A CANDID DISCUSSION
By Stephen Banker
In January, 1984, Jack Tramiel, then 55, abruptly resigned from Commodore International, a company he had transformed in a mere quarter of a century from a typewriter repair shop to the world's largest purveyor of home computers. Though he departed as a wealthy man (with assets estimated at $100 million), his nature would not permit him to while away the days on some sunny beach. Within a year, he had taken over the reins of a former competitor, Atari, and was going mano a mano with Commodore.
Long known for aggressive pricing, Tramiel adopted the slogan of "Power without the Price," and Atari was soon producing a series of micros called the ST (for their 16/32-bit capability). The two models available to date, the 520 and the 1040, are powerful, flexible machines, with the latter offering a megabyte of memory at a cost of less than $1000, a price breakthrough of such watershed impact that it elicited a cover story in Byte, the industry's bellwether magazine. Still, the ST must make its way against a perception that success in the computer field comes from aping standards established by IBM. Atari has responded by encouraging comparisons not to Big Blue but to the Apple Macintosh, and Tramiel's computer is popularly dubbed the "jackintosh." The strategy is working. Industry sources report that upwards of 200,000 ST's have been sold so far, largely in western Europe.
Short and rotund, possessed of boundless energy and confidence, Tramiel is the swizzle stick of the Atari operation. Though he has delegated some responsibilities to his three sons (36 year old Sam is nominally the company president), there is no question who makes key decisions. Tramiel appears, in fact, to be carving himself a unique place in business history- as the developer of two separate billion dollar corporations.
If Jack Tramiel is about to pull off a major surprise at Atari, a feat he certainly accomplished with the extraordinary growth of Commodore, facing long odds is something he was born into- on December 13, 1928, in the ghetto of Lodz, Poland.
JACK TRAMIEL: As for the war years, I will only tell you the end. In the fall of 1944, I was sent from Auschwitz in Poland to Steichen in Hannover, Germany. There were 10,000 of us who came into that camp to work for a company called Continental Tire Company. At that rime, they were producing treads for ranks. On April 10th, when we were liberated by the 9th Air Force Division of the United States Army, there were 60 people left.
STEPHEN BANKER: How did you manage to survive?
JT: We have a power in us which is much stronger than we are, and He decides. As far as I was concerned, I was dead. Only one other member of my family, my mother, survived. We were separated for three years and I found her after the war. She's still alive at 78.
SB: Is there a sense in which all that was useful preparation for a captain of industry?
JT: I do remember and I know when to use my experience. Survival is something you think about in business. You have to know how to live with people, how to work with people. Despite where I was in the war, today I work closely with Germans. We sell more of our computers in Germany than anyplace else. As for the so-called captain of industry, when I got out of the Army, I asked myself what I wanted to be-a laborer or a president. I had those two choices because I didn't have education. I decided to be at the top.
SB: What is your marketing plan at Atari?
JT: What we have done is researched the most advanced technologies, and put those components into a product which was in great demand and which was selling for higher prices. We brought the price down and offered it to the public, to the mass market.
SB: But didn't people say to you, "Mr Tramiel, you can't make money in this business unless you imitate the IBM standard"?
JT: I was told that all the time, but I refuse to produce a clone that is behind the times. I was impressed when I came to the United States that we are a country of individuals. Most major corporations don't respect people. They think if General Motors says yellow is the color, then everybody will buy yellow. I don't believe that. I am producing products for the most sophisticated consumer in the world. He reads about science- what's available in the computer field, for instance-so that when I introduce new features, he already read about them a year ago.
SB: Toward the beginning of 1985 you said, "People should not buy the ST during the first six months because that is the time for software developers to do their work." That did not make your PR staff happy.
JT: As it came out, I was right. Today, we have hundreds of pieces of software. When you introduce a new machine with a new operating system, you place it in universities, in laboratories, where they can use that product as an engine. Then the engineers create the software. Don't give someone a tool he cannot use. Don't take the money out of his pocket.
SB: But I know developers who say you made it hard for them to get their hands on the early ST, that you were charging $4,000 for development kits.
JT: I wanted to give them hardware at our cost because the first models are very expensive. Furthermore, anybody who will spend $4,000 will be dedicated to get his money back and write solid software, nor just put the money in the bank. Some of my competitors when they go to software people, they flood them with cash.
SB: You also offered cash. You said to software developers, "You need money? I'll give you money." Remember that?
JT: I made that proposal as an investment. That would be going into business with them.
SB: What did you tell your engineers when you began to design the ST?
JT: I asked for a "fifth generation" product-the most advanced microprocessor, the Motorola 68000. That gave us the greatest ease of use along with upwardly compatible features so we could build the kind of 32-bit machines the 68000 chip can support.
SB: The computer industry makes a sharp distinction between home computers and office computers. Did you take that into account?
