Downfall Amiga, After Commodore

In this documentary by Amigaland Back to Basic, the focus is on the history of the Amiga, exploring Commodore’s future plans, the roles of ESCOM and Gateway, and the overall decline of the machine.

The Amiga CD32 was Commodore’s last effort to save the company from bankruptcy. Released on September 17, 1993, it lasted only eight months. During the Christmas period following its launch, Commodore struggled to meet the high demand, with the CD32 accounting for 30% of all CD-ROM sales in the UK, surpassing the sales of the Mega CD, and eventually selling 100,000 units in Europe. However, Commodore faced a major setback due to a significant lawsuit in the USA, preventing them from selling the console there, resulting in many units being dumped in factories in the Philippines. The rushed release annoyed developers, discouraging them from creating exclusive titles, and many games ended up being simple ports with minor improvements.

Commodore declared bankruptcy on April 29, 1994. This documentary raises questions about their future plans: would they have continued with outdated technology or pursued a drastic change? Although the Amiga seemed outdated by the mid-90s, it was revolutionary when it was first released in 1985. Could Commodore have made a similar leap in 1995-96, or was it too late? The documentary also touches on the advanced Amiga architecture chipset, developed in 1988 and canceled in 1994, hinting at further stories to be explored in future videos.

In this video, we explore the RISC-based chipset called Hombre. What exactly is the Hombre chipset? Commodore began designing a new 64-bit 3D graphics chipset on Hewlett Packard’s PA-RISC architecture in collaboration with Hewlett Packard over an estimated 18-month period. Hombre is composed of two chips: a System Controller chip and a Display Controller chip. According to engineer Dave Haney, Hombre would bear little resemblance to previous Amiga models, with no plans to include an Amiga RS port or offer compatibility with older models.

Here’s a clip of Dave on The Retro Hour discussing the Hombre chipset and plans for the CD64:

The Hombre chipset was intended to power a console system, potentially the CD64. Although the console was in early conceptual stages, existing specifications indicated it would offer graphics performance comparable to the Sega Saturn, with OpenGL support and CD-based functionality to reduce costs. However, Commodore faced significant challenges. David Pleasants, Commodore’s marketing executive, suggested renaming the CD64 to avoid confusion with the C64 and claimed it would outperform the Sega Saturn and Nintendo Project Reality. While these statements were ambitious, there was genuine interest in Hombre, evidenced by a meeting with Philips just two days before Commodore declared bankruptcy. Despite these plans, the Hombre project was never realized, and the German computer manufacturer ESCOM acquired Amiga in 1995.

ESCOM was founded in 1991 by Manfred Schmidt as an offshoot of his music company, previously known as Smith Computers Limited. Initially, the company sold Commodore 64 computers before branching into the IBM clone market, eventually becoming the largest PC manufacturer in Germany.

In its early days, securing stock and reliable suppliers was challenging for ESCOM. During the critical 1991 Christmas season, Schmidt contacted Commodore and was connected with Petro Tyschtschenko, Commodore’s Global Logistics Director. Petro ensured ESCOM received ample supplies of C64s, which helped the company avoid folding in those early days.

ESCOM established a strong retail presence in Germany with dedicated stores featuring customer service, sales reps, and displays—an uncommon approach in Europe during the 1990s, dominated by independent retailers and computer stores. With 27 retail outlets in Germany, ESCOM became a world leader in computer retail sales.

In contrast, the UK sales model was primarily mail order, with few independent retail stores and the main retail chain being PC World, which had 14 stores nationwide. Seeing an opportunity, ESCOM expanded into the UK market by purchasing 168 former Rumbelows stores, converting them into ESCOM retail units, and eventually operating around 300 stores worldwide.

Even as one of the most popular computers globally, the Commodore 64 remained the second-biggest seller of PCs by retail volume when Commodore declared bankruptcy in 1994. Numerous parties, including Samsung Electronics, Philips Electronics, Amstrad PLC, ESCOM, Gateway, IBM, Commodore UK, NewStar Electronics, and Creative Equipment International, showed interest in purchasing Commodore and its Amiga assets.

