(Editor's note: this story was updated at about 6:15 p.m. EST on Dec. 13 to remove the original wording stating that Commodore International's rejection of Apple's proposal that it resell the Apple II occurred in 1982.)
Back in the dawn of the PC era, Commodore International rejected a proposal from legendary Apple Inc. founders Steve Wozniak and Steve Jobs to resell the Apple II computer. Luckily for Apple, as it turned out, Commodore instead decided to depend on its own systems, eventually including the revolutionary Commodore 64.
Apple was just one of several companies to approach influential Commodore at the time to sell PCs, said Wozniak during an energetic panel discussion at a 25th anniversary celebration of the Commodore 64 held Monday at the Computer History Museum in Mountain View, Calif. "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 the Apple machines, Wozniak and Jobs approached Commodore about distributing 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," 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 instead to develop its own simpler, lower-cost, black-and-white machine without the pizazz of the Apple II, Wozniak said. Commodore could do it more quickly and thought at the time that would be a better course for the company, he said.
In 1982, when the Commodore 64 debuted, Commodore started selling the PC for $599 and managed to eventually cut the price to $199. Apple PCs were more expensive, noted fellow 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 acknowledged that Commodore may have failed by not supplying hardware and software in one package. The company almost adopted the CP/M operating system but was more focused on supplying hardware to the market.
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 told me that I didn't have to give him any money; all I had to give him was $3 per unit. I told him I was already married," Tramiel 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.
Veterans from another early PC maker, IBM, also recalled 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 IBM's Bill Lowe, who is 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 because it was having problems of its own, said Lowe. "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," he said.
In the early 1980s, computers were not generic brands like they are today, the panelists said. Wozniak said that 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.
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