On August 19, 1974, Chuck Peddle, Bill Mensch, Rod Orgill, Harry Bawcom, Ray Hirt, Terry Holdt, Wil Mathys, and Mike Janes quit their jobs at Motorola to venture out on their own, founding MOS Technology. The eight had worked on the design for the Motorola 6800 along with nine others. At MOS Technology, they went on to design the 6502 CPU.
The Motorola 6800 was a good CPU, but it was expensive. When Chuck Peddle accompanied salespeople on trips to sell the 6800 CPU, potential customers objected at the cost and complexity. They would proceed to re-engineer the CPU in front of Peddle, telling them they needed an inexpensive processor with a minimal list of instructions.
Peddle had no objections to moving downmarket and creating a cheap CPU. But Motorola didn’t want to do that. Motorola wanted to build even more powerful and more expensive CPUs, which they later did in the form of the 6809 and 68000. So he and his seven buddies left, taking the idea with them, and designed the CPU Motorola didn’t want. It was 43% smaller than a 6800 yet contained 55 of the 6800’s 72 instructions, so arguably it was 76 percent of the chip in 57 percent of the space. They sold it for just $25 when competing CPUs sold for $200 or more.
In December 1973, Mensch had suggested to Peddle that they could build a home computer from a 6800 CPU, 6820 IO chip, RAM, and ROM. Of course, that simple design could be considerably cheaper with a 6502 instead of a 6800. MOS sold a simple single board computer called the KIM-1 to demonstrate the chip.
Initially, MOS sold two versions of essentially the same CPU. The 6501 used the same pinout as the Motorola 6800 and plugged into the 6800’s socket. This allowed you to substitute a 6501 into a design that used the 6800. As long as you could rewrite the ROM and the software with the reduced instruction set, you could adapt an existing design and make it much cheaper.
The 6502 was the same chip with its own pinout. The 6502 soon found itself in use in the Apple II. Steve Wozniak chose it because it was the only CPU he could afford. A 6502 or one of its derivatives ended up powering numerous computers and game consoles of the late 1970s and 1980s.
Motorola’s lawsuit over the 6502
Motorola didn’t take kindly to the 6501 and 6502. On November 3, 1975, Motorola sued, seeking to stop MOS from selling CPUs altogether. Allen-Bradley, one of MOS Technology’s backers, decided not to fight this case and sold their interest back to the founders. In March 1976, MOS Technology was running out of money and had to settle the case. They agreed to drop the 6501 processor, pay Motorola $200,000 and return any documents that Motorola contended were confidential. Both companies agreed to cross-license microprocessor patents. But the legal problems left MOS Technology in a precarious financial condition, and in November 1976, Commodore acquired MOS Technology.
MOS Technology as a subsidiary of Commodore
Initially Commodore just wanted a subsidiary that could make calculator chips for them. But Peddle talked them into making a computer. Not just a single-board demonstrator like the KIM-1, but a proper home computer. This turned into the Commodore PET.
MOS proved it had some versatility, making most of the chips in the PET, but they proved better at making some types of chips than others. MOS was not as good at making memory chips or 74-series logic chips, for example. But as the PET series gave way to the VIC-20 and Commodore 64, MOS made the sound and video chips in those legendary home computers. The vertical integration that MOS provided Commodore let it sell computers for less than its competitors, at least for a time. Commodore was stingy about upgrading the fabrication plants, so as time went on, this cost advantage faded. But for a few years, the integration worked very well.
David Farquhar is a computer security professional, entrepreneur, and author. He has written professionally about computers since 1991, so he was writing about retro computers when they were still new. He has been working in IT professionally since 1994 and has specialized in vulnerability management since 2013. He holds Security+ and CISSP certifications. Today he blogs five times a week, mostly about retro computers and retro gaming covering the time period from 1975 to 2000.