Commodore UK, still operating, initially collaborated with NewStar Electronics and Creative Equipment International on a bid. However, NewStar decided to partner with ESCOM, leaving Commodore UK unable to bid, leading Creative Equipment International to back Dell instead. To streamline the auction process, the auctioneer required all bidders to place a $1 million deposit.

The final stage of bidding saw Creative Equipment International compete against ESCOM and NewStar Electronics. ESCOM had behind-the-scenes support from IBM, which preferred ESCOM over Dell. ESCOM won the bid for $12 million, despite Dell’s $15 million offer, as ESCOM’s bid was unconditional and accepted first. Dell’s conditional bid required a 30-day review period, which the creditors deemed unfair and likely to restart the process.

After the acquisition, ESCOM maintained a close relationship with IBM, engaging in several deals. One such deal proved fatal for ESCOM: IBM persuaded leading PC manufacturers, including Vobis Microcomputer, ESCOM, and Comtech, that their operating system, OS/2 Warp, would capture over 40% of the German market, surpassing Windows 95. Consequently, these companies pre-loaded OS/2 Warp onto their machines—a move that ultimately proved disastrous for ESCOM, a story that will be detailed in part two.

ESCOM initially showed little interest in the Amiga brand during the buyout process, focusing instead on the Commodore name, which was still a significant player in the PC market. They divided the brand’s assets into two groups: Commodore Holdings BV, which owned the Commodore brand and assets, and the Amiga brand and assets, which were packaged for quick resale. However, the enthusiastic response from thousands of Amiga users led ESCOM to recognize the brand’s strong, existing user base. Consequently, they consolidated the brand and assets under the name Amiga Technologies, appointing Petro Tyschtschenko as the director to potentially produce and sell new products through ESCOM’s retail stores.

Petro’s first move was to ensure that Amiga Technologies operated as a viable business without financial support from ESCOM, relying instead on sales and licensing of Amiga products and assets worldwide. Before Amiga Technologies could begin operations, they faced challenges such as reopening factories and consolidating scattered stock. They aimed to redefine themselves and move away from the old Commodore Amiga era, including a rebranding effort.

Amiga Technologies invited designer Bjor Rayach from Scala, a leading presentation software company, to their opening press conference in Frankfurt. He presented a new design for the Amiga 4000 tower case and a new logo, featuring an abstracted “A” split into three bars. Initially tilted, the logo was later rotated horizontally to avoid resemblance to the Adidas logo. However, user feedback revealed that the design was already in use by Scientology’s Dianetics program, prompting Amiga Technologies to drop it. They then hired Frog Design to create the Bondi font logo with a red square, which some users found overly simplistic.

ESCOM also utilized the Commodore assets to create rebranded PCs and innovative products like the Commodore Webbit, an internet-enabled 486 PC with a built-in C64 emulator, and the IBM-compatible F6000T laptop. Despite these efforts, information on ESCOM’s Commodore machines remains scarce.

Amiga Technologies faced the daunting task of consolidating Amiga products and restarting production at their French factory near Bordeaux. Essential to their success were display monitors, leading them to partner with Microvitec in Bradford, England, to produce three new models. They began with the Amiga 1200, using leftover stock and adding a 3.1 Kickstart ROM. They released two packages: the Amiga Magic Package, including the Amiga 1200, games, and software for £500, and the Amiga Surfer Package, featuring a modem and internet software.

Production eventually moved to Irvine, Scotland, to be closer to ESCOM’s extensive retail network. However, sourcing Amiga-specific floppy drives proved challenging, leading to compatibility issues with the high-density drives they used. This sparked community efforts to hack PC drives for use in Amiga 1200s.

In Scotland, they also produced Amiga 4000Ts, modifying the Commodore design with a square form factor and including upgraded components. However, due to ESCOM’s financial difficulties, the 4000T received little advertising and reportedly sold only 2,000 units worldwide.

