Where would Coleco be if the crash didn't happen?

[JamesD]

In another similar thread I made the suggestion about an updated Colecovision that you just plug in the keyboard and drive to have a computer I suggested including 1 expansion slot.
On further thought, it would be better to have an expansion header like Tandy used in some of their 1000 models than to include slots. It would let them build a lower profile machine and the expansion buss can be passed through from one card to the next to support 2 or 3 expansion cards.
I think a smaller form factor alone would have offset the cost of added RAM, ROM and ADAMnet (6801, glue logic and connectors) to keep the console the same price.
Coleco about has to introduce a super expander with the same features to insure games will be written for the extra memory.

The major problem I see with any updated game console is that the computer price war dropped prices down to where computers were priced competitive with game consoles. You have to keep prices close to compete.

BTW, we've never mentioned the legal issues Coleco had over the 2600 expansion unit. Some pages seem to think Coleco won but they ended up paying royalties in the settlement and legal fees surely weren't cheap.

[+nanochess]

A thing of crashes is that someone shouts "There is a crash!" and then every company starts cutting workplaces, reducing predictions, destroying project, and so...

 

So efectively the company cuts its arms. Obviously CEO was blind with Coleco.

 

The recipe was simple enough: more games, and 2nd generation Colecovision simplified to reduce manufacturing costs, with more RAM.

 

The extra income would have saved Coleco at least till 1995, just the same way that the optimized Atari 2600 Jr continued generating income for Atari.

[JamesD]

A thing of crashes is that someone shouts "There is a crash!" and then every company starts cutting workplaces, reducing predictions, destroying project, and so...

 

So efectively the company cuts its arms. Obviously CEO was blind with Coleco.

 

The recipe was simple enough: more games, and 2nd generation Colecovision simplified to reduce manufacturing costs, with more RAM.

 

The extra income would have saved Coleco at least till 1995, just the same way that the optimized Atari 2600 Jr continued generating income for Atari.

Pretty much. If someone yells fire in a theater, people run.

I don't know that the extra income would have saved Coleco but it would have certainly helped secure financing that would.

If sales were sufficient then they may have weathered the storm long enough to have a followup product and to get to a period where investors were less paranoid about computers.

 

[cimerians]

I read interviews a few years back with Kunkel and Katz (the guys at the old EG magazine) and they said the ACTUAL crash was felt in 84' but they started seeing the signs of it in 83'.

 

Which seems accurate because most accounting records and events I read about that lead to the crash show a lot of behind the scenes events taking place in 83'............but since the Adam came out in late 83' what was Coleco's financial state at THAT point? Were they hurting or just breaking even? Was Coleco banking on the Adam or were they ok and the Adam simply cost too much and they lost out? Obviously the Adam seems to have killed them off in terms of video games.

 

We need that book!!!

[JamesD]

We need the stockholder reports to be honest. Only the accountants, CEO and board of directors would probably know the exact financial state and they probably worked at three other places or more and are retired by now.

'83-'84 sounds plausible for the "crash". The TS-1000 was in mid '82, C64 in '82... Price drops would have started in '82. TI introduced the reduce cost model in '83 and bailed in '84.
I think people forget how fast the TI dropped from around $500 to $99. It only took about two years.
The price drops may have impacted a lot of computer sales on the periphery and companies didn't die or drop out until they ran out of money in '84 or '85.

[high voltage]

[JamesD]

BTW, the reason I specifically mention TI is because of the shared graphics & sound chips.
It had to beg comparison within Coleco.
More RAM, faster CPU, mass storage, external keyboard and printer for about what TI wanted for just the computer.
That had to sound good on paper. The reality was a bit different though.

If Coleco released developer info when they saw the market faltering, the number of games would have probably doubled within a year and increased interest in the console.
So early 1984? That gives companies time to release games in time for Christmas and with new game announcements console sales would be better through the crash.

Going back to more of the earlier ADAM discussions... if Coleco survives until 1985, they can upgrade the game system/computer to a 9938 VDP and YMZ285.
The VDP adds an 80 column mode for the computer, selectable color palette and a 256 color mode among other things.
The YMZ285 would keep the machine competitive sound wise. If nothing else, it could sound different than older machines and adds more voices.
A 3.5" disk drive would probably be an option at that point as well.
Those upgrades would have to let the machine be competitive in the game market and makes CP/M much more usable in time to compete with the C128.
At that point, staying in the market until they have a shot at purchasing Acorn becomes possible or they have time to at least try to build a 16/32 bit machine.

One thing that keeps nagging me is that even if they do those things right, they could still really screw up entering the 16/32 bit market and the sophistication of the machines is getting to the point where you have to wonder if a toy company wants to take the next step or not.

