communications was wanting to get out of the home video game business, as its Atari division had fallen on hard times due to the Great Video Game Crash of 1983. Jack had been going around to different computer companies with the prospect of buying them out to use their manufacturing facilities and distribution networks. Among the companies approached were Warner's Atari Inc., which was having well known financial problems. Jack and Warner held several talks over May and early June, but ultimately thought the deal was dead. That is until Warner Communications called Garry Tramiel (at the time a stock broker at Merrill Lynch) shortly before the June CES and asked if his father would be interested in purchasing Atari. On July 3, 1984, TTL (Tramel Technologies, Ltd.) bought the home consumer division of Atari (the home consumer division consisted of the Atari 400/800/XL computer line and the Atari home video game line). Garry Tramiel later left Merrill Lynch to join his father and his older brother Sam at the new Atari, and Leonard followed shortly after as well. The transaction included the "Atari" name and "Fuji" logo, along with intangible property rights (patents, trademarks, and copyrights) owned by Atari in conjunction with its computer and video game businesses (Atari Consumer), all for exclusive use in all areas other than coin-operated video game use. The Atari arcade division was not part of this deal. Warner Communications retained this division and renamed it Atari Games.
Warner received no cash, but received US$240 million in long-term notes and warrants for a 32 percent interest in Tramiel's new venture. Tramiel, in return, received warrants giving him the right to purchase one million shares of Warner common stock at US$22 a share.
Almost immediately, Atari Corporation froze all ongoing projects of the original Atari Consumer pending evaluation. This included the Atari 7800 (which had just been released in test markets in the Los Angeles area a month prior) and the Atari 2600 Jr. (the cost-reduced redesign of the Atari 2600 VCS). The Atari 5200, a product on the market for 2 years already, was cancelled outright. The company also slashed the prices of the entire consumer line (including consoles and computers) and fired 90% of Atari's workforce. The plan was to function off of Atari Inc.'s remaining video game stock for capital until it was able to push its next generation computer as Atari Corp.'s main product.
Around this time (mid July) several other Commodore engineers left Commodore to join up at Atari Corp. Fearful of losing even more staff to its ex-founder, Commodore launched a lawsuit against these engineers. claiming theft of proprietary secrets. This lawsuit would serve several purposes, among them to deter any more defections and most importantly to create an injunction against Jack's forthcoming next generation computer. It was around this time that Jack's son Leonard made an interesting discovery.
While cataloging and evaluating all the properties they had purchased, Leonard discovered documents pertaining to deals Atari, Inc. had with a computer company named Amiga. Made up of two key members of the original Atari 8-bit family design staff (Jay Miner and Joe Decuir), the company had been strapped for cash. That Fall, Amiga worked out a deal with Atari Inc. to provide access to its technology in exchange for an influx of cash. The plans called for Atari Inc. to retain ownership of the Amiga technology if the loan could not be paid back by August of the following year. During the interim, Atari inc. had been working on using the 16-bit Amiga chipset design for use in next-generation 16-bit home computers and a future 16-bit home video game system.
During time Jack had been finalizing buying Atari Consumer, Commodore entered in to negotiations to buy Amiga, who had been even further hurting for cash to finish the development of its computer. By the end of July, at the same time Commodore was launching its lawsuits against the Atari Corp. engineers, Commodore was also delivering its first installment towards the purchase (which would not be complete until approved by the board and shareholders). To further add to the irony, at around the time Amiga was paying back its initial loan from Atari Inc. (which now defaulted to Atari Corp.), Leonard discovered the documents of the deal.
Jack immediately turned these discovered facts towards his advantage and filed a lawsuit against Amiga Corporation and Commodore International on grounds of "breach of contract". The lawsuit was eventually settled in March of 1987 for an undisclosed amount of money and a dropping of Commodore's original lawsuit, and during the interim both companies were able to release their respective next generation computers. In fact Jack's next generation computer, the Atari ST, debuted at the 1985 Winter Consumer Electronics Show to good reviews. The ST line officially hit store shelves later in 1985.
Also discovered during the evaluation were Atari's plans for enhancements to the XL line called the XLF (one of which was in production in Europe briefly before all projects had been frozen). In order to have a full spectrum of new computer lines available for the Winter CES that January, Jack had his engineers use the already designed updates to come up with a replacement to the inherited XL line. These upgraded and cost reduced Atari 8-bit computers would allow Jack to further strike back at Commodore and undercut his formerly prized Commodore 64. So, at the Winter CES the public was introduced to the Atari XE (XL Enhanced) computer line right next to the next generation ST line.
[edit] Late 1980s to the present day
In the late 1980s, Tramiel decided to step away from day-to-day operations at Atari and named his eldest son Sam the new President and CEO of Atari. In 1989, Atari Corporation introduced the Atari Lynx, the first portable video game system with a color screen. The Lynx's price point proved to be harmful to its sales as the cheaper monochrome Game Boy proved to be a huge seller. On January 1, 1992, Atari Corporation officially retired the Atari 2600, Atari 7800, and the Atari 8-bit computer line, which included the Atari XE Games System. By 1993, Atari had released its 64-bit Jaguar video game system, which initially sold well, but sales quickly turned southward. In 1995, Atari informally retired the Atari Lynx and sold all remaining Lynx stock in special package deals, such as a Lynx II system and four cartridges for $60. Sam Tramiel remained as President and CEO until he suffered a mild heart attack in late-1995. Jack Tramiel came back to run the company, but as the company was losing millions of dollars a year, he knew that Atari was dying, and decided to sell Atari to disk-drive manufacturer Jugi Tandon Storage in a reverse merger deal. The newly merged company was named JTS Corporation, and Jack Tramiel was on the JTS board. In 1998, JTS Corporation was on the verge of bankruptcy and sold Atari to Hasbro, forming Hasbro Interactive. In 2001, Hasbro sold Hasbro Interactive to Infogrames. In 2003, Infogrames was renamed Atari.
Jack Tramiel is now retired and living in Monte Sereno, California, with his wife Helen, who he married in 1947 shortly after his immigration from Poland. They have three sons: Sam (born 1950), Leonard (born 1955 or 1956), and Garry (born 1959 or 1960). The Tramiels also have several grandchildren.
[edit] External links
- You Don't Know Jack at a Commodore History Site
- On the Edge: The Spectacular Rise and Fall of Commodore (2005) Variant Press, ISBN 0-9738649-0-7. – A book documenting the rise and fall of Commodore and Jack Tramiel.