JT: Absolutely nor, because there is no such distinction. The distinction is only to those people who set the price because they believe they can charge more for the office.
SB: Some people think you play rough. In fact, a phrase you yourself have used many times is, "business is war."
JT: I believe that when you start something, you have to win. That's why I compare it to war.
SB: Another quote: "Anybody who sells a product against me I would like to wipe out."
JT: I do not like competition. I like, if I can, to be by myself, to have the marker all to myself. I know that's not possible, but it would be nice.
SB: On the other hand, you have also been referred to by somebody who deals with you frequently as a "gentle, misunderstood man."
JT: I really do not believe in image. When I get letters from young people, it gives me a good feeling-a satisfaction that I am giving them what they want.
SB: Given your compassionate side, what did it do to you to cut the Atari staff down from 1200 to 100?
JT: I believe that we live in a country where for hard working people there are always jobs. People should not be sitting around getting pay they don't deserve.
SB: The Wall Street Journal wrote, "Commodore under Jack Tramiel was notorious for announcing products that never made it to retailers' shelves." That's a perception that must create difficulty in dealing with retailers.
JT: The retailers, or anyone else I would have problems with - they do not understand the market, and they must be selling other products than mine, so they like to say what I'm doing is wrong. When you plan a product that normally takes 12 months or longer, better technology can be produced during that time. Then it's important to kill the product before it reaches the market because it's very expensive to kill after it comes out. I am not afraid to announce my intentions, but I'm very careful before I put it on a dealer's shelf. Anyway, I'm not working for The Wall Street Journal. What they say really doesn't interest me.
SB: In April '85 you said you hoped to sell three to five million computers that year What happened?
JT: The reason we did nor reach that number is that we are in a transition period. The users of 8-bit machines are trying to figure our what is the next generation. Is it the 16-bit machine? And when they decide that this really is the product, which I now believe will be sometime in 1987, 20 million 8-bit computers will be replaced and then there will be a real upswing in the marketplace.
SB: What's the next major offering from Atari?
JT: We are working on a very advanced laser printer And for a product our competitors sell for $6,000, we intend to be way below $2,000. (Editor's note: The latest indications show that Atari may actually bring their laser printer to market at a retail price below $1,000.)
SB: I'm told that you are going to run the printer directly from the computer rather than have a separate chip in the printer, as is the case nowadays.
JT: I am not at liberty to tell you how it's going to work.
SB: But I have had interviews with your designers on this.
JT: I will try to make sure they don't tell you again.
SB: What about CD ROM?
JT: The CD ROM is just a 4-inch disk but it's like a 500 square-foot room full of hooks. We are getting ready to put the legal libraries of all 50 states on this disk, so when a lawyer wants to know about a certain kind of case, he can get it in a matter of seconds. You can have an encyclopedia on the disk. Or you can go to the Mayo Clinic, in effect, and get the facts on cancer, on heart disease, on whatever it is.
SB: How far away is that?
JT: The technology is done. I'm only waiting for the price to fall under $500.
SB: There's a lot of talk about a new generation of Atari computers using the 68020 microprocessor which is a full 32-bit chip. When is that going to happen?
JT: Sometime in the beginning of '87.
(Editor's note: At press time, it seemed certain the 68020 implementation would be in the form of an add-on box for the existing ST line rather than a new generation of computers.)
SB: Using a UNIX operating system?
JT: It will be one of the operating systems, yes.
SB: What will be the impact of that?
JT: Speed and better graphics-a more advanced machine.
SB: Do you, yourself use a computer?
JT: Yes, for my stock portfolio. I hook it up to my modem and get all the facts I need.
SB: What are you uncertain about in terms of Atari's development?
JT: Is the market as big as I think it is? And do the Japanese have something up their sleeves?
SB: There are many people with whom you have done business who do not want to deal with you anymore. There were advertising agencies that refused to make a proposal on the Atari account unless you pre-signed a letter of credit, and, of course, there are quite a few people whom you fired. On the other hand, I hear constantly about your philanthropic activity. Do those parts mesh?
JT: One is business and one is private. Last year I made very little income because most of my investments were in tax-free bonds. I actually had to cash in some things because I enjoy giving money to the right causes. That gives me almost as much pleasure as designing an advanced computer.
SB: What are the right causes?
JT: There are many, but cancer research is something I support. Then there is Army Relief. The United States Army helped me in 1948, and I've been helping them.
SB: During one of the computer shows in Las Vegas, I spotted you at the gaming table, betting $500 dollars on a single card. I was reminded of what people say about survivors- - that there's something in their mentality that requires risk.
JT: There are those moments when I get carried away. But I definitely am very careful how I spend my money. I still travel economy class and try to save every nickel I can. I believe in hotdogs and caviar.