*edit*
Actually, I think I suggested the YM2203 sound chip in the earlier thread. Both support AY sound syntheses but the YM2203 adds FM sound synthesis where the YMZ285 adds PCM.

Edited October 19, 2013 by JamesD

[Retro Rogue]

According to the story, the Amiga group were in dire need of financing, and Atari had lowballed them a really lousy bid on the shares when Commodore surprisingly put in a much better bid. The story has been told many times in slightly varying order of actions, and in the "what if" world, I suppose just about anyone could have aquired the company and the project.

 

 

Completely nonfactual regarding Atari. There was never a lowball bid or even a bid, Atari Inc.'s deal was a royalty based deal. We've covered this a lot of times here as well as in the book, including sharing pages from the original deal document in the book. The other stories floating around out there are pure fantasy.

 

 

Let me ask this question, "How much of an affect do you really think the videogame crash had on Coleco and the ColecoVision?".

 

I personally don't think that it had as much of an affect on Coleco as some might think, especially since by late summer of '83, Coleco was already transitioning all their production lines to handle the manufacturing of the ADAM Computer... which meant that new CV units were not being manufactured at this time and on into '84.

 

 

 

I think we talked about his once before, but:

 

http://atariage.com/forums/topic/152359-the-adam-killed-the-colecovision/?do=findComment&comment=1864193

 

In relation to the original question of the topic, it's ironic that they exited several months before Nintendo's test in New York and Atari Corp.'s relaunching of the 7800 that January '86. Perhaps if they would have held out a bit longer, they could have been part of the big brew-ha in Fall '86. And who knows, Sega might have approached them about doing the Master System in the US.

[+wood_jl]

I think a better question would be "Where would Colecovision have gone if company resources were not futily wasted on the Adam?" The Adam failure (and what it did to the company) and the Videogame Crash are 2 separate entities, each with large effects on Coleco.

[NIAD]

I think we talked about his once before, but:

 

http://atariage.com/forums/topic/152359-the-adam-killed-the-colecovision/?do=findComment&comment=1864193

 

Yeah, I know. Coleco said a lot of things, but by the Fall of '84, management's minds were made up and all those announcements in 1985 were just "smoke and mirrors"... kind of like Coleco's introduction of the ADAM at the 1983 Summer CES.

 

January 3, 1985 - "Coleco said it would continue to manufacture its Colecovision video game units, which company officials have previously described as ''marginally profitable,''"

 

At best Coleco was just assembling systems from items that were already in their plants just to get them out the door and recoup much needed cash. You can see this by how systems started to be sold with the ADAM beige Hand Controller as they did not have the matching black controllers anymore. Then eventually they ran out of retail boxes and systems were being sold just with the styrofoam trays. Then just the bottom styrofoam tray and shrinkwrap was used to seal everything in place.

 

They had large stocks of ADAMs and even CVs to purge themselves of (err... liquidate) and they couldn't completely destroy consumer and retailer confidence... well, anymore than it already was. These 1985 announcement were nothing but FLUFF as is proven by the fact that not one single new item was released by Coleco for the ColecoVision in 1985.

 

Here's another example... the ADAM software programs Jeopardy, SubRoc - SuperGame, The Best of Electronic Arts and SmartBASIC v2.0 were all completed/ready and could have been released for the Holiday Season of '84, but management cancelled the release of these programs. The three entertainment programs could have easily and more cost effectively been released commercially than SmartBASIC v2.0 (large manual to produce), but it was still decided not to release them. It took a Coleco employee in mid-'85 to contact the orginal founder of N.I.A.D. for these programs to finally be made available to the numerous ADAM Users Groups that were springing up all over via the Public Domain, but with the stipulation that all copyright and trademark references had to be removed from the tilte screens.

[Osgeld]

BTW, the reason I specifically mention TI

 

TI makes their own chips, TI sets market price, people like coleco are customers and competitors of TI at the same time, yea that is going to work out well

 

TI continued to sell computers into the pentium MMX era, TI is still one of the top 5 semiconductor designers and fabricators in the world

Edited October 19, 2013 by Osgeld

[Greg2600]

This really proves it here. Coleco acted like mid-level toy produces throughout it's life. And most toys are fads, that explode and die off in a couple of years. That's what the Coleco video game program did. They made marginal profits on CV and Gemini hardware, and took a bath on Adam. The biggest reason they would never have made it was that they didn't create original games. One has to imagine all those licenses also left them with "marginal profits."

 

January 3, 1985 - "Coleco said it would continue to manufacture its Colecovision video game units, which company officials have previously described as ''marginally profitable,''"

[NIAD]

This really proves it here. Coleco acted like mid-level toy produces throughout it's life. And most toys are fads, that explode and die off in a couple of years.

You hit the nail on the head.

