When Escom bought Commodore and the Amiga during 1995 it fell into
the limelight of millions of curious users. A market it was ill
prepared to support. Its purchase was unexpected for many but, in
light of the high number of former Commodore staff that worked for
the company is not unexpected. The Escom dynasty began during 1991
as the dream of one man, Manfred Schmitt. Since 1986 he had been
impressed by the growing computer market and decided that it was
the key to success. Just as Commodore had moved from office
furniture to adding machines and calculators, Schmitt added
computers to his organ and instrument shop. Escom quickly expanded
their computer business until 1994, just three years later, they
had a market share of 11.2% in Germany and second most successful
PC provider in The Netherlands.
||1.222 Mio. DM
||1.549 Mio. DM
||2.151 Mio. DM
Escom distinguished itself from other PC manufacturers through
owning a PC retail chain and production facilities, where their own
brand of computer and peripherals were sold. Its empire spread over
1500 shops in 10 European countries. Besides the 34 Escom stores in
Germany, they built strategic alliances with Skala (24 stores in
The Netherlands), consumer electronic chain Mikro-Electro (14 shops
in Zeeland and West-Brabant), De Block (22 shops in Holland and
Utrecht), Scheer & Foppen (44 shops in the north and east part
of the Netherlands), and Horn (51 shops in the south of the
Netherlands). Escom systems were also available by mail order from
Neckermann, Wehkamp and Otto.
Eager to expand their empire into the UK market, a subsiduary was
set up in 1994 by Escom AG. Through a series of purchases,
including the old Rumbelows and Silica shops, they totalled a
massive 168 stores and invested £50 million in the UK market.
Certainly a company that realises the importance of cooperation
with other companies to get what they want!
The past three years had been profitable for Escom, establishing
themselves as the second largest PC retailer. Sales had more than
doubled since Escom began manufacturing under their own name in
1992. The company continued its expansion during 1995 bidding for
he rights to the Commodore trademarks. The intention was to sell a
range of PCs under the Commodore brand. Despite the company's
history, Commodore was still a recognisable name in the industry.
Other bidders at the legal proceeding objected to the sale forcing
Escom to bid for the whole company, including the Amiga- an area
they were obviously uninterested in. With the purchase complete,
the company form two subsiduaries, Commodore BV in
Nieuw-Vennep, Holland, and Amiga Technologies located in Bensheim.
Despite the obvious expense of the Commodore purchase they were
confident that this money would be won back om developing these
lines. In particular they mention that demonstration of new Amiga
systems had raised great interest at the Berlin IF show in May '95
and the 1995 production line was already sold out. In a gesture of
support for the Amiga, they state the purchase has turned Escom
from a PC to a multimedia company. It soon became clear they were
planning to move into the communication industry with the
additional purchase of over 250 Telliance and Thorn EMI stores.
Retail Stores, as of July 31 1995
In a matter of months Escom release their first
Commodore-branded PC based upon the Pentium processor. The Amiga,
on the other hand, was not ready for shipping until Winter. Escom
expressed their confidence they would be able to double the money
spent upon the Commodore purchase, promoting the Commodore systems
in broadsheet advertisements. At the same time their half-yearly
report, (30th June 1995) noted that the PC market has shown a
slowdown of sales in preparation for the release of Windows 95.
This was producing a "weak consumer economy."
At first the weak economy was barely noticeable with Escom
taking a large share of the total highstreet PC sales, becoming the
second biggest PC distributor in the world, and making an annual
turnover of £200 million. However, this was short-lived, as,
in the wave of increasing competition the price of PC parts fell
dramatically. In a moment that mirrored Commodores problems in the
calculator market 20 years earlier, Escom found themselves selling
PCs at up to £500 more than everyone else. The world and his
uncle were getting into the PC market and prices were being updated
almost everyday. Escom could not compete with this and gradually
lost the battle for PC supremacy. Despite the drop in sales, Escom
were rapidly expanding their retail chain, with a jump in
employment from 1,138 to 2,891. The effect of this was soon
felt as the company announced pre-tax losses of 4 million DM, a
dramatic turnaround compared to the 6 million DM profits of 1994.
Meanwhile events in the board room led to the departure of Manfred
Schmitt, the man who started the company. The large number of
former Commodore employees seemed to have tainted the PC industrys
jewel as Escom followed the same path as Commodore.
In June Escom Germany filed for 'protection from its creditors'.
This did not immediately affect Escom UK. Escom Germany had
appointed a new director who started a shake-up. Escom UK were
given a degree of autonomy, and began closing some of the less
profitable shops. On the 24th of July the crunch came, Escom AG was
declared bankrupt. Every store was closed and the company went up
for sale. A week later the UK daughter company followed.
Surprisingly no one wanted to take over the whole of Escom as a
going concern, all they wanted were a few of the stores or some of
the stock. Therefore, the decision was taken to close the whole
Despite the fall of their parent company two European
subsiduaries attempted a successful management buyout (similar to
the Commodore UK buyout in 1994). Escom Netherlands bought all
rights to the Commodore name, becoming Commodore NL. The Amigas
former parent had survived to fight another day, becoming a dealer
of Commodore badged PCs. The company did not last for long, going
into liquidation less than a year after the death of Escom.
Events were just as worrying regarding the sale of the Amiga.
VISCorp had been in negotiation with Escom to buy Amiga
Technologies and all rights to the Amiga since January 1996. The
bankruptcy slowed down these negotiations, turning the event into a
liquidation sale. The extended period of negotiation proved to be
too much for the American company leading VISCorp to pull out of
the negotiations for the Amiga purchase during October. Quikpak, an
American manufacturer that had been building A4000T's for Escom
stepped into the bidding, announcing plans to develop a range of
Amiga 68k systems and the development of the AmigaOS for the Alpha
processor. The Amiga seemed destined for an obscure future. Both
companies were unable to provide the same mass market appeal the
Amiga had during the Commodore era. The revelation that Gateway
2000 were interested in the Amiga sent shockwaves through the
entire industry. The announcement was soon followed by confirmation
of the Amigas purchase by Gateway. The Amiga had been saved but
concern still existed regarding what Gateway would do with the
Amiga. They were, after all, only a PC company with little
appreciation about what the Amiga represented. As it turned out,
the concern was unnecessary.
||Manfred Schmitt added computers to
his organ and instrument shop.
||He Owned 10 shops in Frankfurt.
When the Berlin wall fell a joint venture with Dresden enterprises
meant that Escom started manufacturing PCs. They also expanded into
||Started manufacture under own Escom
||Market expands with the purchase of
a Dutch retail chain into UK. Escom took over Hako AG gaining
access to the stock -exchange
||167 Escom stores in the UK, 36 in
Holland and 140 in Germany. Escom buy Commodore and Amiga. They
claim this allows them to position theirselves favourably in the
new multimedia market. Two subsiduaries are formed, Commodore BV in
Nieuw-Vennep, Holland, and Amiga Technologies located in Bensheim.
Escom buy RWE TELiance, September 28. Incorporate 50 stores in the
Escom group for telecommunication sales.
||The main headquarters in Germany
goes bust. UK operations closed, at least 2 European subsiduaries
attempt a successful management buyout, the Commodore name is
brought for badged PCs, Amiga is to be sold to Viscorp. Due to
financial diffculties Viscorp drop out of the bidding by November
of that year. After months of waiting the rights to the Amiga were
bought by Gateway 2000.