Why was it not possible to cost-reduce the Amiga 500?

Question

According to 'Commodore: The Final Years' (whole trilogy highly recommended, BTW), page 129, 'Jeff Porter realized it would not be possible to significantly cost reduce the Amiga 500 to get it into the $250 retail price range'.

This is really important. All the flailing around Commodore did in their final years, designing a bunch of different machines that missed the point. I used to wonder why it didn't occur to them that they needed to focus on cost-reducing the A500, get back to selling a good computer at a surprisingly low price, that was always their core strength. Well according to the above, it did occur to them, but they decided they would not be able to do it. And everything else the company did in the last few years of its life, was the rebound from that. (Okay, I exaggerate slightly. Some of their higher-end products would have been important anyway. But nothing else had the potential to sell millions of computers.)

Why was such cost-reduction not possible? Two possibilities come to mind:

1. The late eighties was the time of the RAM famine; half a megabyte was significantly costly all by itself. (But then why did the verdict not change when the famine ended?)

2. There were a lot of chips on the board. They needed to be fused into fewer chips. But Commodore Semiconductor Group (nee MOS Technology) had been starved of capital to keep up in process technology, and could not make the larger chips that would be needed.

Is there something else I am missing?

Answer 1

'Jeff Porter realized it would not be possible to significantly cost reduce the Amiga 500 to get it into the $250 retail price range'.

They could have cost-reduced the A500 - perhaps even to $250 retail - but they would have had to make some compromises that (thankfully) they weren't willing to do.

There were a lot of chips on the board. They needed to be fused into fewer chips.

The custom chipset was only 4 chips (Agnus/Denise/Paula/Gary). You could keep those chips and still make significant cost savings in other areas. First step would be to remove little used features such as the serial and parallel ports, CPU expansion bus, and internal RAM expansion board / realtime clock connector. This also eliminates a lot of passive components that were required to meet EMI specs etc., and significantly reduces the board size and cost.

Without serial and parallel ports the essential I/O functions can be combined into a single CIA chip. Then all the custom chips can be made surface mount and soldered onto the motherboard to get rid of troublesome IC sockets. Finally the modulator can be integrated onto the motherboard, or you could simply provide a basic RGB port and make users buy a separate monitor (not included in the base price!) or use a SCART TV.

But for really big savings the answer would be to leverage the PC clone market. With small tweaks your cost-reduced A500 could use a standard AT keyboard, floppy drive, case and power supply - supplied by whichever Taiwanese manufacturer was cheapest - or you could just sell bare motherboards and let the purchaser choose what they require to complete it! (perhaps nothing if they can use bits from an existing PC).

Well according to the above, it did occur to them, but they decided they would not be able to do it. And everything else the company did in the last few years of its life, was the rebound from that.

Yes, it seems that they considered, but rejected, going down that path. The A600 is commonly accused of being a failed attempt at producing a cost-reduced A500, but this may have had more to do with manufacturing costs in general rather than the design itself. The inclusion of IDE and PCMCIA ports shows that they wanted to do more - and those extra features justified a slightly higher price. If the A600 had been truly cut down to the bone it might have been cheaper, but much less desirable.

The closest Commodore got to a true cut-down Amiga was the CD32. No keyboard, serial, parallel, RGB ports etc., essential I/O functions integrated into a single custom chip - yet they still (thankfully) provided a keyboard port and expansion bus. So even the CD32 wasn't as cut down as it could have been. Clearly even at this late stage Commodore held out hopes of the Amiga being more than just a games machine shoved out at the lowest possible price.

Answer 2

They did, with the A600. But in true late-stage Commodore fashion, they screwed it up and made it more expensive.

To cost-reduce an A500, you'd have to reproduce its spec on simpler silicon. The market wasn't interested in an 8 MHz 68000 in 1991/92: the PC had stolen all of the Amiga's thunder at commodity prices. The Amiga's niche silicon was just too expensive to produce and couldn't benefit from commodity use from multiple vendors.

Answer 3

Commodore obtained an infusion of cash from Gould, which Tramiel used beginning in 1976 to purchase several second-source chip suppliers, including MOS Technology, Inc., in order to assure his supply.[6] He agreed to buy MOS, which was having troubles of its own, only on the condition that its chip designer Chuck Peddle join Commodore directly as head of engineering.

They bought a company to make their own chips, "which was having troubles of its own", and on top of that they stole the guy in charge. Strikes, one and two.

In 1983, Tramiel decided to focus on market share and cut the price of the VIC-20 and C64 dramatically, starting what would be called the "home computer war". TI responded by cutting prices on its TI-99/4A, which had been introduced in 1981. Soon there was an all-out price war involving Commodore, TI, Atari, and practically every vendor other than Apple Computer.

Why was that? Because Apple doesn't make anything. They take off-the-shelf parts, purchased from the lowest bidder using buying power alone, and have things built for them in countries with lax labor laws. Strike three, you're out.