Despite proudly displaying Amiga 1200s in their stores, ESCOM staff lacked training on the machines, leading to frustration among users. An article by Andrew Ellia, “The Truth About ESCOM,” highlights the perspective of an Amiga fan inside ESCOM. Enthusiasts often took it upon themselves to educate store employees about the Amiga.

In my personal experience, visiting an ESCOM store with my father, I excitedly asked about the new Amiga Magic Pack, only to be met with confusion and a dismissive response from the sales assistant. This reflected the broader issue of inadequate knowledge and support for the Amiga brand within ESCOM’s retail network.

While Amiga Technologies was operating and selling new stock, they licensed the Amiga name and technologies worldwide. The first company to receive a license was Virtual IO. Previously known as Virtual Projects GmbH, Virtual IO was a subsidiary of ESCOM AG. ESCOM planned to use this company to develop cutting-edge 3D and VR technology. Before the Amiga acquisition, Virtual IO had already developed a product called EyeGlasses, released in 1995. These glasses featured two 640×480 resolution screens and supported the PAL video standard. Virtual IO had arranged deals with Microsoft and IBM to ensure compatibility with Windows 95 and OS/2, and the glasses were also compatible with major gaming systems like Sega, Nintendo, and Sony.

Initially, Amiga support was not a priority for Virtual IO until the ESCOM acquisition. The EyeGlasses were heavily advertised in ESCOM’s Amiga promotions and sold in retail stores, but they only supported two games: Gloom Deluxe and Nemac. Despite the initial excitement, the glasses received mixed reviews due to issues like sickness, dizziness, headaches, and the inconvenience of heavy cables and a bulky power supply.

Another licensee was Newstar, which originally entered a deal with ESCOM to distribute Amiga products in Western markets. However, distribution rights were awarded to Tiet in Trust and Investment Co., which had a factory near Beijing. Despite this setback, Newstar obtained an Amiga license and produced the 68k-based Amiga Igga 5A. According to Vice President and Chairman Jing J. Lee, the Amiga 5A was an internet-enabled machine with a 68000 processor running version 3.1 of AmigaOS. The machine’s release status remains unclear, with limited information available.

Newstar was a subsidiary of Lotus Pacific, as was Regent Electronics Corporation. Regent produced the Wonder TV A6000 and A6060 with help from German manufacturer DCE. These devices resembled a hybrid of a CDTV or CD32 but offered enhanced features, including functioning as a computer, fax machine, internet box, audio CD player, CDG player, video CD player, photo CD viewer, Tellyweb broadcast information system, and karaoke player.

ESCOM’s bankruptcy left many questioning how such a major PC retailer could collapse so quickly. Two primary reasons stand out: extended warranties and the OS/2 deal. Extended warranties became a significant revenue source, with customers pressured to buy them. ESCOM customers initially received a one-year guarantee, which was extended to three years for an extra charge. These warranties and customer support were managed by a company called ICL Saus.

When ESCOM went bankrupt, ICL Saus received thousands of calls daily from angry customers who had lost money on these warranties.

The OS/2 deal also played a critical role. ESCOM and other PC manufacturers entered a deal with IBM to preload OS/2 on their machines instead of Windows 95. This required ESCOM to convince customers to use OS/2 or install Windows at home, leading to a surplus of OS/2 machines and increasingly desperate fire sales.

Many companies showed interest in buying the Amiga assets, with one of the most notable being VIScorp, led by Bill Buck, who later formed Genesis and funded MorphOS. Paul Allen, co-founder of Microsoft, was also on VIScorp’s board. VIScorp aimed to use Amiga technology to create set-top boxes that transformed TVs into internet devices with a custom OS interface. Despite producing a unit called the VIScorp, they ultimately failed to secure the Amiga assets due to a series of internal disputes and eventually disappeared.

Another interested company was QuickPak, which had been licensed to build Amiga 4000 towers and A1200 components in North America. They produced Power Towers aimed at Video Toaster owners and developed accelerators like the 4060 with advanced features. QuickPak continued production even after ESCOM ceased operations and maintained communication with the Amiga community and other companies.

