The following interview was published in the June issue of The Computer Paper, Western Canada's Computer Information Source.(circulation 100,000 in B.C. & Alberta) Interview done by Kirtan Singh Khalsa, editor. For subscription information call (604) 733-5596.
James Dionne is President and General Manager of Commodore Business Machines of Canada. Commodore, started in Canada. It has been in business for over 30 years. It was an early player in the home computer market with the PET and C64 computers. A few years back it launched the Amiga line of 68000 based computers. Recently it has brought out a successful MS-DOS compatible computer line. We recently had an opportunity to talk with him when he was visiting Vancouver.
Have you been with Commodore a long time?
Yes, since 1978, I was hired as Commodore's original sales manager when we were just starting up. There might have been a couple of dealers signed on when I came on. We were selling calculators and filing cabinets. In the early days, we had one dealer, Conti, in Vancouver. They still are a dealer here. Then we signed up Computerland. They no longer sell our stuff. We will be successful with or without them. Would we like to do business with them again? -- sure. They have a big share of the reseller market. But we are not going to sit back and lose sales without them. Our independents are very effective. Because we don't have a national chain, we have to look to our independents to carry the ball. It is more work for us to deal with them, but sometimes they are much more effective because they own their own stores. They will go the extra mile.
How do you work with your dealers?
We are dealing with corporations, but we let the dealers do the installations. There is still an incentive for dealers to go and talk to corporations. We get involved ourselves because some corporations will not deal with a small dealer. He may not be able to service their requirements across the country. So we work with the dealers and coordinate for them across the country. This is something fairly recent. We have just recently got the products that we feel are worth pursuing this way.
We have a very good AT. We have announced a 386 which will be available for September. It will be a total Coommodore designed product, not just an OEM board. In the fall we plan to bring out the Amiga 3000, which will be a 68030 based computer. We are putting things in place to sell.
This week we are interviewing some corporate sales people for the Vancouver office. We are starting slow and building our base keeping the overhead down. I would like to think that next year we will have a lot more corporate sales people in place.
Can you give an example of what constitutes a corporate sale?
We have been successful with employee purchase programs. We negotiate a sales program where we sell them to their employees. With Air Canada we got in the back door this way, and now they are starting to consider these machines for use internally.
How do your sales break out? Where does your money come from?
I would say now the C64 and C128 computers account for about 20% of our revenues. Sales now are stable, but they have come down since 1986. We will do about $100 million this year in total sales. In 1983, we did 100 million just on C64's. Our sales are growing, but they are growing from the MS-DOS and Amiga lines. That means about $20 million in sales for the C64 line, and the rest about evenly split between the Amiga and the MS-DOS machines. The Amiga revenues are split between the 500 and 2000, though we sell many more 500's, but the 2000's cost twice the price. Revenue is evenly split.
What is the most profitable?
The C-64 because it is older technology, not so much goes into development now, then the Amiga, because we own the technology, and then the lowest profit margins are in the MS-DOS line. It is very tough to make money in the MS-DOS world. A lot of guys are in it that don't want to make money at it, and it is very competitive. We are not interested in being the cheapest. What we do is include a lot of features built right in. They are very advanced. What we always say, is that we offer the best value. It is not the cheapest.
Where do you build your computers?
Right now we have switched all the production to West Chester, Virginia. We are looking right now at taking advantage of free trade.
What is your component break down? Do you have more than 50% of the product made in the USA?
That is what we are looking at right now, many people don't realize that even if the machine is assembled in the USA, it may not qualify for the exemption, because the components come from off shore. Even with the duty free, on many of the machines, we are only talking about $20-$30 for duty. It is not as significant as many people would assume. I like where our production is done because it is very close for us to get it in for our Toronto office. It cuts down on the amount we have to store in inventory. We can get equipment in 8 hours. I also like the fact that it is made in the U.S. I think that customers feel more confident with equipment made in the United States than if it is made in Taiwan. Sometimes we do get equipment made in West Germany. That has a good association with quality as well.
Commodore is really big in Germany. Why is that?
Yes that is true. This year, 70% of the revenues of Commodore will come from Europe. We are strong in Canada, Australia. But in the U.S. some people don't even realize that Commodore is still in the computer business. Some of that spills over into Canada as well.
How many amigas have you sold now?
In March, we just shipped the millionth Amiga. That is faster than the Macintosh got to its first million.
How many Amigas have you sold in Canada?
I would say 50-60,000. So many of the 1 million sold are in Europe. In Germany they have gone completely crazy for the Amiga. At one point they were selling 15,000 machines a month. The pricing is very attractive over there because the Deutsche Mark is so high. Germans also love the best technology. The German company has also done some good marketing. They got good association by sponsoring sports teams. Many of our competitors in America are not so strong over there.
Another factor is that in the early days when we had a supply problem, the company would make more money on the machines over there, so they would ship the Europeans supplies first. So quite often they would get the shipments and we would not. They built a stronger presence because of it.
We are starting to get a much stronger presence in Canada with the Amiga.
You scored a bit of a coup when you got the Ontario government to approve Commodore for education purchases (previously the education ministry had attempted to support their own "Made in Canada" brand of computers the icon).
Yes, we worked for two years on that. It helped when the government changed. It was a poorly thought out policy. When you know you are right, and you can't get the other side to see it. They spent a lot of tax payers money to do that.
The Amiga lacks the polish on the operating system that you see on the Macintosh. Is Commodore planning to enhance the operating system?
With version 1.4, you will see a much more sophisticated operating system. We will be releasing a new chip set also which will give higher screen resolution. You will able to upgrade 500s and 2000s to use Multisync monitors.
What computer do you use yourself?
Well, the most use I get on a computer is at home. I use the C128 only because over the years, I have acquired the software, and the kids like it. I have been meaning to make the change to the Amiga, but you know how it is with getting the time to change. In the office, we use PCs and Amigas and a System 38 (IBM). The PCs and Amigas work as terminals.
How can you network an Amiga?
The easiest way is to move to the MS-DOS side with a Bridge card and use Ethernet. We are developing a fully Amiga solution for the schools in Ontario. We are also looking at making it compatible with the more accepted standards like Ethernet. We can see using the new Amiga 3000 as a Unix workstation. There are some third party cards around though.