 

The one thing that sticks in my crawl about the statement that the ColecoVision was "marginally profitable" is that pre-CV, Coleco's stock was hooving around $5 a share after nearly entering bankruptcy due to numerous failures and oversights such as the TeleStar system a couple years earlier. Within a short period of time after the CV release, the fortunes of the company quickly turned and stocks soared to something like $35 a share. I know, the CV wasn't the only product in Coleco's lineup, but at this time, it was the Coleco product that helped turn their fortunes around. So "marginally profitable" as far as what it cost Coleco to manufacture compared to what they sold the system for, but definetly not marginally profitable to the shareholders.

[JamesD]

 

TI makes their own chips, TI sets market price, people like coleco are customers and competitors of TI at the same time, yea that is going to work out well

 

TI continued to sell computers into the pentium MMX era, TI is still one of the top 5 semiconductor designers and fabricators in the world

I didn't say it was a smart decision. Technically, I think Atari was priced similar to TI so they were probably just aiming at what they saw as market price and remaining marginally profitable. If you look at the marketing and product, it looks more like they were targeting Apple.

The BASIC was sorta Applesoft compatible and full of bugs, the ads were targeted at Apple with overreaching promises of compatibility, the manuals were cheap as possible and full of mistakes where Apple had gorgeous spiral bound manuals meticulously produced, the ADAM printer was cheap where SmartWriters were built to be some of the best printers, the ADAM smart drive erased tapes and the Apple II disk worked flawlessly... what could possibly go wrong there?

 

 

The price war caused the "crash" and a steady stream of cheaper computers drove that. I blame the VIC20, TS-1000 and C64 the most. Delaying the VIC20 to fix the serial port would only delay it and the C64 a little as would Timex holding out for the 1500 over the 1000. But you end up with all those machines being more competitive and only delay things a year. Suddenly, machines that were imported only briefly in '83 are your drop dead point for a delay because even if the VIC20 and TS-1000 don't cause the crash, those other machines probably will and Timex may import the Spectrum as is. The only real winners I see there are the Tandy CoCo and Atari 400 which would have benefited from not having the VIC20 around for 1 Christmas season longer. TI might have stayed in the market a year longer as well which might have allowed them to introduce the 99/8 and it's anyone's guess what impact that would have. All the smaller companies with questionable financing still end up dead and game consoles still end up competing with computers. Coleco might have one more decent Christmas out of the Colecovision so there might have been less pressure to rush the ADAM to market. But seriously, does anyone see the ADAM or the Colecovision surviving in their original form? I don't.

 

No matter how I look at it, I think the only thing that could have saved Coleco's electronics division is having someone tech savvy and more cautious with money in upper management. If you do that, they certainly could have stuck around and spent more time in the games and/or computer market. In the end PCs took over computers and videogames had a whole new set of competitors. I see Coleco exiting the computer market around the time Amiga died and videogames would be an endless battle.

The best outcome I see is if Coleco acquired ARM with Acorn and could build game consoles using that technology starting in the late 80s or early 90s. They could also license ARM to other companies. But part of the reason ARM has become so popular is because Acorn died and ARM was separated from a specific computer system.

Colecovision 2 and 3 might come about but I just see Coleco returning to toys somewhere between 1994 and 2000.

 

Edited October 19, 2013 by JamesD

[Zwackery]

Another question... "What if Nuvatek hadn't redesigned the CV prototype that was brought to them and therefore there was not an Expansion Bus which offered the possibility for expansion into a computer?"

 

You just blew my mind!

[NIAD]

 

You just blew my mind!

Take away that little 'ole Expansion Bus Interface and the ColecoVision is strictly a videogame console with no ability to be expanded into a computer system. I understand that the possible expansion of the CV into a full-fledged computer system was a very good selling point, but when you come to think of it:

 

- How many other videogame system manufacturers promised this same expandability of their console into a computer system?

- How many actually pulled it off and released a computer upgrade?

- How many were actually successful with a computer upgrade of their videogame console?

 

So without the computer expansion that came to be known as the ADAM, I think the ColecoVision sticks around for a number of years more, crash or no crash, which could drastically change Nintendo's plans for entering the North American market with the NES.

 

BTW, I understand that you would lose the EM #1 Atari Adapter as well, but that was not a make or break option for the largest majority of people considering to buy a ColecoVision.

[Osgeld]

I remember as a kid seeing the EM1 and it did not compute to me, but I had limited exposure to the 2600 library

[BassGuitari]

Coleco would have buried itself anyway. And the NES would have buried Coleco even deeper.

