Newsgroups: comp.sys.amiga.advocacy
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From: taab5@isuvax.iastate.edu (Marc Barrett)
Subject: Re: YOU PEOPLE HAD BETTER GET WIT THE PROGRAM!! (Was: Re: Commodore Business Machines)
Message-ID: <1991Jun24.125754.4008@news.iastate.edu>
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Reply-To: taab5@isuvax.iastate.edu
Organization: Iowa State University, Ames, IA.
References: <1991Jun23.230738.28319@mintaka.lcs.mit.edu> <17308@chopin.udel.edu> <4193@ux.acs.umn.edu>,<1991Jun24.030715.511@cunixf.cc.columbia.edu>
Date: Mon, 24 Jun 1991 12:57:54 GMT
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In article <1991Jun24.030715.511@cunixf.cc.columbia.edu>, es1@cunixb.cc.columbia.edu (Ethan Solomita) writes:
>	They are trying to survive. If they aren't doing enough
>for you, then don't buy an Amiga. But they can't make money
>appear out of thin air. I'm sure they've got 100 things they
>could list that they would do with money if they had it. But they
>don't.
>	My point is that, for Commodore to turn around the U.S.
>market, they would have to put SO MUCH MONEY into the advertising
>that they wouldn't be able to afford it. Think about it: we know
>about the Amiga. How much advertising would it take to make a
>large segment of America even CONSIDER the Amiga? It has
>specialized niches, but it would take more advertising than
>Commodore could handle to make things turn around.
>	I take as my evidence the "Stevie" campaign. That cost
>Commodore $14 million dollars. What did it do? It helped, but it
>wasn't nearly enough. It lasted 2.5-3 months and had a reasonable
>amount of coverage, without being overwhelming. It would seem
>that $50 million would barely be enough for a year-round BIG
>campaign. Commodore would go bankrupt doing that.

   You seem to think, along with others, that Commodore is racked with 
debt and will go bankrupt if they borrow money to finance advertizing.
This could not be further from the case.  Commodore's debt:assets ratio
(I said 'assets:debt' in a previous message; I had it backwards) is so
low that they are virtually debt-free.  This means that Commodore 
probably could borrow a very substantial amount of money without risking
their corporate future.

   Consider this: most companies in the U.S. today are very highly 
leveraged.  These companies have very high debt:assets ratios, in some
cases having debts that exceeds their assets.  Yet these companies do
usually survive more often than not.  If such highly leveraged companies
can survive, Commodore can survive with a little debt.

   If I were Commodore, I would borrow a small amount of money ($100
million, which is less than 10% of Commodore's total annual sales) and
invest that money in R&D and advertizing.  

>	Besides, the U.S. division is either unprofitable or
>barely profitable, at least officially (the books can be played
>with for tax purposes). How can Commodore justify spending even
>$30 million on U.S. advertising (TV) campaigns when they might
>not even work at all.

   Because the alternative is even worse.  Some people here paint a very
bright future for the Amiga in the U.S., as if they cannot see reality.  
Here are some facts about the Amiga in the U.S.:

(1) less than 800,000 machines have been sold in the past six years.
(2) the bulk of these machines are low-cost consumer machines.
(3) more than 5,000,000 Macintoshes have been sold in the U.S.
(4) the bulk of the Macintoshes are professional-level machines in very
    prestigious markets.
(5) Apple is selling Macintosh Classic systems like gangbusters
(6) Apple is getting ready to sell Macintosh Classic systems through
    mass-marketing channels like K-Mart and Sears, competing directly 
    with Commodore on Commodore's own turf.

   I could state more.  The future is really no bright for the Amiga, and
only very radical steps (like spending $50 million on advertizing) will
change things.

>
>	Commodore IS advertising, despite what most people here
>seem to think. The only TV ads are A500 (CDTV?) ads come
>Christmas time. BUT, there are ads in Music, Video and Unix
>magazines on a regular, monthly basis. That will get Commodore
>far more bang-for-the-buck than TV ads. Of the total people
>watching TV, how many do you think care at all about computers?
>	-- Ethan

   A lot of them must, because Apple pours money into T.V. advertizing,
and reaps the benefits of large sales figures.  

>
>"...Know-Nothing-Bozo the Non-Wonder Dog, an animal so stupid that it
>had been sacked from one of Will's own commercials for being incapable
>of knowing which dog food it was supposed to prefer, despite the fact
>that the meat in all the other bowls had engine oil poured all over it."

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