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From: kkrueger@zeus.unomaha.edu
Newsgroups: comp.sys.amiga
Subject: Re: Commodore Research and Development.
Message-ID: <6360.278474cc@zeus.unomaha.edu>
Date: 4 Jan 91 18:27:56 GMT
References: <1991Jan3.003449.1@ccvax.iastate.edu>
Lines: 90


     It's just like one of those Friday XIII movies: Once you think -MB- is
done with his inane posts, he's back!  I can actually feel right about flaming
him because he told me that he posted a pointed message and offered to have me
grab a copy of it out of his account and respond.  I warned him in advance
that I probably wouldn't be nice.  (Yes, I personally know him, but please
don't flame for that no matter how much I deserve it.)

> CASE 1: THE CMOS CHIPSET AND THE ATARI LYNX
> Some of the original Amiga founders were able to scale the Amiga chipset
> down somewhat and produce a CMOS version of it that preserves the 4096 colors
> and 4-voice stereo sound of the Amiga.

     First of all, come on Marc, you know better than to compare a handheld
Atari to an Amiga!  It doesn't matter if it has 4096 colors and four voices
and came from an Amiga's chipset because you are talking about Apples and
oranges.  I see the point you are trying to make, but you are really reaching.

> CASE 2: COMMODORE'S PC-CLONE R&D:
> Commodore is perpetually a full generation behind the rest of the world
> in developing PC-xompatible [sic] systems.

     Second, who cares if C= doesn't have the latest clone technology?!  The
only reason any Amiga owner cares about the well-being of C= is because our
future hardware/software support depends on it.  I wish the company would phase
out the clone line entirely.

>    In conclusion, I feel that Commodore has fallen so for [sic] behind in
> their R&D that they will probably never catch up.  Commodore has never been
> a company that produces innovative new technologies, and very likely never
> will be.  Commodore is a 'catch-up' company that is forever trying to
> catch up with the rest of the industry, to avoid going out of business
> altogether, and will likely always be this way.

     Third, I can see logic went out the window when you wrote that conclusion.
This wasn't a gap in reasoning; it was a canyon!  I just don't see how clones,
handheld Ataris, and laptops have much to do with "forever."  Forever is a long
time.

> AMIGA -- YESTERDAY'S TECHNOLOGY, FOREVER!!!

     Fourth, you always end your messages with some tag that announces to the
net, "I'm a nut!  Flame me for my radical opinions!!"  Ask and you shall
receive.  I have come to the conclusion that, by your writing style, you really
don't care if you can persuade anyone; you're just out for a fight.

     Nonetheless, distilled down, with all of the charged language and leaps of
logic removed, you have a point.  I am a graduate business major, so I think
I can add some insight on the business side of this R&D matter.  I checked the
last listing of R&D expenditures for 1989 in BusinessWeek (June 15, 1990), and
C= is, indeed, behind the industry average for American computer companies in
terms of R&D expenditures as a percentage of sales.  The industry average is 9.0
while IBM is at 8.3, and Apple is at 8.0.  Since C= is not an American company,
I had to compute its 1989 ratio from the the 1990 annual report.  This works
out to a mere 2.1!  (Note that IBM and Apple are below industry average because
they are big companies, and big companies tend to spend less as a percentage
than do small ones.)  However, when I computed the 1990 ratio, I found that this
ratio had increased to 3.1.  Partly this was due to the fact that 1990 sales
were sharply down from 1989, thus the denominator was lowered.  However, R&D
did increase from a miniscule $19,300,000 to a paltry $27,700,000.
     This does not provide the overall picture, though.  There are far fewer
companies doing research on Amiga products than there are doing research on
clones.  Also, much clone research will benefit all computers.  These and other
intervening factors muddy the picture, but the message is essentially the same:
a company that does not invest in improving its technology will die.  I do not
mean this as a leap of logic, though.  It is clear from many studies that there
is a good correlation between R&D expenditures and future profitability.  The
Japanese, for example, spend about 15% of their sales on R&D.  According to a
graduate accounting professor I had, the Japanese firms will dominate their
American counterparts if our R&D expenditures do not sharply increase.  I
believe the American average is somewhere around 7%.  While this is another
issue entirely, I bring it up because the largely successful Japanese do
believe that high levels of R&D will bring future success and so should C=.
     Assuming the role of an objective financial analyst, I looked at C='s
annual report.  The company is in a secure debt position, but there is
absolutely no way I would invest in shares in C= for the long term.  In fact,
I would expect sales to generally decline from year to year.  I do hold a bit
of optimism, though.  In the past year, the company seems to be starting to get
its act together and seems to have more of a strategic plan.  Coming back to
what I originally said about not caring about C='s business unless it affects
the end user, I do believe this does just that.  You, as the user, should
really hope that R&D does increase to somewhere in the neighborhood of
$100,000,000 per year if you don't plan to abandon ship down the line.

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Kurt Krueger | BITNET:   KKRUEGER@UNOMA1           |        //\
MBA student  | Internet: KKRUEGER@ZEUS.UNOMAHA.EDU |      \X/--\ M I G A
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                           TYPE >barrett: flames
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