The 1983 Home Computer Price War

The most important development in 1983 was the Personal Computer Price War. Texas Instruments had nearly destroyed Commodore International when TI began selling fully assembled calculators for less than Commodore and other calculator makers paid for components. Jack Tramiel, Commodore’s founder, vowed revenge.

The 1983 Personal Computer Price War

Texas Instruments TI-99/4 computerThe Texas Instruments 99/4 was the first 16-bit personal computer, and it initially retailed at US$1,150 in late 1979 – that price included a 13″ modified and rebranded Zenith color TV functioning as its monitor. The original 99/4 had calculator-style keys and no lowercase text. It had a ROM cartridge for games and software, just like the Commodore 64, Atari 400 and 800, and TRS-80 Color Computer.

Texas Instruments TI-99/4AThe TI 99/4A added lowercase text and a full-travel keyboard. It retailed for US$525 on its released in June 1981. It also shipped with an FCC approved RF modulator, so TI no longer had to include a monitor.

With it 16-bit TMS9900 CPU running at 3 MHz, you’d think it would have been the performance champion – and you’d be wrong. The 16-bit CPU had to access system memory 8 bits at a time, and it could only do that via the computer’s video chip, which really hobbled throughput.

By 1982, the Atari 400 and TI 99/4A were both selling at $349, the Radio Shack Color Computer at $379, the Commodore VIC-20 at $199, and the C-64 at $499.

Commodore VIC-20In January 1983, Commodore reduced the wholesale price of the VIC-20 to $130. In February 1983, TI cut the wholesale price of the 99/4A to $150, even though it was much more expensive to produce. In April 1983, wholesale price of the VIC-20 dropped to just $100. TI countered by cutting prices and offering a $100 mail-in rebate, giving the 99/4A an end cost below $100.

Commodore had purchased MOS Technology, which produced the popular 6502 CPU used in Apple, Atari, and Commodore computers, along with other chips. This gave Commodore the edge it needed to do to Texas Instruments in the personal computer world what TI had done to Commodore with calculators.

Commodore 64In June 1983, Commodore slashed the Commodore 64 to $299, and some retailers sold it for as little as $199. Commodore was selling as many home computers as the entire rest of the industry, and the Atari 800 was being blown out at $165 in July 1983. Texas Instruments was ready to launch its budget 99/2 for $99, but the 99/4A had already been slashed to that price.

Atari 800Texas Instruments was losing money on every computer it sold, losing hundreds of millions of dollars in the 1983 PC price war. TI threw in the towel in October 1983. At one point TI owned one-third of the home computer market, but even TI could not compete with Commodore – which also hurt itself financially in order to get back at its former supplier.

The price war ended with Commodore hurting, Atari bleeding red ink, and TI out of the picture.

Atari 65XE and 130XE

Atari 130XEIn January 1984, Commodore got rid of Jack Tramiel, who went on to purchase the Atari home computer division from Warner Communications in July 1984 for a song. The 600XL and 800XL were replaced by more economical versions while Tramiel put the focus on the next generation Atari ST.

The Atari 65XE was essentially an 800XL without its parallel bus (PBI), while the 130XE was a 128 MB version of the 800XL and had a parallel interface that wasn’t compatible with PBI.

Further Reading

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2 thoughts on “The 1983 Home Computer Price War

  1. “The Atari 65XE was essentially an 800XL without its parallel bus (PBI), while the 130XE was a 128 MB version of the 800XL and had a parallel interface that wasn’t compatible with PBI.”

    Small correction to an otherwise enjoyable tour down memory lane. The 130XE was 128 KB vs 128 MB.