[atarian63]

There never is an Xbox because the console market already consists of Sony, Sega, Nintendo and Coleco.

and Atari

[atarian63]

Coleco would have buried itself anyway. And the NES would have buried Coleco even deeper.

maybe , NES certainly would have unless Coleco came up with some great new titles. NES was not a lock at christmas 85,far from it. The gyromite package made it expensive.Most customers had no idea what it was,though they liked duck hunt. We sold 2 units that season,1 was the demo which we sold at a loss, our store sold everything from 2600 up and were still liquidating stuff from the crash like Intellivision, bulk Atari stuff,and truckloads of software. took another 6 months or more for NES to start really moving. There was time for someone.

Edited October 20, 2013 by atarian63

[Greg2600]

You hit the nail on the head.

 

The one thing that sticks in my crawl about the statement that the ColecoVision was "marginally profitable" is that pre-CV, Coleco's stock was hooving around $5 a share after nearly entering bankruptcy due to numerous failures and oversights such as the TeleStar system a couple years earlier. Within a short period of time after the CV release, the fortunes of the company quickly turned and stocks soared to something like $35 a share. I know, the CV wasn't the only product in Coleco's lineup, but at this time, it was the Coleco product that helped turn their fortunes around. So "marginally profitable" as far as what it cost Coleco to manufacture compared to what they sold the system for, but definetly not marginally profitable to the shareholders.

 

Were they speaking about just the hardware or the total line (HW and SW)? I have to think the SW licensing may have been an albatross.

[NIAD]

 

Were they speaking about just the hardware or the total line (HW and SW)? I have to think the SW licensing may have been an albatross.

I always took that statement of "marginally profitable" as meaning the hardware (fully packaged ColecoVision) and this smaller profit margin seems to be the case when discussing most videogame consoles that have been produced.

 

From the 1984 CES Coleco Price List and Order Form that I have, it cost a retailer $116 each in a pack of 4 to purchase ColecoVisions. The suggested retail price was around $159.95 if I recall correctly, so the retailer was afforded a nice profit per system sold. As far as Coleco's final cost per unit, I have no way of knowing especially considering the very long list that would have to be considered to come up with a final cost per unit, but I would venture a guess that they had to be making a decent dollar amount... even more for sales made direct to consumers.

 

The largest majority of game cartridges are listed at $24 each in packs of 6 for retailers while a couple others are listed at $19 each in packs of 6.

 

All in all, however, the stock price shooting up to $35 a share after it was as low as $5 a share pre-ColecoVision will tell you a lot about what the ColecoVision meant to Coleco.

[atarian63]

I always took that statement of "marginally profitable" as meaning the hardware (fully packaged ColecoVision) and this smaller profit margin seems to be the case when discussing most videogame consoles that have been produced.

 

From the 1984 CES Coleco Price List and Order Form that I have, it cost a retailer $116 each in a pack of 4 to purchase ColecoVisions. The suggested retail price was around $159.95 if I recall correctly, so the retailer was afforded a nice profit per system sold. As far as Coleco's final cost per unit, I have no way of knowing especially considering the very long list that would have to be considered to come up with a final cost per unit, but I would venture a guess that they had to be making a decent dollar amount... even more for sales made direct to consumers.

 

The largest majority of game cartridges are listed at $24 each in packs of 6 for retailers while a couple others are listed at $19 each in packs of 6.

 

All in all, however, the stock price shooting up to $35 a share after it was as low as $5 a share pre-ColecoVision will tell you a lot about what the ColecoVision meant to Coleco.

We sold this stuff and the price seems what I recall however it did not include shipping, best guess would be add $20 for the 4 pack box. does not effect Coleco but made for small margins for us.

[NIAD]

We sold this stuff and the price seems what I recall however it did not include shipping, best guess would be add $20 for the 4 pack box. does not effect Coleco but made for small margins for us.

Indeed, thecost of shipping needs to be factored in for the retailers and there is never a way around this extra cost... even ordering in larger quantities to offset shipping has the added detriement of having to sit on more stock until it sells to recoup one's investment. I experienced these issues when I managed a computer store/ran a mail-order and the hardest part with the mail-order was creating fair breakdowns for shipping to our customers especially if they paid with a check or money order... credit card orders could more fairly be charged for shipping.

 

One thing that I have come to grips with in todays's retro-collecting world is not to factor in the shipping expense for items that I really want or need. It's a necessary evil, but I really appreciate those that offer free shipping on items... even though those sellers are probably just factoring this in to the initial asking price.

[Retro Rogue]

Yeah, I know. Coleco said a lot of things, but by the Fall of '84, management's minds were made up and all those announcements in 1985 were just "smoke and mirrors"... kind of like Coleco's introduction of the ADAM at the 1983 Summer CES.

 

 

 

 

Yes, but is that based on actual documentation and direct interviews, or just your interpretation and hunch? For the book, you guys need to exhaust all avenues before you can genuinely make that claim. Otherwise the material will be called into question.