The second Amiga bankruptcy and buyout process was more opaque than the first. Companies like Microsoft, Sony, Philips, and Gateway were involved, with Gateway ultimately winning the bid for around $13 million. They also acquired Petro Tyschtschenko, a key figure in the Amiga community, and formed Amiga International as a wholly owned subsidiary of Gateway.

Despite the acquisition, Lotus Pacific claimed ownership of the Amiga patents in Asia, leading to a legal battle that was eventually resolved in 1998. During the transition, there were issues with OS 3.1, but these were eventually settled, allowing the rights to be transferred to Gateway.

In 1997, as the tech world saw significant advancements like the launch of the N64 and the introduction of Apple’s Power Macintosh G3, Gateway saw value in Amiga’s patents and technology. Gateway 2000, a well-known PC retailer founded in 1985, decided to place the Amiga assets in a separate subsidiary to protect them from Microsoft’s influence.

Gateway’s acquisition of Amiga highlighted the enduring value of its patents and the loyalty of its user community. Amiga International, led by a mix of former Commodore staff and Gateway executives, aimed to revive the brand and support the Amiga community.

Amiga International launched various promotional efforts, including merchandise and an official Amiga dance act, to re-engage with the community. This period marked an attempt to modernize the Amiga brand while retaining its loyal user base.

In conclusion, the complex history of Amiga’s buyouts and licensing deals reflects the challenges and opportunities of sustaining a beloved technology brand in a rapidly evolving industry.

As Gateway 2000 began to struggle with declining sales and shifts in strategic direction, Amiga International sought external investment to break free from internal conflicts. They devised an ambitious plan to revive the Amiga brand while offering support to the existing Amiga market. Their strategy aimed to move away from traditional architecture and create a new ecosystem, reminiscent of Apple’s transition from 68k to PowerPC and their acquisition of NeXT.

The vision was to develop a range of devices under the Amiga brand, making Amiga a part of everyday life. This included a gaming multimedia system, a developer’s machine for serious applications, and a tablet. In 1997, internet connectivity was not as pervasive as it is today, and many devices were not connected. Amiga aimed to bridge this gap by creating interconnected devices.

Gateway, a well-connected company, found this vision feasible, given their experience in hardware development and their industry relationships. The software glue for this ecosystem would be the Amiga Operating Environment (AOE). Devices would become Amiga objects, integrated into the AOE, similar to today’s Internet of Things (IoT). An app store-like function would enable micro-payments and revenue sharing for developers, exciting many Amiga developers about the potential to port legacy apps to new systems.

During this period, the computer industry was in turmoil. Apple had just been saved from bankruptcy by a $150 million investment from Microsoft, with Steve Jobs returning as CEO. The plan was to position Amiga as a creative alternative to Apple, leveraging its strong gaming history to gain market share.

In 1998, Gateway 2000 announced plans for the Amiga Multimedia Convergence Computer (MCC), a multimedia machine featuring a standard ATX motherboard, DVD support, four USB ports, internet set-top box functionality, and 3D gaming support. Although details were scarce, they touted a “magic chip” that promised significant capabilities.

Despite initial excitement, the project faced numerous challenges. Gateway’s discussions with Transmeta about the machine’s architecture collapsed, and the decision to switch the operating system kernel from QNX to Linux sparked controversy. Jim Collas met with Linux creator Linus Torvalds to discuss the plans, which received positive feedback. However, these plans never materialized.

The Amiga brand would never again be owned by a major corporation. Instead, it entered a period of obscurity, with its ambitious plans rehashed but never realized on the same scale. Internal conflicts at Gateway led to the shutdown of the MCC project and the eventual dismissal of key executives. The Amiga community faced disappointment and a mass exodus.

Ultimately, the Amiga was sold to Amino Developments, formed by ex-Gateway employees with venture capital backing. The brand entered a dark period but survived as a hobby system driven by the passion of its users, nostalgia, and support from small companies. Today, the Amiga community continues to thrive with ongoing hardware development and innovation, ensuring the legacy of Amiga lives on.